My Weekly Stock Debrief (July 5 - 8)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #27 of 2022 (July 5 - 8), our weekly newsletter reviewing the stock market performance.
1. Market Performance
The equity markets were up for the week, with the SP500 gaining 1.9%, the Dow Jones 0.8%, and the NASDAQ 4.7%. The stock indexes recovered most of the previous week's losses on hopes the FED could contain inflation without leading the economy into a recession.
Technical indicators are improving and suggest this rally has more legs, but the SP500 will soon face a critical test with the 50-day moving average just ahead. And next week will also bring critical updates for the markets with the latest inflation reading for June on Wednesday and the Q2 earnings season starting with bank stocks.
2. SP500 Sector Performance
5 out of the 11 SP500 sectors closed the week higher. Consumer Cyclical and Technology led this week, finishing up 4%. Utilities and Energy lagged and declined 2.8% and 2.3%, respectively.
Only 1 sector is positive year-to-date. Energy remains the indisputable winner of 2022 with a 28% gain. Communication Services and Consumer Cyclical are the worst performers in 2022
3. SP500 Heatmap
75% of the SP500 was up last week. Healthcare and Consumer Cyclicals stocks performed well. Moderna (MRNA) closed up 23% after COVID-19 vaccine boosters targeting the omicron variants were approved by the FDA.
4. SP500 Breadth
Momentum and breadth are improving for the SP500. While almost 80% of the SP500 stocks are trading below their respective 200-day moving average, more than half is 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.
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5. SP500 Daily Chart
Technical indicators are improving, with the SP500 reclaiming its 20-day moving average last week, and both MACD and RSI suggests the current rally still has legs.
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 a strong 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 (30), a 6-point improvement vs. the previous week. The VIX was down and closed at 25, still implying a high level of market uncertainty
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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 53% of the respondents had a bearish market outlook, worsening vs. the previous week and remaining largely above the historical average.
7. Our Earnings Chart of the Week
JP Morgan Chase (JPM) is reporting earnings next week. The 1-day stock performance post-earnings were positive in only 4 of the past 12 quarters, for a daily return of -1.3% and an average move of +/- 2% on the day of earnings.
8. Our Favorite Analysis of the Week
Market breadth hit a record low in mid-June when less than 7% of the NASDAQ stocks were trading above their 200-day moving average. The low reading is quite rare, and history suggests better performance ahead.
9. The Week Ahead
Next week will mark the start of the Q2 earnings season, with PepsiCo (PEP), JP Morgan (JPM), and Morgan Stanley (MS) reporting quarterly results.
Key economic reports for the week ahead will give us more insights into inflation. Notably, the Consumer Price Index report for June is released on Wednesday.
10. My Weekly Stock Pick
This week, our stock pick was MRK, and the stock was up 0.4% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 9% cumulatively (no leverage, buy and hold five days), and our options trading is up 149%.
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 #27 of 2022 (July 5 - 8).
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Have a lovely trading week,
My Weekly Stock
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