My Weekly Stock Debrief (Oct 17 - 21)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #42 of 2022 (Oct 17 - 21), our weekly recap of the stock market performance.
1. Market Performance
The SP500 Index posted its largest weekly increase over four months, while the Dow Jones gained for the third week in a row. Markets rose after various reports suggested the Federal Reserve may slow the pace of interest rate hikes. Better-than-expected quarterly results also contributed to lifting sentiment.
While technical and sentiment indicators are improving, we are still far from turning outright bullish, and the coming week will already put this rally to the test.
Prepare for one of the busiest and most important weeks of the earnings season, with Apple, Amazon, Google, Microsoft, and Meta all set to report. The week ahead will also bring several economic reports for investors, including the preliminary estimate of the Q3 GDP and yet another inflation reading, with the PCE price index.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week higher. Energy led and closed up 8.3%. Utilities and Consumer Defensive lagged but finished up 1.9% and 2.0%, respectively.
Year-to-date, only 1 sector is positive. Despite the volatility, energy remains the indisputable winner of 2022 with a 56% gain. Communication Services and Real Estate are the worst performers in 2022.
3. SP500 Heatmap
86% of the SP500 stocks were up in the last 5 trading days.
Best performers:
Netflix, Inc. (NFLX, 26%)
Schlumberger Limited (SLB, 20%)
Intuitive Surgical, Inc. (ISRG, 19%)
Worst performers:
SVB Financial Group (SIVB, -28%)
Generac Holdings Inc. (GNRC, -20%)
M&T Bank Corporation (MTB, -13%)
4. SP500 Breadth
Momentum is positive short-term, with 2 out of 3 stocks in the SP500 above their respective 20-day moving average. However, more than 70% of the index components continue to trade below their 50 and 200-day moving averages.
Despite a significant improvement from the prior week, we still saw more 52-week lows (37) than highs (14).
Read more about moving averages
5. SP500 Daily Chart
Technical indications are negative, although improving. While the SP500 remains below its 50 and 200-day moving averages, Friday's rise lifted the index above the 20-day. I'd like to see all the moving averages reclaimed before calling an end to the bear market.
MACD has become more bullish, with the indicator crossing above its signal line, potentially implying this rally has further to run.
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 “Neutral” level (45), a stunning 24-point gain from the previous week. The VIX fell 7% to end below 30, 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 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
Microsoft (MSFT) is reporting its quarterly results next week. The stock performance after releasing earnings was positive in 8 of the past 12 quarters. The average 1-day return was +1.0%, for an average move of +/- 3.1% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
The coming week will likely be the most important of the corporate earnings season. Apple, Amazon, Microsoft, Alphabet, and Meta are all set to report quarterly results.
Several economic updates will be released in the week ahead, including the preliminary estimate for the third-quarter GDP and the PCE price index, which will be the final inflation data before the next FED meeting.
10. My Weekly Stock Pick
This week, our stock pick was AMGN, and the stock was up 0.2% (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 #42 of 2022 (Oct 17 - 21).
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Have a great trading week,
My Weekly Stock
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