My Weekly Stock Debrief (Sep 12-16)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #37 of 2022 (Sep 12-16), our weekly newsletter recapping the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 4.8%, the Dow Jones 4.1%, and the NASDAQ 5.8%.
In last week's newsletter, I expected to see some softness and heightened volatility, and the market delivered on both. Markets were up firmly on Monday before posting their worst 1-day performance since June 2020 on Tuesday. The sell-off came after the CPI report for August came in ahead of expectations. With inflation not showing a firm sign of cooling down, the markets fear the FED will continue with its aggressive monetary policy.
It is fair to assume we will see another week of high volatility, especially with the Federal Reserve meeting next week. Recent declarations from FED members and the latest economic data all point to another aggressive rate increase, with 75bps the most probable outcome, while a 100 bps is not out of the table.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week lower. Health Care led but was still down 2.3%. Industrials and Materials lagged and finished down 6.4% and 6.6%.
Only 2 sectors are positive year-to-date. Despite the recent volatility, energy remains the indisputable winner of 2022 with a 41% gain.
ain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
Only 5% of the SP500 stocks were up in the last 5 trading days. The best performers were Royal Caribbean Cruises (RCL, 7%), APA Corporation (APA, 6%), and Norwegian Cruise Line Holdings Ltd. (NCLH, 5%).
The worst performers were Adobe Inc. (ADBE, -24%), FedEx Corporation (FDX, -23%), and Nucor Corporation (NUE, -18%).
4. SP500 Breadth
Momentum and breadth are bearish for the SP500. Three-quarters of the index trade below the 50 and 200-day moving averages.
We again had more 52-week lows (62) than highs (13), with the sell-off hitting many stocks this 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 and losing again the 50-day this week. We may still see new lows for the year until the index recovers these trend lines.
The MACD is still below its signal line, signaling that pain may not be over. The RSI is at 51, strongly decreasing vs. the previous week but not reaching an oversold level yet.
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 “Fear” level (36), a 9-point deterioration vs. the previous week. The VIX was up 15% and closed above 26, 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 46% of the respondents had a bearish market outlook, a 6-point improvement from the previous week. Still, this week's sell-off will heavily impact sentiment reading next week.
7. Our Earnings Chart of the Week
Darden Restaurants (DRI) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 8 of the past 12 quarters, for a positive 1-day return of +3.2% and an average move of +/- 6% on the earnings day.
8. Best Tweets of the Week
9. The Week Ahead
99% of the companies in the SP500 have already published Q2 earnings, with 75% reporting EPS ahead of estimates, slightly below the 80% historical average. Companies like General Mills (GIS), FedEx(FDX) andCostco(COST) will report next week.
The Federal Reserve, Bank of England, and Bank of Japan will all hold monetary policy meetings next week, and interest rate decisions will be in the spotlight. After the hot inflation report of this week, the probability of a 100bps rate increase by the FED has undoubtedly increased.
10. My Weekly Stock Pick
This week, our stock pick was AMGN, and the stock was down 2.9% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are up 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 #37 of 2022 (Sep 12-16).
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Have a lovely trading week,
My Weekly Stock
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