My Weekly Stock Debrief (Aug 29 - Sep 2)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #35 of 2022 (Aug 29 - Sep 2), our weekly newsletter reviewing the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 3.3%, the Dow Jones 3.0%, and the NASDAQ 4.0%. The S&P 500 decreased for a third consecutive week as markets reacted negatively to last week's hawkish comments from the Fed chairman. The market participants still anticipate a 75-basis-point increase in the FED meeting in September, and the labor report did little to ease investors' concerns that the Fed would soften its stance.
Technical indicators are primarily bearish for the SP500, pointing to more pain ahead. In addition, we entered the weakest month of the year for stocks. Until we see a significant multi-day rally and recapture the previously-lost levels (4,000, the 50-day moving average, and ultimately the 200-day), we should assume that we are not through with this sell-off.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week lower. Utilities led this week, finishing still down 1.5%. Technology and Materials lagged and were down 5.0% and 4.9%, respectively.
Only 2 sectors are positive year-to-date. Despite the recent volatility, energy remains the indisputable winner of 2022 with a 44% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
Only 8% of the SP500 stocks were up last week. The best performers were DXC Technology (DXC, 13%), Cardinal Health, Inc. (CAH, 5%), and Bath & Body (BBWI, 4%)
The worst performers were NVIDIA Corporation (NVDA, -16%), PVH Corp. (PVH, -15%), and Seagate Technology Holdings plc (STX, -12%).
4. SP500 Breadth
Momentum and breadth turned bearish for the SP500. Two-thirds of the index trades below its 50-day moving average, and 74% are below the 200-day.
We again had more 52-week lows (46) than highs (5) as the sell-off hit many stocks.
Read more about moving averages
5. SP500 Daily Chart
The technical indicators are bearish, with the SP500 below its 20, 50, and 200-day moving averages. The index lost its 50-day SMA this week, and until recaptured, we should expect more weakness.
The MACD is also bearish as it remains below its signal line, signaling the pain is probably not over. The RSI is at 35, declining vs. the previous week, getting close to the oversold region.
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 (41), a 3-point reduction vs. the previous week. The VIX was flat 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 50% of the respondents had a bearish market outlook, a 8-point deterioration from the previous week and still above the historical average.
7. Our Earnings Chart of the Week
GameStop (GME) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 4 of the past 12 quarters, for a negative daily return of -10% and an average move of +/- 13% on the earnings day.
8. Our Favorite Analysis of the Week
September is usually a weak month, but it is even worse when things are already in bad shape going into it. The seasonality is not helping anyone at this time.
9. The Week Ahead
99% of the companies in the SP500 have already published Q2 earnings, with 75% reporting EPS ahead of estimates. Companies like GameStop (GME), DocuSign (DOCU), and Kroger (KR) will be reporting next week.
The Institute for Supply Management (ISM) will publish the latest purchasing managers index (PMI) figures on Tuesday. The European Central Bank (ECB) and the Bank of Canada (BOC) will hold meetings on Wednesday and Thursday, respectively, with experts expecting an increase in interest rates.
10. My Weekly Stock Pick
This week, our stock pick was CVX, and the stock was down 3.7% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 2% cumulatively (no leverage, buy and hold for five days), and our options trading is up 137%.
Access our performance tracking here.
We will trade a stock in the Healthcare 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 #35 of 2022 (Aug 29-Sep2).
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Have a lovely trading week,
My Weekly Stock
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