The Market’s Compass Crypto Sweet Sixteen Study

Welcome to this week’s publication of the Market’s Compass Crypto Sweet Sixteen Study #245. The Study tracks the technical condition of sixteen of the larger market cap cryptocurrencies. Every week the Studies will highlight the technical changes of the 16 cryptocurrencies that I track as well as highlights on noteworthy moves in individual Cryptocurrencies and Indexes. Past publications including the Weekly ETF Studies can be accessed by paid subscribers via The Market’s Compass Substack Blog.

This Week’s and 8 Week Trailing Technical Rankings of the Sixteen Individual Cryptocurrencies

An explanation of my objective Individual Technical Rankings and Sweet Sixteen Total Technical Ranking go to www.themarketscompass.com. Then go to the MC’s Technical Indicators and select “crypto sweet 16”. What follows is a Cliff Notes version* of the full explanation…

*The technical ranking system is a quantitative approach that utilizes multiple technical considerations that include but are not limited to trend, momentum, measurements of accumulation/distribution and relative strength. The TR of each individual Cryptocurrency can range from 0 to 50. The Sweet Sixteen Total Technical Ranking or “SSTTR” is the sum of the sixteen individual TRs and can be viewed as an overbought / oversold indicator as well as a confirmation / non-confirmation indicator.

The Sweet Sixteen Total Technical Ranking fell again, for the fourth week in a row, down -26.94% to 179 after falling -18.60% the week before to 245 and is down -60.9% from 457.5 five weeks ago, which was the highest reading in the SSTTR since October of last year. Last week’s SSTTR reading of 179 marked the lowest level since March 27th reading of 158.

Last week only two of the Sweet Sixteen TRs gained de minimis ground, two were unchanged, and twelve TRs fell. Only one Crypto Currency TRs ended the week in the “green zone” (TRs between 35 and 50) and that was Stellar (XLM), one ended the week in the “blue zone” (TRs between 15.5 and 34.5), and fourteen were in the “red zone” (TRs between 0 and 15). The previous week when there were two TRs in the “green zone”, four were in the “blue zone” and ten were in “red zone”. The Average TR loss on the week was -4.3, adding to the previous week’s Average TR loss of -3.5 and a loss of - 5.66 three weeks ago.

The 13-Week Exponential Moving Averages* of the Sweet Sixteen Objective Technical Rankings Since January 1st

*The 13-Week Exponential Moving Average (EMA) lines smooths what can be “choppy” Technical Rankings and better defines trend. in the TRs. Changes in the EMA trends with follow-through are signals worthy of consideration.

Tron’s (TRX) 13-Week Simple Moving Average (SMA) of its TR continues to climb higher maintaining its “pole position” leaving the balance of the Sweet Sixteen TRs 13-Week SMA’s behind. One standout is Stellar’s (XLM) 13-Week SMA which has been rising over the past two weeks.

Relative Strength and Weakness in the Sweet Sixteen vs. The CCi30 Index* utilizing a Relative Rotation Graph

The Relative Rotation Graph, commonly referred to as RRGs, was developed in 2004-2005 by Julius de Kempenaer. These charts are a unique visualization tool for relative strength analysis. Chartists can use RRGs to analyze the relative strength trends of several securities against a common benchmark, (in this case the CCi30 Index*) and against each other over any given period (in the case below, daily) over the past two weeks. The power of RRG is its ability to plot relative performance on one graph and show true rotation. All RRGs charts use four quadrants to define the four phases of a relative trend. The Optuma RRG charts rotates from Leading (in green) to Weakening (in yellow) to Lagging (in pink) to Improving (in blue) and back to Leading (in green). True rotations can be seen as securities move from one quadrant to the other over time. This is only a brief explanation of how to interpret RRG charts. To learn more, see the postscripts and links at the end of this Blog.

*The CCi30 Index is a registered trademark and was created and is maintained by an independent team of mathematicians, quants and fund managers lead by Igor Rivin. It is a rules-based index designed to objectively measure the overall growth, daily and long-term movement of the blockchain sector. It does so by indexing the 30 largest cryptocurrencies by market capitalization, excluding stable coins (more details can be found at CCi30.com).

The chart below has two weeks, or 14 days, of relative data points vs. the benchmark, deliniated by the dots or nodes. Not all of the Sweet Sixteen are plotted in this RRG Chart. I have done this for clarity purposes. Those which I believe are of higher technical interest remain.

Although Stellar’s (XLM) Relative Strength Momentum started to slow at the end of last week, it nonetheless continues to mark daily improvements in Relative Strength (RS) vs. the benchmark CCi30 Index by registering three weeks of RS gains in a row (see Tabulation Table below) and in turn far outpacing (131.56) the other fifteen cryptos on an RS basis. It has been a grind on a Relative Strength Momentum basis, but Polygon (POL) has made a three Quadrant move by leaving the Lagging Quadrant, passing through the Improving Quadrant to end last week in the Leading Quadrant. A week ago, last Thursday Uniswap (UNI) fell into the Lagging Quadrant and although downside Relative Strength Momentum is starting to slow it is still losing Relative Strength vs. the CCi30 Index.

Relative Strength and Relative Strength Momentum “Tabulation Table”

The “Tabulation Table” below marks the Relative Strength and Relative Strength Momentum readings of the Sweet Sixteen vs. the CCi30 Index at the end of last week and the end of the two preceding weeks. If there has been an improvement in either the Relative Strength Ratio or the Relative Strength Momentum reading since the end of the preceding week, I have highlighted it in green. If there has been a contraction in either it is highlighted in red and an unchanged reading in either will remain black. The color-coding system has served as a heat map over the past three weeks highlighting either the continued improvement, deterioration, or stasis vs. the benchmark CCi30 Index. The crypto currencies that are in the comments below the RRG chart are highlighted in blue.

Seven Day Absolute % Price Change*

*Friday May 29th to Friday June 5th

Over the past seven days not even one of the Sweet Sixteen gained absolute ground with all cryptos trading sharply lower vs the previous week when one of the Sweet Sixteen gained absolute ground and fifteen traded lower. Last week the average absolute percentage loss was -18.73% with all but one marking double-digit losses. The week before the average 7-Day gain was +2.05% (the average absolute loss would have been -3.35% if not for the +82.98% absolute gain in Stellar). Both weekly average losses and gains exclude the two Indexes.

Year to Date Absolute % Price Change

The Average YTD Absolute % Price Change of The Sweet Sixteen at the end of last week was -33.50%. A nasty across the “broad” drop from the end of the week before when the Average YTD % Price Change was -22.24%.

The Technical Condition Factors

The Technical Condition Factors or TCFs are utilized in the calculation of the Individual Crypto Currencies Technical Rankings. What is shown in the excel panel below is the total TCFs of all sixteen TRs. A few TCFs carry more weight than the others, such as the Weekly Trend Factor and the Weekly Momentum Factor in compiling each individual TR of each of the 16 Cryptocurrencies. Because of that, the excel sheet below calculates each factor’s weekly reading as a percentage of the possible total.

A full explanation of my Technical Condition Factors go to www.themarketscompass.com. Then go to the MC’s Technical Indicators and select Crypto Sweet 16.

The Daily Momentum Technical Condition Factor or “DMTCF” fell again for the forth week in a row to a deeply oversold reading of 4.46% or 5 out of a possible 112.

As a confirmation tool, if all eight TCFs improve on a week over week basis, more of the 16 Cryptocurrencies are improving internally on a technical basis, confirming a broader market move higher (think of an advance/decline calculation). Conversely, if more of the TCFs fall on a week over week basis, more of the “Cryptos” are deteriorating on a technical basis confirming the broader market move lower. At the end of last week seven of the TCFs showed decreases, and one was higher confirming the broader market move lower.

The Weekly CCi30 Index and The Weekly Stochastic Momentum Index, MACD, and The Total Sweet Sixteen Technical Condition Factor or“TSSTCF” Oscillator*

The “TSSTCF” Oscillator tallies the eight objective Technical Condition Factors into one overbought / oversold indicator that ranges between 0 and 8.

The sub-title to the end of May, Market’s Compass Crypto Sweet Sixteen Study, published to my Substack Blog a week ago was “Hanging on by a Thread”. That thread unraveled and the CCi30 Index dropped like a stone over the course of the week. It first dropped below the Lower Parallel (solid violet line) of the Standard Pitchfork (violet P1 through P3) that had supported pullbacks in the counter trend rally since the February 6th low at violet P1. The second was a violation of price support at the 10,200 level. When the counter trend 14-week rally was capped at the 12,380 level and fell to the Lower Parallel a drew a new short-term Schiff Pitchfork (light green P1 through P3), but I did not extend it backwards to avoid “overforking” the chart. Nonetheless, at the end of the week the Median Line (green dotted line) did offer a measure of support but both the shorter-term Stochastic Momentum Index continues to track lower below its signal line and longer-term MACD is starting to roll over in negative territory with nary a suggestion that downside price momentum has run its course. Add to that, The Total Technical Condition Factor Indicator has fallen back below both now falling moving averages.

The CCi30 Index Daily Candlestick Chart with Momentum Oscillators

The Daily chart reveals last week’s break of Cloud and multiple price support in what can only be called impulsive liquidation. Both Daily momentum oscillators are tracking lower below their signal lines. The Sweet Sixteen Daily Momentum / Breadth Oscillator has reached an extreme oversold condition but that is outweighed by the other negative technical factors. I expect a short-term oversold rally but there is nothing to suggest that the index has reached its nadir.

For readers who are unfamiliar with the technical terms or tools referred to in the comments on the technical condition of the CCi30 Index can avail themselves of a brief tutorial titled, Tools of Technical Analysis and the three part Andrews Pitchfork Series available on my website.

www.themarketscompass.com

Charts are courtesy of Optuma whose charting software allows the Technical Rankings to be calculated and back tested.