My Weekly Stock Debrief (June 6 - 10)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #23 of 2022 (June 6 - 10), 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 5.1%, the Dow Jones 4.6%, and the NASDAQ 5.7%. It was again a very frustrating week for investors. Like many times this year, the equity indexes traded in a range, trapping both bulls and bears, before finally losing support and selling off hard on Friday. The SP500 declined in 9 of the past 10 weeks.
A worst-than-expected inflation report has upped the expectations of a faster-tightening cycle by the FED. The 10-Year rate increased significantly and closed at 3.17%.
With the technical and momentum indicators again bearish, the SP500 seems poised to retest its 2022 low and may this time officially enter into a bear market. The Fed meeting and its rate decision on Wednesday will give us more clues about the market direction in the next few weeks.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week lower. Energy and Consumer Defensive led this week but finished down 0.9% and 2.6%. Financials and Technology lagged and declined 6.7% and 6.4%, respectively.
Only 1 sector is positive year-to-date. Energy remains the indisputable winner of 2022 with a 60% gain. Communication Services and Consumer Cyclical are the worst performers in 2022, down almost 30%.
3. SP500 Heatmap
94% of the SP500 was down on the last 5 trading days. The few green spots on the index were Consumer Goods or Energy. JM Smucker (SJM) was the best performer this week, gaining 4.6% thanks to solid quarterly results.
Meanwhile, Cyclicals and Technology sold off hard. Notably, cruise stocks were down double-digit.
4. SP500 Breadth
Momentum and breadth remain bearish for the SP500. Only one-quarter of the index components are trading above their respective 200 moving average and only 12% above the 50-day.
While 19 stocks of the SP500 made new highs this week, there are almost all energy stocks, and most lost their weekly gains with the Friday sell-off.
5. SP500 Daily Chart
Technical indicators turned bearish again, with the SP500 breaking below its 20-day moving average. MACD and RSI are both on a declining trend but not quite oversold yet. Overall, it’s likely we will see another test of the 2022 low in the coming week.
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 (28), mostly in line vs. the previous week. The VIX closed at 28, 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, significantly deteriorating from the previous week, but still with a margin vs. the 2022 high at 59%.
7. Our Earnings Chart of the Week
Oracle (ORCL) 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 1.6% and an average move of +/- 6% on the earnings day.
8. Our Favorite Analysis of the Week
Friday was the 20th time in 2022 we got a 2% daily move (up or down) on the SP500. In comparison, we had only 7 days at +/- 2% in the whole of 2021. Reasons more to trade carefully in this environment (reduce position size and leverage, don’t overtrade).
9. The Week Ahead
Next week, earnings releases are expected from more Tech and consumer stocks, with Oracle (ORCL), Adobe (ADBE), and Kroger (KR) reporting quarterly results.
https://www.financegreater.com/earnings-calendar
Next week's highlight will be the Federal Reserve 2-day meeting, with the rate decision expected on Wednesday afternoon. While the market expects a 50-bps increase, the recent robust economic reports and hot inflation numbers could force the FED to go beyond and/or faster in its rate-hiking cycle.
10. My Weekly Stock Pick
This week, our stock pick was IBM, and the stock closed down 4.7% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 19% cumulatively (no leverage, buy and hold five days), and our options trading is up 150%.
Access our performance tracking here.
We will trade a stock in the Energy sector for the week ahead. Our stock pick will be released later 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 #23 of 2022 (June 6 - 10).
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Have a lovely trading week,
My Weekly Stock
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