My Weekly Stock Debrief (Apr. 15 - 22)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #16 of 2022 (Apr. 15 - 22), our weekly newsletter reviewing the market performance.
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1. Market Performance
The equity markets were down for the week, with the SP500 losing 2.8%, the Dow Jones 1.9%, and the NASDAQ 3.8%. Despite starting the week positive, fueled by strong earnings reports, the markets sold off hard the last 2 days and closed a 3rd straight losing week.
Federal Reserve Chairman Jerome Powell spooked the markets on Thursday after confirming the Fed will aggressively move to fight inflation. A 50bps rise in interest during the May Fed meeting is definitively on the table now.
The SP500 has been frustratingly stuck in a trading range between roughly 4300 and 4,500. We will come out of this range one way or another, setting up the next big move for the market. And next week will bring us an important test, for that matter.
2. SP500 Sector Performance
Only 2 of the 11 SP500 sectors closed the week higher. This week, Consumer Defensive and Real Estate led and rose just above 1%. Communication Services and Energy lagged and declined by 7.5% and 5.9%, respectively.
Only 3 sectors are positive year-to-date. Energy remains the indisputable winner of 2022 with a 37% gain. Communication Services is the worst performer in 2022 and is down more than 20%.
3. SP500 Top / Bottom Stock Performers
Airlines stocks performed again well this week. United Airlines reported better-than-expected earnings and provided upbeat guidance based on the surging travel demand.
Meanwhile, Netflix lost almost 40% after reporting the first subscriber loss in 10 years. The company also forecasted a 2 million additional loss for the next quarter.
4. SP500 Breadth
The SP500 breadth indicators worsened this week. Only 33% of the stocks are within 10% of their 52-week highs, declining 6 points in the last five days.
29% of the index has an RSI above 50, a reading 19 points below the previous week. 41% of the components of the SP500 are trading above their 50-day moving average, a reduction by 10 points vs. last week.
29% of the index traded positive for the week and 97% (!!!) were down on Friday for the worst trading day since 2020.
Read more about market breadth
5. SP500 Daily Chart
The SP500 technical indicators are overall bearish. The index is trading below its 20, 50, and 200-day moving averages. MACD is negative, the RSI is at 37, and both remain on a downtrend.
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 “Fear” level (40), a 5-point reduction vs. the previous week, and the VIX spiked 25%, closing above 28.
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 that 44% of the respondents had a bearish market outlook. It is a 4-point increase vs. April 13th, but it does not reflect the end-of-week selloff.
7. Our Chart of the Week
Two-thirds of the SP500 are in correction territory vs. their 52-week high. Even more so, 1 stock in 5 is down more than 30% vs. their recent highs.
8. Our Favorite Analysis of the Week
Bullish Sentiment below 20
The bullish sentiment among individual investors remains below 20% for a second week. It did not prevent the market from rallying 6 and 12 months later in 30 of the 31 previous instances.
9. The Week Ahead
We are up for the busiest week of this earning season with notably all the Big Tech reporting. Alphabet and Microsoft are on deck on Tuesday, Meta on Wednesday, and Amazon and Apple on Thursday. Investors and analysts will put as much (if not more) attention toward the forward guidance as last quarter's performance.
The preliminary figures for the first-quarter GDP are released on Thursday and should show a deceleration of the economy. On Friday, we will be watching out for the PCE, the favorite inflation measure of the FED. No members of the FED will be speaking in the coming days (thank God!), as it is cautionary the week before the Fed Meeting.
10. My Weekly Stock Pick
This week, our stock pick was Chevron (CVX), and the stock closed down 7.0% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 27% cumulatively (no leverage, buy and hold five days), and our options trading is up 174%.
Access our performance tracking here.
For the week ahead, we will trade a stock in the consumer defensive sector. This stock is one of the best performing mega-cap this month and is trading only 2% 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 #16 of 2022 (Apr. 15 - 22).
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Have a lovely trading week,
My Weekly Stock
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