My Weekly Stock Debrief (June 13 - 17)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #24 of 2022 (June 13 - 17), our weekly newsletter reviewing the stock market performance.
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1. Market Performance
The equity markets were down for the week, with the SP500 losing 5.8%, the Dow Jones 4.8%, and the NASDAQ 4.8%. The SP500 declined in 10 of the past 11 weeks, with a broad-based sell-off touching all sectors and market caps.
The Federal Reserve increased its benchmark rate by 75bps on Wednesday, its most significant hike since 1994, while leaving on the table the option of another 3-quarter point hike in July. The FED showed its resolution to combat inflation; however, the market seems to doubt the Central bank can manage a soft landing, i.e., reduce inflation without leading the US economy into a recession.
While we may get relief rallies here and there, the outlook for equity indexes is bearish until we see signals that inflation is topping off and the economy remains strong.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week lower. Technology and Consumer Defensive led this week but finished down 4.9% and 4.3%. Energy and Utilities lagged and declined 17% and 9%, respectively.
Only 1 sector is positive year-to-date. Energy remains the indisputable winner of 2022 with a 32% gain. Communication Services and Consumer Cyclical are the worst performers in 2022, down more than 30%.
3. SP500 Heatmap
97% of the SP500 was down on the last five trading days. The few green spots on the index were Industrials. FedEx (FDX) was the best performer this week after the company raised its dividend by 53% and reached an agreement with the activist hedge fund D.E. Shaw
Meanwhile, Energy stocks sold off hard, with Oil prices down 8% this week due to concerns about the demand outlook.
4. SP500 Breadth
Momentum and breadth are incredibly bearish for the SP500. Nine stocks out of ten are trading below their respective 200 moving average and 98% below the 50-day.
Half of the index made a new 52-week low in the last 5 days, leaving little place to hide for long traders.
5. SP500 Daily Chart
Technical indicators are bearish, with the SP500 trading below its 20, 50, and 200-day moving average. RSI is currently at 31 and close to flashing an oversold signal. While we may get a relief bounce, the index needs to reclaim its key trend lines before we can be confident a short-term low has been struck.
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 “Extreme Fear” level (14), a 10-point drop vs. the previous week. The VIX closed at 31, implying a very 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 58% of the respondents had a bearish market outlook, significantly deteriorating from the previous week. The indicator is very close to making another low for the year.
7. Our Earnings Chart of the Week
FedEx (FDX) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 6 of the past 12 quarters, for a daily return of -0.8% and an average move of +/- 7% on the earnings day.
8. Our Favorite Analysis of the Week
Energy is the only green sector in 2022 and provided most of our winning trades, at least before this week. The sector ETF closed the week down 17% and just had its worst week since March 2020. As Mark Ungewitter reminds us, bear markets typically leave no place to hide for investors.
9. The Week Ahead
Next week, few earnings releases are expected as the earnings season comes to an end, with FedEx (FXX), Accenture (ACN), and Darden Restaurant (DRI) reporting quarterly results.
https://www.financegreater.com/earnings-calendar
The Federal Reserve Chairman is scheduled to address the Congress on Tuesday and Wednesday and will provide more perspectives after the last FED meeting. We will also get more insights about consumer strength with the University of Michigan's Consumer Sentiment Index (MSCI) for June, published on Friday.
10. My Weekly Stock Pick
This week, our stock pick was XOM, and the stock closed down 12% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 5% cumulatively (no leverage, buy and hold five days), and our options trading is up 148%.
Access our performance tracking here.
We will trade a stock in the Technology 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 #24 of 2022 (June 13 - 17).
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Have a lovely trading week,
My Weekly Stock
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