My Weekly Stock Debrief (Oct 24 - 28)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #43 of 2022 (Oct 24 - 28), our weekly recap of the stock market performance.
1. Market Performance
The equity markets were up for the week, with the SP500 gaining 4.0%, the Dow Jones 5.7%, and the NASDAQ 2.1%. Despite major losses in several large technology stocks, including Amazon, Alphabet, and Meta, US equities rose sharply, extending the previous week's solid gains.
Sentiment continues to be boosted by speculation that the Fed may soon slow down the pace of interest rate hikes. The Bank of Canada's decision to increase rates by 50 basis points, rather than the widely expected 75 basis points, was seen as a further sign that the rate hike cycle may soon end.
With so much hope centered on a potential policy shift by central banks, next week's FED meeting will be important for this rally. On Wednesday, the FED will announce its decision, and investors will be interested in any hints about future increases.
From a technical perspective, the 200-day moving average is a clear magnet for the SP500, and the index's reaction around that critical level will indicate its trend for the coming weeks.
2. SP500 Sector Performance
10 out of the 11 SP500 sectors closed the week higher. Industrials led and closed up 6.7%, while Communication Services lagged and finished down 2.2%.
Year-to-date, only 1 sector is positive. Despite the volatility, energy remains the indisputable winner of 2022 with a 61% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
90% of the SP500 stocks were up in the last 5 trading days.
Best performers:
Universal Health Services, Inc. (UHS, 30%)
DexCom, Inc. (DXCM, 26%)
Enphase Energy, Inc. (ENPH, 21%)
Worst performers:
Meta Platforms, Inc. (META, -24%)
DaVita Inc. (DVA, -22%)
Edwards Lifesciences Corporation (EW, -16%)
4. SP500 Breadth
Nearly 90% of the SP500 components are trading above their respective 20-day moving averages, indicating positive short-term momentum. Similarly, almost two-thirds of stocks in the SP500 are trading above their 50-day moving averages.
This week also saw more new 52-week highs (42) than new 52-week lows (24).
Read more about moving averages
5. SP500 Daily Chart
The SP500's technical indicators are improving. Following the previous week's regain of the 20-day moving average, the index reclaimed the 50-day one on Friday. The 200-day moving average, presently just above the 4,000 level, will be the ultimate test for this rally. Historically, this critical technical level has often signaled the end of bear markets. Similarly, The index's failure to recapture the level in August precipitated a selloff and brought new lows for 2022.
The MACD is bullish, with the indicator well above its signal line.
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 (16), an impressive 16-point gain from the previous week. The VIX fell 13% toclose at 25, 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 46% of the respondents had a bearish market outlook, a strong improvement from the previous week but still largely above historical levels.
7. Our Earnings Chart of the Week
Qulacomm (QCOM) 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 +4.0%, for an average move of +/- 7.2% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
The Q3 earnings season will continue in the week ahead. Several healthcare companies are set to report quarterly results, including Pfizer, Eli Lilly, and Amgen Inc.
Beginning Tuesday, the Federal Reserve will hold a two-day policy meeting, at which it will announce its interest rate decision on Wednesday. Nonfarm payroll data for October will also be of particular interest, as it will shed light on the labor market's strength.
10. My Weekly Stock Pick
This week, our stock pick was Merck & Co. (MRK), and the stock was up 4.5% (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 #43 of 2022 (Oct 24 - 28).
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Have a great trading week,
My Weekly Stock
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