My Weekly Stock Debrief (Nov. 14-18)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #46 of 2022 (Nov. 14-18), our weekly recap of the stock market performance.
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1. Market Performance
The equity markets were down for the week, with the SP500 losing 0.7% and the NASDAQ 1.2%, while the Dow Jones was flat.
Despite early signs of inflation easing, markets were influenced by recent comments from FED officials that the aggressive monetary policy may still be ongoing. According to St. Louis Federal Reserve President James Bullard, the optimal target for the federal funds rate could be as high as 7%. Another Fed member also said a 75-basis-point rate hike in December was not out of the question.
While next week will be short due to Thanksgiving, we will still get significant updates with the FED meeting minutes and the November consumer confidence index. Technically, I continue to believe the SP500 will test the 200-day moving average (currently at 4,067). The index's reaction around that level will be critical for the rally's future.
2. SP500 Sector Performance
Only 3 out of the 11 SP500 sectors closed the week higher. Consumer Defensive led and closed up 1.6%, while Consumer Cyclical lagged and finished down 2.8%.
Year-to-date, only 1 sector is positive. Despite the volatility, energy remains the indisputable winner of 2022 with a 65% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
40% of the SP500 stocks were up in the last 5 trading days.
Best performers:
Ross Stores, Inc. (ROST, 12%)
Jack Henry & Associates, Inc. (JKHY, 7%)
Lincoln National Corporation (LNC, 7%)
Worst performers:
Advance Auto Parts, Inc. (AAP, -21%)
Albemarle Corporation (ALB, -15%)
Live Nation Entertainment, Inc. (LYV, -14%)
4. SP500 Breadth
More than 80% of the SP500 components are trading above their respective 20 and 50-day moving averages, indicating a positive short-term momentum.
This week also saw more new 52-week highs (20) than new lows (6).
Read more about moving averages
5. SP500 Daily Chart
The technical indicators for the SP500 remain on the bullish side. The index is trading above its 20 and 50-day moving averages, and the MACD indicator is also above its signal line.
The 200-day SMA (now at 4,067) may be the next significant resistance, and the index reaction at that level will be critical for this rally. The failure of the index to re-capture the 200-day moving average in August started a selloff, resulting in new 2022 lows.
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 "Greed" level (62), 3 points lower than the previous week. The VIX was up 3% to close at 23, still indicating a high level of market uncertainty.
AAII Investor Sentiment Survey
The American Association of Individual Investors surveys its members each week 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 40% of the respondents had a bearish market outlook, improving from the previous week. The market sentiment is normalizing back to historical averages.
7. Our Earnings Chart of the Week
Best Buy (BBY) is reporting its quarterly results next week. The stock performance after releasing earnings was positive in 6 of the past 12 quarters. The average 1-day return was -0.9%, for an average move of +/- 6.1% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
So far, 475 SP500 companies have reported Q3 2022 earnings. 70% have exceeded analysts' projections on EPS, which is 9 points lower than the previous four-quarter average.
Next week, Zoom (ZM), Medtronic (MDT), and John Deere (DE) are set to release quarterly results for a short week of corporate earnings as the season winds down.
Due to the Thanksgiving holiday on Thursday, the US financial markets will have a short trading week. The Federal Reserve will release the minutes from its most recent meeting, and we expect an ongoing discussion regarding the future direction of interest rates.
The November Consumer Sentiment Index (MSCI) announced on Wednesday by the University of Michigan will provide insight into consumer strength. Black Friday will also mark the beginning of the holiday season and provide further insights into consumer confidence and the retail industry.
10. My Weekly Stock Pick
This week, our stock pick, Caterpillar (CAT), was down 1.9% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 6% cumulatively (no leverage, buy and hold for five days), and our options trading is up 135%.
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 Monday before the markets open. In the meantime, you can learn more about our trading approach in the article below:
Read more about our trading approach here.
That’s all for My Weekly Stock’s debrief for week #46 of 2022 (Nov. 14-18).
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Have a great trading week,
My Weekly Stock
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