My Weekly Stock Debrief (July 25 - 29)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #30 of 2022 (July 25 - 29), our weekly newsletter reviewing the stock market performance.
1. Market Performance
The equity markets were up for the week, with the SP500 gaining 4.3%, the Dow Jones 3.0%, and the NASDAQ 4.5%. GDP reading for Q2 showed the US economy contracted for the second consecutive quarter. The FED increased its rate benchmark by 75bps for the second time in a row but hinted it could slow down on future hikes. Finally, stronger-than-expected quarterly earnings from Tech and growth stocks lifted the stock indexes.
The market's positive reaction after this busy week of data and the improvement in sentiment and technicals are undoubtedly good news for investors. The SP500 closed July up 9%, its best monthly performance since 2020, and posted 2 consecutive weekly gains for the first time since the end of March.
With no FED meeting until September and no inflation data expected next week, the markets may consolidate before setting up its next trend.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week higher. Energy and Utilities led this week, finishing up 10% and 6.5%, respectively. Communication Services and Healthcare lagged but were still positive for the week.
Only 2 sectors are positive year-to-date. Energy remains the indisputable winner of 2022 with a 41% gain. Communication Services and Consumer Cyclical are the worst performers in 2022, down more than 20%.
3. SP500 Heatmap
85% of the SP500 was up last week. Energy and Technology stocks performed well this week, thanks to upbeat earnings reports. Notably, Enphase Energy was up 34% for the week and the best performer of the SP500 in the past 5 days.
On the other hand, Stanley Black & Decker (SWK) ) posted the worst weekly performance of the SP500 after missing on earnings and revenue targets and cutting its guidance for the rest of the year.
4. SP500 Breadth
Momentum and breadth are improving and bullish for the SP500. Almost 80% of the index is trading above its 50-day moving average.
This week, there were almost as many new 52-week highs (10) as lows (11), showing again how powerful the rally was in July.
5. SP500 Daily Chart
The technical indicators are bullish, with the SP500 above its 20-day and 50-day moving averages and its trend lines ascending. Both RSI and MACD are supportive of a continuation of this rally.
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), a 3-point improvement vs. the previous week. The VIX was down 7% and closed at 21, 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 40% of the respondents had a bearish market outlook, which improved from the previous week but remained above the historical average.
7. Our Earnings Chart of the Week
Moderna (MRNA) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 5 of the past 12 quarters, for a daily return of +1.7% and an average move of +/- 7.4% on the earnings day.
8. Our Favorite Analysis of the Week
Fed meetings have been a great positive catalyst this year. If you owned the SP500 just for the day the FED released the rate decision, you’d be looking at a 7% gain. And this week, the FOMC delivered again on this pattern.
9. The Week Ahead
Next week will be another busy week of quarterly earnings, with AMD, Eli Lilly (LLY), and Moderna (MRNA) reporting, among others.
Key economic reports for the week ahead will give us more insights into the job market, with the non-farm payroll report released on Friday.
10. My Weekly Stock Pick
This week, our stock pick was MRK, and the stock was up 3.1% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 9% cumulatively (no leverage, buy and hold for five days), and our options trading is up 154%.
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 #30 of 2022 (July 25 - 29).
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Have a lovely trading week,
My Weekly Stock
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