My Weekly Stock Debrief (Aug 1 - 5)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #31 of 2022 (Aug 1-5), our weekly newsletter reviewing the stock market performance.
1. Market Performance
The equity markets were up for the week, with the SP500 gaining 0.4%, the Dow Jones flat, and the NASDAQ 2.0%. In last week’s debrief, I expected the indexes to consolidate this week, and the markets delivered on that. While the week was frustrating for traders, the SP500 remained firmly above its critical 4,000 support level. The trend remains bullish, and this rally will likely test the 200-day moving average (around the 4,300 level).
Next week will bring another critical inflation data, with the CPI for July released on Wednesday. It is fair to expect more volatility ahead of this report, especially after the job report this Friday showed the job market remains very strong.
2. SP500 Sector Performance
6 out of the 11 SP500 sectors closed the week higher. Communication Services and Technology led this week, finishing up 1.3% and 1.9%, respectively. Energy lagged and was down 7%.
Only 2 sectors are positive year-to-date. Despite the recent volatility, energy remains the indisputable winner of 2022 with a 32% gain. Communication Services and Consumer Cyclical are the worst performers in 2022, down more than 20%.
3. SP500 Heatmap
52% of the SP500 was up last week. Moderna (MRNA) finished up 14% after releasing quarterly results that beat estimates and announcing a $3 billion share-buyback plan.
4. SP500 Breadth
Momentum and breadth remainbullish for the SP500. More than 70% of the index is trading above its 50-day moving average.
For the first time in months, we had more 52-week highs (15) than lows (10), as many stocks have been recovering in the past month.
5. SP500 Daily Chart
The technical indicators are bullish, with the SP500 above its 20-day and 50-day moving averages and its trend lines ascending. The next major test will be the 200-day moving average.
MACD is positive and rising, and supportive of a continuation of this rally.
6. Market Sentiment
Fear & Greed Index
CNN's Fear & Greed Index tracks seven sentiment indicators and is published daily.
On Friday, the indicator closed at the “Neutral” level (50), a 8-point improvement vs. the previous week. The VIX was flat and closed at 21, still implying a high level of market uncertainty.
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.
The last AAII survey reported that 39% of the respondents had a bearish market outlook, which improved from the previous week but remained above the historical average.
7. Our Earnings Chart of the Week
Disney (DIS) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 5 of the past 12 quarters, for a daily return of -0.1% and an average move of +/- 3.2% on the earnings day.
8. Our Favorite Analysis of the Week
The next big test for the SP500 will be the 200-day moving average (roughly at the 4,340 level), a common test in bear markets, as Adam Mancini points out. And clearing that level would be a very bullish signal.
9. The Week Ahead
87% of the companies in the SP500 have already published Q2 earnings, with 75% reporting EPS ahead of estimates. Disney (DIS), Palantir (PLTR), and Coinbase (COIN) will be reporting next week, among others.
Key economic reports for the week ahead will give us more insights into inflation, with the CPI report for July expected on Wednesday.
10. My Weekly Stock Pick
This week, our stock pick was MRK, and the stock was down 1.3% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 8% cumulatively (no leverage, buy and hold for five days), and our options trading is up 148%.
Access our performance tracking here.
We will trade a stock in the Healthcare sector again for the week ahead. 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 #31 of 2022 (Aug 1-5).
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Have a lovely trading week,
My Weekly Stock
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