My Weekly Stock Debrief (May 23 - 27)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #21 of 2022 (May 23 -27), our weekly newsletter reviewing the stock market performance.
Subscribe to receive this newsletter directly into your mailbox every week!
1. Market Performance
The equity markets were up for the week, with the SP500 gaining 6.6%, the Dow Jones 6.2%, and the NASDAQ 6.8%. The Dow Jones finally broke its 8-week losing streak, the longest since 1923. Strong earnings from retail stocks and a slowing inflation report lifted the market. The Personal Consumption Expenditures (PCE) index for April increased 4.9% year-over-year, in line with expectations but a deceleration vs. the 5.3% in March. The PCE index is one of the inflation data most watched by the Fed.
After weeks of bearish sentiment and technicals, the markets were due for a bounce. We will need more follow-through to confirm if we have seen the bottom or if this is just a bear-market rally.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week higher. This week, Energy and Consumer Cyclical led and were up more than 8%. Communication Services and Health Care lagged but still added 3.8% and 3.3%, respectively.
Only 2 sectors are 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, and down more than 20%.
3. SP500 Top / Bottom Stock Performers
Dollar Tree(DLTR), Ulta Beauty (ULTA), and Dollar General (DG) were the best performers of the SP500 this week. All 3 stocks rallied after releasing upbeat quarterly earnings and outlooks.
Meanwhile, Dexcom (DXCM) lost 10% after several news outlets announced the company was in advance talks to acquire the medical-device company Insulet Corp.
4. SP500 Breadth
Momentum improved significantly, with 45% of the stocks now trading above their 50-day moving averages, improving 31 points vs. the previous week. While the rally was broad-based, 74% of the index is still in correction territory vs. their 52-week highs.
5. SP500 Daily Chart
Technical indicators improved in the last five days, with the SP500 reclaiming its 20-day moving average and both RSI and MACD on a rising trend. This rally has good potential to continue next week, but we will watch for the next major test ahead with the 50-day moving average.
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 (21), a 10-point increase vs. the previous week, and the VIX closed at 25.
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 54% of the respondents had a bearish market outlook, remaining 20-points higher than the historical average.
7. Our Earnings Chart of the Week
Salesforce (CRM) is reporting earnings next week. In the past 12 quarters, the 1-day stock performance post-earnings were positive 50% of the time, for a 0.6% return and an average move of 6% on the day of earnings.
8. Our Favorite Analysis of the Week
Ryan Detrick analyzed past instances of the SP500 gaining more than 6% in a week and concludes that these performances typically signal the start of a strong uptrend.
9. The Week Ahead
Next week, earnings releases are expected from more Tech stocks, with Salesforce (CRM) and Broadcom (AVGO).
https://www.financegreater.com/earnings-calendar
Key economic reports for the week ahead will give us more insights into the Labor market's strength. Notably, the nonfarm payroll report for May is released on Friday.
10. My Weekly Stock Pick
This week, our stock pick was Merck (MRK), and the stock closed down 0.5% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 27% cumulatively (no leverage, buy and hold five days), and our options trading is up 161%.
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 #21 of 2022 (May 23 -27).
If you enjoy reading our newsletter, please share it via the link below:
You can also follow us on Twitter where we post many more charts during the week.
Have a lovely trading week,
My Weekly Stock
Disclaimer
My Weekly Stock shares information and content on our websites, social networks, or newsletters only for educational purposes. The information contained in our publications has been prepared based on publicly available information and proprietary research. The author does not guarantee the correctness, accuracy, or completeness of the information provided.
All information provided by My Weekly Stock or its affiliates is impersonal and not tailored to your needs, your investment objectives, or your financial situation. Nothing contained in the report shall constitute financial advice or an investment recommendation.
You are solely responsible for your own investment decisions. We recommend consulting with a registered investment advisor, broker-dealer, or financial advisor. If you choose to invest, with or without seeking advice, then any consequences resulting from your investments are your sole responsibility. We are neither liable nor responsible for any profits or losses arising from any investment decision you have taken or made based on information we provide on our websites, social networks, or newsletters.
By using this site, newsletter, or any information provided herein, you indicate your consent and agreement to the terms of this disclaimer.