My Weekly Stock Debrief (July 11 - 15)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #28 of 2022 (July 11 - 15), our weekly newsletter reviewing the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 0.9%, the Dow Jones 0.2%, and the NASDAQ 1.2%. The stock indexes were down after disappointing earnings from banks, notably JP Morgan, and a hotter-than-expected inflation report. The CPI for June came at 9.1% in June, above the 8.8% expected by economists and the highest reading since 1981. Stocks recovered on Friday after the latest retail sale report showed that consumer demand remains strong despite the elevated prices.
The following two weeks will provide critical tests for the markets, with most of the big names of the SP500 reporting quarterly earnings and the Federal Reserve meeting end of July. And while several FED members communicated that a 75bps rate increase feels appropriate, the probability of seeing a 100bps hike has increased after the hot inflation reading.
2. SP500 Sector Performance
Only 1 out of the 11 SP500 sectors closed the week higher. Consumer Defensive and Utilities led this week, finishing roughly flat. Communication Services and Energy lagged and declined 2.3% and 3.3%, respectively.
Only 1 sector is positive year-to-date. Energy remains the indisputable winner of 2022 with a 24% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
Only 38% of the SP500 was up last week. Industrial stocks performed well; notably, Southwest Airlines (LUV) and Boeing (BA) were up 8% and 6% after receiving upgrades from several analysts.
4. SP500 Breadth
Momentum and breadth are improving for the SP500. While 80% of the SP500 stocks are trading below their 200-day moving average, more than two-thirds are now above their 20-day.
The number of new 52-week lows was still sizeable this week, and only 6 stocks made a new high.
5. SP500 Daily Chart
The technical indicators are mixed, with the SP500 trading slightly above its 20-day moving average but below its 50 and 200-day ones. RSI has a neutral reading of 49 and slightly increasing.
The index will face an important test in the coming weeks, with the 50-day moving average just ahead. Reclaiming that trend line would be an important win for the bulls.
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 (27), a 3-point deterioration vs. the previous week. The VIX was flat and closed at 24, still implying a high 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 47% of the respondents had a bearish market outlook, imrpoving vs. the previous week, but remaining largely above the historical average.
7. Our Earnings Chart of the Week
Netflix ($NFLX) is reporting earnings next week. The 1-day stock performance post-earnings were positive in only 2 of the past 12 quarters, for a daily return of -7% and an average move of +/- 10% on the day of earnings.
8. Our Favorite Analysis of the Week
While the SP500 finished Friday up almost 2%, the index was still below its high of the previous week, and the trend lines remain bearish across all major equity indexes.
9. The Week Ahead
The Q2 earnings seasons will gain more steam next week, with Goldman Sachs ($GS), Bank of America ($BAC), Netflix ($NFLX), and Telsa (TSLA) reporting quarterly results.
Key economic reports for the week ahead will give us more insights into the housing market. The European Central Bank is also expected to raise its benchmark rate for the first time since 2011.
10. My Weekly Stock Pick
This week, our stock pick was MRK, and the stock was up 2.2% (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 151%.
Access our performance tracking here.
We will trade a stock in the Healthcare sector again 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 #28 of 2022 (July 11 - 15).
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Have a lovely trading week,
My Weekly Stock
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