My Weekly Stock Debrief (Sep 19-23)
Dear subscribers,
Welcome to My Weekly Stock’s debrief for week #38 of 2022 (Sep 19-23), our weekly newsletter recapping the stock market performance.
1. Market Performance
The equity markets were down for the week, with the SP500 losing 4.7%, the Dow Jones 4.0%, and the NASDAQ 4.6%. The Dow Jones entered a bear market and reached a new low for 2022. Equity markets tumbled as concerns over economic recession increased, and the FED raised interest rates by another 75bps. The FED Chairman reaffirmed its commitment to curb inflation in the coming months.
As of now, 2022 is the 5th worst start in the history of US equities. The last four weeks have been brutal, with the sell-off affecting almost all stocks and industries equally, and 98% of the SP500 stocks decreasing.
The good news is that September, one of the historically weakest months, is almost over. Additionally, many sentiment and technical indicators are getting overly bearish, signaling this sell-off may be running out of steam and nearing its end.
As for next week, after the relentless selling of the previous few days, we might see a bounce. However, volatility is likely to stay high, particularly as Friday brings additional inflation updates for the US and the Eurozone.
2. SP500 Sector Performance
All the 11 SP500 sectors closed the week lower. Consumer Defensive led but was still down 2.7%. Energy and Consumer Cyclical lagged and finished down 10.2% and 7.3%.
Only 2 sectors are positive year-to-date. Despite the recent volatility, energy remains the indisputable winner of 2022 with a 27% gain. Communication Services and Consumer Cyclical are the worst performers in 2022.
3. SP500 Heatmap
Only 3% of the SP500 stocks were up in the last 5 trading days. The best performers were General Mills (GIS, 5%), Kellogg Company (K, 3%), and Allegion (ALLE, 3%).
The worst performers were Caesars Entertainment (CZR, -22%), APA Corporation (APA, -19%), and Carnival (CCL, -17%).
4. SP500 Breadth
Momentum and breadth are bearish for the SP500. Close to 90% of the index trade below the 50 and 200-day moving averages.
We again had more 52-week lows (162) than highs (13), with basically 1 stock out of 3 making a new low in the last 5 days.
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. The index is back to June’s low level, and we will likely break below before the end of this bear market.
The MACD is still below its signal line, with no sign of reversal yet. The RSI is at 29, strongly decreasing vs. the previous week but getting close to an oversold level.
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 (24), an 11-point deterioration vs. the previous week. The VIX was up 14% and closed almost at 30, 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 61% of the respondents had a bearish market outlook, a 15-point increase from the previous week. Note that this is one of the five highest bearish sentiment reading since 1987.
7. Our Earnings Chart of the Week
Nike (NKE) is reporting earnings next week. The 1-day stock performance post-earnings were positive in 7 of the past 12 quarters, for a 1-day return of 2.1% and an average move of +/- 6.4% 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 76% reporting EPS ahead of estimates, slightly below the 80% historical average. Companies like Nike (NKE), Micron (MU), and Bed Bath & Beyond (BBBY) will report next week.
More information on inflation is anticipated next week, including updates to the CPI for the Eurozone and the Personal Consumption Expenditures (PCE) index for the US, which is the Fed's preferred inflation indicator.
.10. My Weekly Stock Pick
This week, our stock pick was AMGN, and the stock was down 1.0% (Monday open to Friday close). In 2022, My Weekly Stock’s picks are flat 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 #38 of 2022 (Sep 19-23).
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Have a lovely trading week,
My Weekly Stock
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