My Weekly Stock Debrief (Oct 3 - 7)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #40 of 2022 (Oct 3 - 7), our weekly newsletter recapping the stock market performance.
1. Market Performance
The equity markets were up for the week, with the SP500 gaining 1.5%, the Dow Jones 2.0%, and the NASDAQ 0.6%. In yet another highly volatile trading week, the SP500 still managed to post a weekly gain behind a strong rally on Monday and Tuesday. However, as the week went on, more pessimism began to accumulate.
As a result of OPEC+'s production reduction announcement, oil surged, posting its highest weekly gain since March and finishing at $93 per barrel. Friday's nonfarm payroll report confirmed labor market remains strong. All this somewhat decreased the likelihood that the Fed will slow down its tightening monetary policy and that a pivot might be on the horizon. In addition, companies like Levi Strauss and AMD lowered their outlook, further weighing on market sentiment.
Looking ahead to next week, important data will shape the markets actions in the short term. The Q3 earnings season will begin with big banks and financial organizations. Consumer and producer inflation (CPI / PPI), retail sales, and consumer confidence will also be published. Additionally, on Wednesday, the minutes from the most recent FED meeting will be made public.
2. SP500 Sector Performance
7 out of the 11 SP500 sectors closed the week higher. Energy led and closed up 14%. Utilities and Real Estate lagged and finished down 2.7% and 4.1%.
Year-to-date, only 1 sector is positive. Despite the recent volatility, energy remains the indisputable winner of 2022 with a 47% gain. Communication Services and Real Estate are the worst performers in 2022.
3. SP500 Heatmap
74% of the SP500 stocks were up in the last 5 trading days. The best performers were DexCom (DXCM, 27%), APA Corporation (APA, 24%), and Marathon Oil Corporation (MRO, 24%)
The worst performers were Tesla (TSLA, -16%), Generac Holdings (GNRC, -13%), and SolarEdge Technologies (SEDG, -9%).
4. SP500 Breadth
Momentum and breadth are bearish for the SP500. More than 80% of the index components trade below the 20, 50, and 200-day moving averages.
We again had more 52-week lows (91) than highs (3), despite the substantial gains early in the week.
Read more about moving averages
5. SP500 Daily Chart
The technical indicators are bearish, with the SP500 below its 20, 50, and 200-day moving averages. Despite the substantial gains early this week, we are not yet confident we are done with this bear market.
The MACD shows early signs of a potential reversal, but it requires more confirmation, especially after the Thursday / Friday sell-off. The RSI is at 37, improving 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 (22), a 7-point improvement vs. the previous week. The VIX was flat but remained above 31, 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 55% of the respondents had a bearish market outlook, a 6-point improvement from the previous week but still largely above historical levels.
7. Our Earnings Chart of the Week
UnitedHealth Group (UNH) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 8 of the past 12 quarters, for a 1-day return of +2.1% and an average move of +/- 2.9% on the earnings day.
8. Best Tweets of the Week
9. The Week Ahead
Big banks and financial institutions will kick off the Q3 earnings season. JPMorgan Chase, BlackRock, and Morgan Stanley will notably report quarterly results next week.
We will have a heavy week in terms of economic data. Consumer and producer inflation (CPI / PPI), retail sales, and consumer confidence will all be published next week. In addition, the minutes from the last FED meeting will be released on Wednesday.
10. My Weekly Stock Pick
This week, our stock pick was UNH, and the stock was down 0.4% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are down 1% 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 Sunday. In the meantime, you can learn more about our trading approach in the article below:
Read more about our trading approach here.
And remember to subscribe to My Weekly Stock to receive our stock picks, trading plan, and buy/sell alerts directly in your mailbox.
That’s all for My Weekly Stock’s debrief for week #40 of 2022 (Oct 3 - 7).
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Have a lovely trading week,
My Weekly Stock
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