My Weekly Stock Debrief (Oct 31 - Nov 4)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #44 of 2022 (Oct 31 - Nov 4), our weekly recap of the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 3.4%, the Dow Jones 1.4%, and the NASDAQ 6.0%. Following a generally underwhelming earnings season, the big tech companies continued showing weakness, with Apple, Alphabet, and Amazon all falling more than 10% this week.
The Fed hiked interest rates by another 75bps, raising its benchmark rate to 3.75%-4%, the highest level since 2008. Although the increase was widely anticipated, Powell's remarks put a stop to hopes of a monetary policy shift occurring soon. The chairman notably stated that a pause in rate hikes was "very premature » at this stage.
With the Fed meeting behind us and 85% of S&P 500 companies having reported their earnings, attention will shift to economic data, starting with the CPI inflation report due Thursday. The US midterm elections on Tuesday may also cause extra volatility in the upcoming week.
2. SP500 Sector Performance
Only 3 out of the 11 SP500 sectors closed the week higher. Energy led and closed up 2.4%, while Communication Services lagged and finished down 6.7%.
Year-to-date, only 1 sector is positive. Despite the volatility, energy remains the indisputable winner of 2022 with a 65% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
Only 36% of the SP500 stocks were up in the last 5 trading days.
Best performers:
Abiomed, Inc. (ABMD, 45%)
Wynn Resorts, Limited (WYNN, 21%)
Hologic, Inc. (HOLX, 12%).
Worst performers:
Lincoln National Corporation (LNC, -36%)
Catalent, Inc. (CTLT, -36%).
Fidelity National Information Services, Inc. (FIS, -29%)
4. SP500 Breadth
75% of the SP500 components are trading above their respective 20-day moving averages, indicating positive short-term momentum is intact. Similarly, almost 60% of the SP500 stocks are trading above their 50-day moving averages.
This week also saw more new 52-week highs (49) than new lows (47).
Read more about moving averages
5. SP500 Daily Chart
The rally that began in October is still alive, but the bullish case has weakened, and the MACD shows early signals of a potential negative reversal.
However, if we can maintain the momentum from Friday, we may see another test of the 200-day moving average. Regaining that level has often marked the end of bear markets. And the index's failure to re-capture the 200-day moving average in August triggered a selloff and resulted 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 (58), mostly in line with the previous week. The VIX fell 5% to close at 24, 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 33% of the respondents had a bearish market outlook, a significant improvement from the previous week and now in line with the historical average.
7. Our Earnings Chart of the Week
Occidental Petroleum (OXY) 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 -3.3%, for an average move of +/- 4.3% on earnings day.
8. Best Tweets of the Week
9. The Week Ahead
We are approaching a calmer time for earnings releases, as approximately 85% of S&P 500 companies have already reported quarterly results. So far, 70% have outperformed EPS estimates, compared to a 5-year average of 77%. Among the companies set to report next week are The Walt Disney Company (DIS), Activision Blizzard (ATVI), and DuPont (DD).
The October CPI inflation report, due on Thursday, will provide an update on consumer pricing trends and how they may affect the Federal Reserve's monetary policy. The US midterm election on Tuesday will also likely bring some more volatility.
10. My Weekly Stock Pick
This week, our stock pick was Amgen Inc. (AMGN), down 0.1% (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 Energy 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 #44 of 2022 (Oct 31 - Nov 4).
If you enjoy reading our newsletter, please share it via the link below:
You can also follow us on Twitter and Instagram, where we post many more charts during the week.
Have a great trading week,
My Weekly Stock
Disclaimer
My Weekly Stock shares information and content on our websites, social networks, or newsletters only for educational purposes. The information contained in our publications has been prepared based on publicly available information and proprietary research. The author does not guarantee the information's correctness, accuracy, or completeness.
All information provided by My Weekly Stock or its affiliates is impersonal and not tailored to your needs, your investment objectives, or your financial situation. Nothing contained in the report shall constitute financial advice or an investment recommendation.
You are solely responsible for your own investment decisions. We recommend consulting with a registered investment advisor, broker-dealer, or financial advisor. If you choose to invest, with or without seeking advice, then any consequences resulting from your investments are your sole responsibility. We are neither liable nor responsible for any profits or losses arising from any investment decision you have taken or made based on information we provide on our websites, social networks, or newsletters.
By using this site, newsletter, or any information provided herein, you indicate your consent and agreement to the terms of this disclaimer.