My Weekly Stock Debrief (Nov. 7-11)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #45 of 2022 (Nov. 7-11), 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 5.9%, the Dow Jones 4.1%, and the NASDAQ 8.8%.
The indexes climbed after a lower-than-expected inflation report fueled speculations of a less aggressive Federal Reserve. The October consumer price index (CPI) came in below expectations at 0.4%, bringing the year-over-year increase to 7.7%. While inflation remained elevated, it was the lowest monthly reading since January.
Technology and internet-related stocks profited the most from the market's rebound, as they are typically the most sensitive to changes in interest rates. This rally has room to run further, and the SP500 seems poised to test its 200-day moving average (currently at 4,080). The reaction of the index around that level will be critical for the rally's future.
Next week will bring significant updates on consumer strength, with numerous retailers releasing earnings, including Walmart, Target, and Home Depot. At the same time, the Retail Sales report for October is expected on Wednesday.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week higher. Technology led and closed up 10%, while Utilities lagged but finished up 1.5%.
Year-to-date, only 1 sector is positive. Despite the volatility, energy remains the indisputable winner of 2022 with a 68% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
84% of the SP500 stocks were up in the last 5 trading days.
Best performers:
SolarEdge Technologies, Inc. (SEDG, 32%)
T. Rowe Price Group, Inc. (TROW, 30%)
DISH Network Corporation (DISH, 27%)
Worst performers:
Cboe Global Markets, Inc. (CBOE, -10%)
McKesson Corporation (MCK, -10%)
Dominion Energy, Inc. (D, -8%)
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 (41) than new lows (27).
Read more about moving averages
5. SP500 Daily Chart
The technical indicators for the SP500 are improving and turning bullish. This week, the index recovered its 50-day moving average. The MACD indicator is also positive and firmly above its signal line.
The 200-day SMA (now at 4,080) 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 (63), 5 points higher than the previous week. The VIX fell 8% to close at 22, 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 47% of the respondents had a bearish market outlook, a significant deterioration from the previous week. However, the survey needs to capture the impact of the strong rally on Thursday.
7. Our Earnings Chart of the Week
Walmart (WMT) is reporting its quarterly results next week. The stock performance after releasing earnings was NEGATIVE in 8 of the past 12 quarters. The average 1-day return was -1.1%, for an average move of +/- 3.2% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
So far, 460 SP500 companies have reported Q3 2022 earnings. 71% have exceeded analysts' projections, which is 8 points lower than the previous four-quarter average.
Next week, Walmart, Target, and Home Depot are set to release quarterly results for the last big week of corporate earnings as the season winds down.
The October retail sales figures, released on Wednesday, will provide insights into how consumers fared in the previous month, just as the holiday season approaches.
10. My Weekly Stock Pick
This week, our stock pick, Chevron (CVX), was up 2.2% (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 Industrials 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 #45 of 2022 (Nov. 7-11).
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Have a great trading week,
My Weekly Stock
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