My Weekly Stock Debrief - Apr. 1-8
Dear subscribers,
Welcome to My Weekly Stock’s debrief for the week #14 of 2022 (Apr. 1 - 8), our weekly newsletter reviewing the market performance this week in 10 points:
Market Performance
SP500 Sector Performance
SP500 Top / Bottom Stock Performers
SP500 Breadth
SP500 Daily Chart
Market Sentiment
Our Chart of the Week
Our Favorite Analysis of the Week
The Week Ahead
My Weekly Stock’s pick
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1. Market Performance
The equity markets were down for the week, with the SP500 losing 1.3%, the Dow Jones 0.3%, and the NASDAQ 3.9%. The indexes were under pressure after comments from several Fed members, and the minutes of the central bank's last meeting suggested the Fed would take a more aggressive stance to combat inflation. The 10-year yield closed the week at 2.7%, the highest level in 3 years, and directly impacted the rate-sensitive stocks like Technology or Cyclicals.
2. SP500 Sector Performance
5 of the 11 SP500 sectors closed the week higher. Health Care and Energy led this week and rose more than 3%. Consumer cyclical and Technology lagged and declined 3.1% and 3.8%, respectively.
Only 4 sectors are positive year-to-date. Energy remains the indisputable winner of 2022 with a 43% gain. Consumer cyclical, Communication Services, and Technology are the worst performers in 2022, losing more than 12%.
3. SP500 Top / Bottom Stock Performers
Defensive stocks, like Target (TGT), performed remarkably well this week. Twitter gained 18% after Elon Musk announced a stake in the company.
Cyclical and Technology stocks lagged the markets. Nvidia lost 13%, impacted by the broader technology sell-off and demand concerns for the semiconductor industry.
4. SP500 Breadth
The SP500 breadth indicators worsened this week. Only 38% of the stocks are within 10% of their 52-week highs, declining 3 points in the last five days.
55% of the index has an RSI above 50, a reading 10 points below the previous week. 49% of the components of the SP500 are trading above their 200-day moving average, a reduction by 3 points vs. last week.
Read more about market breadth
5. SP500 Daily Chart
The SP500 technical indicators are overall neutral. The index is trading above its 20 and 50-day moving averages but closed Friday slightly below the 200-day average. MACD is slightly positive but is declining and seems to be crossing negative soon. The RSI is at a neutral reading of 51 but falling this week.
6. Market Sentiment
Fear & Greed Index
CNN's Fear & Greed Index tracks seven sentiment indicators and is published daily.
Read more about the Fear & Greed Index.
On Friday, the indicator closed at the “Neutral” level (48), flat vs. the previous week, and the VIX closed the week above 20.
AAII Investor Sentiment Survey
The American Association of Individual Investors surveys each week its members on the direction of the stock market for the next six months. The results are published weekly on Wednesdays.
Read more about the AAII sentiment survey
The last AAII survey reported Wednesday that 41% of the respondents had a bearish market outlook. It is a significant 14 point increase vs. March 30.
7. Our Chart of the Week
The Consumer Price Index for March is due on Tuesday. The SP500 traded lower for the week in 7 out of the last 12 CPI releases. The average weekly performance was flat, and the absolute move was 1.4%. The previous three reports all led to a weekly decline for the index.
8. Our Favorite Analysis of the Week
Mid-Term Year
Mid-term years tend to be volatile and to bottom late. Since 1950, mid-term years bottomed on average mid-august.
3 Warning Signs for the markets
Tom Bowley reviews three warning signs for the market: defensive stocks leading in 2022, the tough inflation comps for the March CPI, and sectors sensitive to economic cycles suffering lately.
https://stockcharts.com/articles/chartwatchers/2022/04/please-do-not-ignore-these-3-w-536.html
9. The Week Ahead
The situation in Ukraine, the earning reports, and the Consumer Price Index will be in focus in the coming week. The Q1 2022 earnings seasons will start with the bank and financial stocks, like JP Morgan (JPM), Goldman Sachs (GS), and BlackRock (BLK).
The main economic report will be the Consumer Price Index (CPI) on Tuesday. Economists expect a 7.9% year-over-year increase. A reading higher or in line with expectations will increase the probability of seeing a more hawkish Fed in the next few months.
10. My Weekly Stock Pick
This week, our stock pick was Walmart (WMT), and the stock closed up 4.3% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 38% cumulatively (no leverage, buy and hold five days), and our options trading is up 237%.
Access our performance tracking here.
For the week ahead, we will trade a stock in the health sector. This stock is up double digits in the last month and is trading less than 0.5% from its 52-week high.
You can learn more about our trading approach in the article below:
Read more about our trading approach here.
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That’s all for My Weekly Stock’s debrief for week #14 of 2022 (Apr. 1 - 8).
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Have a lovely trading week,
My Weekly Stock
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