My Weekly Stock Debrief (Dec. 5-9)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #49 of 2022 (Dec. 5-9), our weekly recap of the stock market performance.
1. Market Performance
The equity markets fell last week, with the S&P 500, Dow Jones, and NASDAQ all falling by 3.4%, 2.8%, and 3.6%, respectively.
The decreases were mainly the result of a higher-than-expected reading on wholesale price inflation and uncertainty about the economic impact of the FED's aggressive rate hikes. Technical factors may have also contributed to the fall as the S&P 500 struggled to stay above the critical 200-day moving average.
The consumer price index (CPI) report on Tuesday and the Federal Reserve's rate decision and commentary on Wednesday will almost certainly determine if the rally from the October low still has legs.
2. SP500 Sector Performance
All the 11 S&P500 sectors closed the week lower. Utilities led but closed down 0.3%, while Energy lagged and finished down 8%.
Year-to-date, only 1 sector is positive. Despite the volatility, Energy remains the indisputable winner of 2022 with a 49% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
88% of the SP500 stocks were down in the last 5 trading days.
Best performers:
Evergy, Inc. (EVRG, 7%)
Newell Brands Inc. (NWL, 3%)
Campbell Soup Company (CPB, 3%)
Worst performers:
V.F. Corporation (VFC, -15%)
Lincoln National Corporation (LNC, -18%)
NRG Energy, Inc. (NRG, -22%)
4. SP500 Breadth
Short-term momentum is mixed, with now 61% 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 (31) than new lows (10).
Read more about moving averages
5. SP500 Daily Chart
The technical indicators for the S&P500 are mixed. The index is consolidating slightly beneath the key 200-day moving average. The 200-day SMA served as resistance in August, so we would love to see it cleared to improve the technical picture.
MACD crossed below its signal line, indicating the rally may be running out of steam.
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 (54), 13 points lower vs. the previous week. The VIX was up 20% to close above 22, 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 42% of the respondents had a bearish market outlook, a 2-point increase from the previous week. The market sentiment is normalizing back to historical averages but remains primarily bearish.
7. Our Earnings Chart of the Week
Oracle (ORCL) is reporting its quarterly results next week. The stock performance after releasing earnings was negative in 7 of the past 12 quarters. The average 1-day return was +2.0%, for an average move of +/- 6.3% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
So far, 498 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, Oracle (ORCL), Coupa (COUP), and Adobe (ADBE) are set to release quarterly results as the corporate earnings season winds down.
Next week, the spotlight will be on inflation data due on Tuesday, as well as the Federal Reserve's two-day meeting. The market expects the central bank to hike interest rates by 50 basis points.
10. Trading Update
This week, our stock pick, Merck (MRK), was down 0.9% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 11% 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 #49 of 2022 (Dec. 5-9).
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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