My Weekly Stock Debrief (Apr. 22 - 29)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #17 of 2022 (Apr. 22 - 29), our weekly newsletter reviewing the stock market performance.
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1. Market Performance
The equity markets were down for the week, with the SP500 losing 3.3%, the Dow Jones 2.5%, and the NASDAQ 3.9%, for a 4th consecutive weekly loss. The SP500 frustratingly played ping pong between 4200 and 4300 all week, trapping both bulls and bears with false breakdowns and breakouts, before finally caving in on Friday afternoon.
The first 4 months of the year delivered the worst performance since the 1930s as the markets digested a full load of negative news: record inflation, FED tightening policy, slowing global economy, COVID restrictions in China impacting supply chains, the Russia / Ukraine conflict, as well as disappointing earnings from mega-caps (Amazon, Apple just this week).
Volatility will probably remain high short term but let's hope we can see some relief next week, especially with the FED meeting in the rearview mirror.
2. SP500 Sector Performance
All of the 11 SP500 sectors closed the week lower. This week, Material and Technology led but still finished lower by 1%. Consumer cyclical and Real Estate lagged and declined by 7.4% and 5.6%, respectively.
Only 2 sectors are positive year-to-date. Energy remains the indisputable winner of 2022 with a 35% gain. Communication Services is the worst performer in 2022 and is down more than 20%.
3. SP500 Top / Bottom Stock Performers
Earning beats and misses rhythmed the week and are directly visible on the leaderboard. Notably, Facebook reported better than expected results and closed up 9% in an otherwise challenging context for Tech stocks.
Meanwhile, industrial stocks like General Electric (GE) and Boeing (BA) reported results below expectations and declined by more than 10%.
4. SP500 Breadth
The SP500 breadth indicators worsened this week. 79% of the stocks are in correction territory vs. their 52-week highs, increasing 12 points in the last five days. Only 16% of the index traded positive this week, and for the second Friday in a row, 97% (!!!) were down on the last day.
Momentum is also quite poor. 14% of the index has an RSI above 50, and no stock has an RSI above 70 (overbought). Only 27% of the components of the SP500 are trading above their 50-day moving average, a reduction by 14 points vs. last week.
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 35, 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 (28), a 13-point reduction vs. the previous week, and the VIX spiked 18%, closing above 33.
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 59% of the respondents had a bearish market outlook, a 15-point increase vs. April 20th. It is the 5th highest bearish and lowest bullish reading since 1987, reaching a similar level to the 2008 crisis.
7. Our Chart of the Week
The Federal Reserve meets next week, with the rate decision expected on Wednesday. Both the last 5 and 12 meetings led to positive gains for the markets. The Fed Chairman has been managing expectations, and unless a big surprise, the markets could see a relief rally similarly to the March meeting.
8. Our Favorite Analysis of the Week
As equity markets are having their worst start of the year in decades, equity funds are flowing out to a level last seen in the March 2020 Covid crash.
NASDAQ breadth indicators are even worst than the SP500, with almost 1 stock in 2 down 50% and 1 in 5 down 75%.
9. The Week Ahead
Next week, key earnings releases include Pfizer, AMD, Starbucks, Moderna, Block, and Shopify, among others.
The Federal Reserve has its FOMC meeting on Tuesday and Wednesday, with the market expecting a rise in interest rates by 50 basis points. Several labor reports are also expected next week and will give us a status on the job market's strength.
10. My Weekly Stock Pick
This week, our stock pick was Walmart (WMT), and the stock closed down 2.2% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 24% cumulatively (no leverage, buy and hold five days), and our options trading is up 164%.
Access our performance tracking here.
We will trade a stock in the healthcare sector for the week ahead. This stock recently released strong earnings and was in the top 10 performing stocks of the SP500 this week.
Our stock pick will be released on Sunday, and in the meantime, you can learn more about our trading approach in the article below:
Read more about our trading approach here.
And remember to subscribe to My Weekly Stock to receive our stock picks, trading plan, and buy/sell alerts directly in your mailbox.
That’s all for My Weekly Stock’s debrief for week #17 of 2022 (Apr. 22 - 29).
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Have a lovely trading week,
My Weekly Stock
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