My Weekly Stock Debrief (Dec. 12-16)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #50 of 2022 (Dec. 12-16), our weekly recap of the stock market performance.
1. Market Performance
The equity markets were down this week, with the S&P 500, Dow Jones, and NASDAQ all falling by 2.1%, 2.0%, and 2.8%, respectively.
The week got off to a good start as the November CPI came in lower than projected, however, things took a turn after the FED meeting. The 50bps rate hike was in line with expectations, but the central bank reiterated its plans for further rate increases. Markets are now concerned that the FED actions will tip the economy into recession. The disappointing 0.6% drop in November retail sales has added to market uncertainty.
With sentiment primarily bearish and technical indicators showing that the rally from the October low is losing steam, we advise to be cautious in the coming weeks.
2. SP500 Sector Performance
10 of the 11 S&P500 sectors closed the week lower. Energy led and closed up 2%, while Consumer Cyclical lagged and finished down 4%.
Year-to-date, only 1 sector is positive. Despite the volatility, Energy remains the indisputable winner of 2022 with a 52% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
79% of the SP500 stocks were down in the last 5 trading days.
Best performers:
Moderna, Inc. (MRNA, 9%)
Halliburton Company (HAL, 9%)
Universal Health Services, Inc. (UHS, 7%)
Worst performers:
Trimble Inc. (TRMB, -13%)
Tesla, Inc. (TSLA, -16%)
Charter Communications, Inc. (CHTR, -20%)
4. SP500 Breadth
Short-term momentum is bearish, with now 85% of the S&P 500 components trading below their 20-day moving averages.
Despite the negative performance, this week still saw more new 52-week highs (24) than new lows (18).
Read more about moving averages
5. SP500 Daily Chart
The technical indicators for the S&P500 are turning bearish. The index is now trading below its 20,50, and 200-day moving averages.
More importantly, the uptrend, which has been in effect since mid-October, appears compromised after the index fell below the critical 3'900 support.
In addition, the MACD indicator is below its signal line, indicating potentially more pain ahead.
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 (42), 11 points lower vs. the previous week. The VIX was mostly flat to close below 23, indicating 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 45% of the respondents had a bearish market outlook, a 3-point increase from the previous week. The market sentiment remains predominantly bearish.
7. Our Earnings Chart of the Week
Nike (NKE) is reporting its quarterly results next week. The stock performance after releasing earnings was positive in 6 of the past 12 quarters. The average 1-day return was +0.7%, for an average move of +/- 7.1% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
So far, 499 stocks of the S&P 500 have reported Q3 2022 earnings. 71% have exceeded analysts' projections on EPS, which is 7 points lower than the prior four-quarter average.
Next week, Nike (NKE), Micron (MU), and General Mills (GIS) are set to release quarterly results as the corporate earnings season winds down.
The Personal Consumption Expenditures Price Index for November, the Federal Reserve's preferred inflation gauge, will be released on Friday.
10. Trading Update
This week, our stock pick, Merck (MRK), was up 1.2% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 12% cumulatively (no leverage, buy and hold for five days), and our options trading is up 135%.
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 Monday before the markets open. In the meantime, you can learn more about our trading approach in the article below:
Read more about our trading approach here.
That’s all for My Weekly Stock’s debrief for week #50 of 2022 (Dec. 12-16).
I hope you liked reading our market review for the week! If you have any comments or suggestions, please fill out the survey below:
Have a great week,
My Weekly Stock
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