My Weekly Stock Debrief (Nov. 21-25)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #47 of 2022 (Nov. 21-25), our weekly recap of the stock market performance.
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1. Market Performance
The equity markets were up for the week, with the SP500 gaining 1.5%, the Dow Jones 1.8%, and the NASDAQ 1.2%.
The S&P 500 finished above the 4,000 level for the first time in two months on a holiday-shortened trading week. The rally has been fueled by good earnings reports from retail and technology companies and indications that the Federal Reserve is prepared to slow down its rate hikes.
According to minutes from the Federal Reserve's early-November meeting, a "substantial majority of participants" believed that slowing the pace of rate increases would be appropriate, even if the fed funds rate may end up higher than initially anticipated.
The non-farm payroll report and Cyber Monday next week will give us critical information on the health of the retail sector and the job market. We will receive yet another inflation measure with the PCE price index, the FED's preferred inflation measure. Technically, the SP500 is likely to test the 200-day moving average (currently at 4,057), and the index's reaction around that level will be critical for the rally's future..
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week higher. Utilities led and closed up 3.0%, while Energy lagged but finished up 0.3%.
Year-to-date, only 1 sector is positive. Despite the volatility, Energy remains the indisputable winner of 2022 with a 66% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
88% of the SP500 stocks were up in the last 5 trading days.
Best performers:
Ross Stores, Inc. (ROST, 18%)
Best Buy Co., Inc. (BBY, 16%)
STERIS plc (STE, 9%)
Worst performers:
Autodesk, Inc. (ADSK, -7%)
Dollar Tree, Inc. (DLTR, -8%)
Diamondback Energy, Inc. (FANG, -8%)
4. SP500 Breadth
90% 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 (32) 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 4,057) 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 (64), 3 points higher than the previous week. The VIX was down 11% to close at 20, 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, unchanged from the previous week. The market sentiment is normalizing back to historical averages.
7. Our Earnings Chart of the Week
Intuit (INTU) is reporting its quarterly results next week. The stock performance after releasing earnings was positive in 7 of the past 12 quarters. The average 1-day return was +1.4%, for an average move of +/- 3.3% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
So far, 485 stocks of the SP500 have reported Q3 2022 earnings. 71% have exceeded analysts' projections on EPS, which is 7 points lower than the previous four-quarter average.
Next week, Salesforce (CRM), Dollar General (DG), and Kroger (KR) are set to release quarterly results as the corporate earnings season winds down.
Next week, we are in for some important economic data. Cyber Monday will give us a peek into the health of the retail sector. On Thursday, the FED's preferred inflation indicator, the PCE Price Index, will be released, providing an update on consumer inflation. On Friday, the Labor Department will release non-farm payrolls, showing how robust the labor market is.
10. My Weekly Stock Pick
This week, our stock pick, Merck (MRK), was up 2.4% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 9% 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 #47 of 2022 (Nov. 21-25).
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Have a great trading week,
My Weekly Stock
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