Weekly Market Recap (Jul. 24-28)
Everything you need to know about last week's markets performance and what to expect next
Dear subscribers,
Welcome to our weekly market recap!
Navigating the markets can be overwhelming, but I'm here to provide you with the latest updates and actionable insights to help you succeed. Whether you're an experienced investor or just starting out, my recap has something for everyone.
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SUMMARY
Here are this week's highlights and what to look out for next:
1. The markets were positive for the week, with the S&P 500 up 1.0%, the Dow Jones 0.7%, and the Nasdaq 2.0%. Communication Services (+4.9%) and Energy (+1.8%) were the best-performing sectors.
2. The stock indices were positive, driven by solid earnings from Meta and Alphabet, no surprises from the Fed, and robust GDP data.
3. The long-term trend for the S&P 500 is positive, and the next significant resistance is at 4,600, while support is at 4,500.
4. The Q2 earnings season is picking up steam, and 254 companies from the S&P 500 index have already released their 2nd quarter results, with 79% beating estimates so far. Earnings are expected to be down 6% in Q2 2023 and up 1% in 2023.
5. Earnings reports from Apple and Amazon are scheduled for next week, as is an update on the job market with the Non-Farm Payroll report.
My take:
While we enjoyed another positive week, volatility was high, and the S&P 500 struggled to break above the 4,600 resistance. On Thursday, the index briefly surged above 4,600, only to quickly give away all gains, reminding us that markets are never straightforward.
I expect volatility to remain high next week, especially with many critical earnings reports, including from Apple. As always, zooming out and focusing on key levels is essential. In this case, a sustained break above 4,600 will be a bullish development, while we need to support at 4,500. Anything in between, I consider as mere noise.
My view remains unchanged on a longer time frame: I still believe that the S&P 500 will eventually test its all-time high at 4,800 in the coming months. However, this week showed us that the journey to new highs may be challenging.
PERFORMANCE RECAP
1. SP500 Sector Performance
Over the week, 7 of the S&P 500 sectors have achieved gains. Communication Services led the way and rose by 4.9%. By contrast, Utilities was the weakest, and fell by 2.1%.
Year-to-date, 8 sectors have seen positive results. Technology has been the most successful sector, with a 43% gain. On the other hand, Utilities has been trailing behind.
2. S&P 500 Weekly Heat Map
Over the last week, 49% of the stocks in the S&P 500 index have risen in value.
The best-performing stocks were:
Lam Research Corporation (LRCX, 16%)
Align Technology, Inc. (ALGN, 13%)
Textron Inc. (TXT, 13%)
Meanwhile, the worst-performing stocks were:
Enphase Energy, Inc. (ENPH, -13%)
Arista Networks, Inc. (ANET, -12%)
Alaska Air Group, Inc. (ALK, -11%)
In addition, 91 stocks within the S&P 500 reached a new 52-week high, while 3 set new lows, indicating the momentum is clearly to the upside.
The following are the top stocks, ranked by market size, that reached a new high or low in the last 5 days:
MARKET TRENDS & MOMENTUM
1. S&P 500 Long-Term Trend
The long-term trend for the S&P 500 is positive. I base this evaluation on the weekly chart's 9 and 30 exponential moving averages (EMAs). To determine if the trend is strongly positive, I look for three conditions:
Price is trading above the EMA9 and EMA30: 🟢
EMA9 is above the EMA30: 🟢
Both moving averages are rising: 🟢
I also use MACD as an additional tool to detect trend changes. The MACD is above its signal line, a positive indication for the index.
2. Short-term outlook and key levels
I expect volatility to remain high next week, especially with critical earnings reports. As usual, in this case, I prefer to focus on critical levels. Specifically, I'll look for a breakout above 4,600, as this level acted as resistance all week. On the other hand, a dip below 4,500 would signal more weakness ahead.
Longer-term, the natural target for this rally would be the S&P 500's all-time high of 4,800. On the other hand, if the index falls below June's breakout level of 4,280-4,300, it would be a significant setback for the bullish case.
3. Momentum Analysis of the Week
This week's momentum analysis is about Asset Class ETFs' trends. Using a combination of performance metrics and technical indicators, I've developed a proprietary algorithm to rank these various segments of the market and identify potential outperformers. Based on this approach, I've identified the S&P 500 and Nasdaq as currently having the best relative momentum.
For daily updates and content on the stock market, follow me on Instagram.
EARNINGS RECAP
1. Earnings Season Summary
254 companies from the S&P 500 index have released their Q2 2023 earnings, with 79% posting higher EPS than expectations. This is higher than the previous four-quarter average of 73%, and the historical average of 66%.
2. Expected EPS & Revenue Growth
Q2 2023 earnings for the S&P 500 are expected to be down 6%. Excluding the energy sector, the figure is 0%.
The earnings are projected to be up 1% in 2023, lower than the 9% growth seen on average over the last decade. Earnings are expected to increase year-over-year in 8 of the 11 sectors, with the Consumer Cyclical and Communication Services sectors leading the way. On the other hand, the Energy and Materials sectors are projected to see the worst decline.
MARKET SENTIMENT
Measures of investor sentiment can be helpful as they provide insight into the views and opinions of professional or individual investors. However, it's important to note that these measures are not perfect predictors of market movements. They should be combined with other indicators and analysis tools for a complete market picture.
1. Individual Investors (AAII)
The American Association of Individual Investors (AAII) conducts a weekly survey among its members to gauge their expectations for the stock market over the next six months. The results of the survey are published every Wednesday.
According to the most recent AAII survey, 45% of the respondents had a bullish outlook on the stock market, a 6-point decrease from the previous week. The investors' bullish sentiment was above the average for the 8th consecutive week.
2. Institutional Investors (BofA Bull & Bear Indicator)
The Bank of America Bull-Bear Indicator is a proprietary measure of investor sentiment developed by Bank of America. It is based on a survey of fund managers and institutional investors, and it tracks the percentage of respondents who are bullish, bearish, or neutral on the stock market. Results are published in the form of a score ranging from 0 (extremely bearish) to 10 (extremely bullish)
The indicator increased from 3.8 to 4.0, the highest reading in 2023.
THE WEEK AHEAD
1. Economic Calendar
The week ahead will focus on the job market, with the release of the non-farm payroll report on Friday. Economists expect 184k additional jobs in July and an unemployment rate of 3.6%.
2. Earnings Calendar
Another busy and critical weeks of earnings is ahead of us, and 169 companies from the S&P 500, including Apple and Amazon, are expected to release their quarterly results.
3. Next Week’s Earnings Watchlist
Below is my watchlist of stocks reporting week next week, along with several key indicators I like to review:
Stock performance in the last 3 months.
RSI, where a reading of 70 indicates overbought status and a reading of 30 oversold.
PE ratio, where a reading below 25 indicates a "cheap" value and/or low growth expectations.
Implied volatility is the expected 1-day stock change after earnings are released, as assessed by the options markets.
It is helpful to analyze these indicators to understand better the stocks before their earnings.
Every week, I share a deep dive into one stock reporting earnings in the coming days. This week, I prepared an in-depth overview of Apple (AAPL). In this post, I break down key data points around Apple’s fundamentals, stock returns, analyst ratings, and past earnings performance to help you make informed investment decisions.
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Have a great week!
My Weekly Stock
DISCLAIMER
The information provided in this newsletter is for informational purposes only and should not be taken as financial advice. Any investments or decisions made based on the information provided in this newsletter are the reader's sole responsibility. We recommend that readers conduct their own research and consult a qualified financial professional before making investment decisions. The author does not assume any responsibility for any losses or damages arising from using the information provided in this newsletter.
Hi Gary,
Last week I signed in to trend spider using the link provided, I did not receive the welcome package to set it up as you mentioned, my email address George.jimbalan@gmail.com
did I need to do anything ?
Thanks
George