My Weekly Stock Debrief (Oct 10 - 14)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #41 of 2022 (Oct 10 - 14), our weekly newsletter recapping the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 1.6% and the NASDAQ 3.2%; however, the Dow Jones was up 1.2%.
We just finished another volatile and frustrating trading week as investors digested the latest inflation data. On Thursday, consumer prices for September came in over the estimates, causing the equity markets to fall sharply. The indexes soon recovered with a 5.5% rally, for one the largest intra-day move in years. Unfortunately, the markets fell again on Friday, wiping out all of the week's gains, with only defensive sectors showing some strength. The SP500 index has given back almost half its gains since the March 2020 lows.
The week ahead will be relatively quiet regarding economic data, with the focus shifting to the Q3 earnings season. Many well-known firms, including Goldman Sachs, P&G, and Tesla, are scheduled to report quarterly earnings in the coming days.
And while we may see more rallies like the one on Thursday, the trend remains negative, with sentiment and technicals firmly bearish, inflation still at elevated levels, and no hint of a policy shift from the Fed.
2. SP500 Sector Performance
Only 3 out of the 11 SP500 sectors closed the week higher. Consumer Defensive led and closed up 1.6%. Consumer Cyclical and Technology lagged and finished down 3.8% and 3.3%, respectively.
Year-to-date, only 1 sector is positive. Despite the volatility, energy remains the indisputable winner of 2022 with a 45% gain. Communication Services and Real Estate are the worst performers in 2022.
3. SP500 Heatmap
Only 37% of the SP500 stocks were up in the last 5 trading days.
Best performers:
Moderna, Inc. (MRNA, 12%),
Amgen Inc. (AMGN, 10%)
Viatris Inc. (VTRS, 9%)
Worst performers:
Wynn Resorts (WYNN, -23%)
First Republic Bank (FRC, -18%)
Las Vegas Sands Corp. (LVS, -17%)
4. SP500 Breadth
Momentum is still weak in the SP500. More than 80% of the index components trade below their 50, and 200-day moving averages.
We again had more 52-week lows (188) than highs (7), with almost 40% of the SP500 stocks making a new low.
Read more about moving averages
5. SP500 Daily Chart
Technical indicators are bearish, with the SP500 below its 20, 50, and 200-day moving averages. We would need a sustained rally and a reclaim of the moving averages before having confidence this bear market is over.
The MACD shows early signs of a potential reversal but requires more confirmation. The RSI is at 38, almost unchanged vs. the previous 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 “Extreme Fear” level (21), flat vs. the previous week. The VIX was up 2% and remained above 32, still implying a very 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 56% of the respondents had a bearish market outlook, nearly unchanged from the previous week but still largely above historical levels.
7. Our Earnings Chart of the Week
Netflix (NFLX) is reporting its quarterly results next week. The stock performance after releasing earnings was positive in 3 of the past 12 quarters. The average 1-day return was -5.2%, for an average move of +/- 9.7% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
The week ahead will be one of the busiest of the corporate earnings season. Several well-known corporations, including Goldman Sachs, Tesla, and Procter & Gamble, are set to report quarterly results.
We will have a relatively calm week regarding economic data in the US. As for the rest of the world, China will report third-quarter GDP data on Monday, while the UK will issue September inflation numbers on Wednesday.
10. My Weekly Stock Pick
This week, our stock pick was MRK, and the stock was up 2.5% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 2% 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 #41 of 2022 (Oct 10 - 14).
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Have a great trading week,
My Weekly Stock
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