My Weekly Stock Debrief (June 27 - July 1)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #26 of 2022 (June 27 - July 1), 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 2.2%, the Dow Jones 1.3%, and the NASDAQ 4.3%. The stock indexes rallied on Friday but still finished the week down, as high inflation, aggressive central bank tightening, and economic recession risks weighed on the markets.
The SP500 finished the first half down 20%, its worst performance since 1970, while the NASDAQ recorded its worst first-half ever, losing nearly 30%.
The markets are still facing many hurdles, and upcoming economic and inflation reports, earnings results, and guidance will be critical in the coming weeks. We expect volatility to remain high in the short trading week ahead, with FOMC meeting minutes released on Wednesday and the job report for June released on Friday.
2. SP500 Sector Performance
4 out of the 11 SP500 sectors closed the week higher. Utilities and Energy led this week, finishing up 4% and 1%, respectiely. Consumer Cyclical and Technology lagged and declined almost 5%.
Only 2 sector are positive year-to-date. Energy remains the indisputable winner of 2022 with a 31% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
Only 36% of the SP500 was up last week. Healthcare and Consumer Defensive stocks performed well. General Mills (GIS) closed up 7% after reporting strong quarterly earnings.
Meanwhile, Consumer cyclical lagged, and cruise stocks gave up all their previous week's gains after several analysts downgraded the sector. Morgan Stanley has a worst-case scenario for Carnival (CCL) stock going to $0, citing weak occupancy, pricing, and rising costs.
4. SP500 Breadth
Momentum and breadth remain bearish for the SP500. More than three-quarters of the SP500 stocks are trading below their respective 200 and 50-day moving average.
The number of new 52-week lows was still sizeable this week and only 6 stocks made a new high.
5. SP500 Daily Chart
Technical indicators are bearish, with the SP500 still trading below its 20, 50, and 200-day moving average.
RSI is currently at 44 and roughly flat last week, and we had a cross-up on the MACD, signaling potential further upside ahead.
The index will face important tests in the coming weeks, with the 20-day and 50-day moving average just above. Reclaiming these trend lines could confirm that a 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 (24), a 4-point deterioration vs. the previous week. The VIX was flat and closed at 27, 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, an improvement vs. the previous week but remaining largely above the historical average.
7. Our Earnings Chart of the Week
71 companies have already announced negative guidance for Q2, the highest number since 2019.
The next earnings season will be critical for the market. Investors will try to understand how inflation and economic recession affect Q2 earnings and, more importantly, companies’ outlook.
8. Our Favorite Analysis of the Week
The SP500 had its worst first half since 1962. On the good side, the worst five starts of the year all saw a positive performance in the year's second half.
9. The Week Ahead
Next week, no stock from the SP500 is reporting earnings, as the earnings season comes to an end.
We will also get more insights about job market strength, with the Labor Department’s nonfarm payrolls for June, published on Friday.
10. My Weekly Stock Pick
This week, our stock pick was IBM, and the stock closed down -0.8% (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 #26 of 2022 (June 27 - July 1).
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Have a lovely trading week,
My Weekly Stock
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