My Weekly Stock Debrief (Aug 22 - 26)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #34 of 2022 (Aug 22-26), our weekly newsletter reviewing the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 4.0%, the Dow Jones 4.2%, and the NASDAQ 4.8%. The SP500 posted its second weekly loss after Fed Chairman Powel reiterated the Central Bank's commitment to curb inflation and warned of more pain ahead for businesses and individuals.
Next week will likely bring more volatility, and we can expect a lot of chatter that this summer rally was just a bear market one. From a technical standpoint, the 4,000 level and the 50-day moving average for SP500 are likely to be tested and must hold, or we might see new lows soon.
2. SP500 Sector Performance
Only 1 of the 11 SP500 sectors closed the week higher. Energy led this week, finishing up 4.3%. Technology and Consumer Cyclical lagged and were down 5.6% and 4.7%, respectively.
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 10% of the SP500 stocks were up last week. The best performers were Teh Mosaic Company (MOS, +15%), CF Industries (CF, +14%), and APA Corporation (APA, +11%).
The worst performers were Dollar Tree (DLTR, -17%), Advance Auto Parts (AAP, -16%), and 3M (MMM, -11%).
4. SP500 Breadth
Momentum and breadth are mixed and deteriorating for the SP500. More than 80% of the index is trading above its 20-day moving average, and 2 out of 3 stocks are below its 200-day one.
We had more 52-week lows (18) than highs (15) as the sell-off hit many stocks.
Read more about moving averages
5. SP500 Daily Chart
The technical indicators turned bearish, with the SP500 below its 20-day and 200-day moving averages. The index is still 2% above its 50-day SMA but will likely retest the trend line in the coming days.
The MACD has crossed below its signal line, signaling potentially more pain ahead, while the RSI is at 44, declining 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 “Fear” level (44), a 7-point reduction vs. the previous week. The VIX was up 24% and closed above 25, implying a high level of market uncertainty.
AAII Investor Sentiment Survey
The American Association of Individual Investors surveys its members each week 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 42% of the respondents had a bearish market outlook, a5-point deterioration from the previous week and still above to the historical average.
7. Our Earnings Chart of the Week
CrowdStrike (CRWD) 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 +1.6% and an average move of +/- 8.3% on the earnings day.
8. Our Favorite Analysis of the Week
In 1969, the Fed Chairman also warned of more trouble ahead to fight inflation, and it took another year before the market finally found a bottom.
9. The Week Ahead
97% of the companies in the SP500 have already published Q2 earnings, with 75% reporting EPS ahead of estimates. Companies like Best Buy (BBY), Broadcom (AVGO) and Lululemon (LULU) will be reporting next week.
Key economic reports for the week ahead will give us more insights into the job market's strength, with the nonfarm payrolls report for August expected on Friday.
10. My Weekly Stock Pick
This week, our stock pick was UNH, and the stock was down 2.2% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 6% cumulatively (no leverage, buy and hold for five days), and our options trading is up 142%.
Access our performance tracking here.
We will trade a stock in the Energy sector for the week ahead. Our stock pick will be released later 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 #34 of 2022 (Aug 22-26).
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Have a lovely trading week,
My Weekly Stock
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