My Weekly Stock Debrief (Aug 15 - 19)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #33 of 2022 (Aug 15-19), our weekly newsletter reviewing the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 1.2%, the Dow Jones 0.2%, and the NASDAQ 2.4%. The SP500 broke its 4-week winning streak after the minutes of the last FED meeting weighed on the equity indexes and confirmed the FED's commitment to a tighter monetary policy.
In last week's newsletter, I was expecting a test of the 200-day moving average, which we got early in the week, but the index failed to clear that level. The 200-day moving average is a critical technical level, and a cross-up has often marked the end of bear markets.
Next week will likely bring more volatility again. The SP500 could back-test the 4,200 level or take a second chance at the 200SMA.
2. SP500 Sector Performance
3 of the 11 SP500 sectors closed the week higher. Energy and Consumer Defensive led this week, finishing up 1.3% and 1.9%, respectively. Communication Services lagged and was down 3.1%.
Only 2 sectors are positive year-to-date. Despite the recent volatility, energy remains the indisputable winner of 2022 with a 43% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
Only 31% of the SP500 stocks were up last week. The best performers were Occidental (OXY, +8%), Coterra Energy (CTRA, +6%), and Kroger (KR, +5%).
The worst performers were Moderna (MRNA, -15%), Etsy (ETSY, -11%), and SolarEdge (SEDG, -9%).
4. SP500 Breadth
Momentum and breadth remain positive for the SP500. Nearly 90% of the index is trading above its 50-day moving average.
We again had more 52-week highs (36) than lows (1), as many stocks have recovered in the past month.
5. SP500 Daily Chart
The technical indicators are still bullish, with the SP500 above its 20-day and 50-day moving averages. The index unsuccessfully tested its 200-day moving average this week, and clearing that level would be a strong signal the bear market is over.
MACD is positive but flattening, while RSI is at 61 and cooling off vs. the previous week.
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 (51), a 4-point reduction vs. the previous week. The VIX was up 5% and closed above 20, implying ahigh 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 37% of the respondents had a bearish market outlook, unchanged from the previous week and getting closer to the historical average.
7. Our Earnings Chart of the Week
Salesforce (CRM) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 6 of the past 12 quarters, for a daily return of +1.0% and an average move of +/- 6.8% on the earnings day.
8. Our Favorite Analysis of the Week
Last week, the SP500 recovered half of the bear market losses, a good indicator historically, as stocks were always up a year later.
9. The Week Ahead
95% of the companies in the SP500 have already published Q2 earnings, with 76% reporting EPS ahead of estimates. Tech stocks like Zoom (ZM), Salesforce (CRM), and Nvidia (NVDA) will be reporting next week.
Starting Thursday, the Federal Reserve members will meet for their annual Jackson Hole Symposium. In addition, the Personal Consumption Expenditures (PCE), the FED's favorite inflation measure, will be released on Friday.
10. My Weekly Stock Pick
This week, our stock pick was AAPL, and the stock was flat (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 9% cumulatively (no leverage, buy and hold for five days), and our options trading is up 151%.
Access our performance tracking here.
We will trade a stock in the Health Care sector 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 #33 of 2022 (Aug 15-19).
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Have a lovely trading week,
My Weekly Stock
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