Weekly Market Recap (Nov. 13 - 17)
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 up for the week, with the S&P 500 up 2.2%, the Nasdaq 2.4%, and the Dow Jones 1.9%. Real Estate (+4.5%) and Materials (+3.7%) were the best-performing sectors.
2. The stock indices rallied behind lower-than-feared inflation data.
3. The long-term trend for the S&P 500 is improving, and the short-term momentum is positive. The next resistance is at 4,600, while support is at 4,400.
4. The earnings season is well underway, and 469 companies from the S&P 500 index have released their 3rd quarter results, with 82% beating estimates. Earnings are expected to be up 7% in Q3 2023 and 11% in 2024.
5. Earnings reports from NVIDIA and Lowe’s and the FOMC Meeting Minutes are scheduled for next week.
My take:
The momentum in the markets continued to be strong, successfully clearing key levels one by one. That being said, next week could be an opportune time for the market to consolidate and digest the impressive gains since the late October low. Many indicators also suggest we are due for a pause in this rally. As long as the S&P 500 index remains above the 4,400 mark, I'd view any pullback as healthy, setting us up for a potential push toward the 4,600 level.
In the long term, I remain cautiously optimistic about the market. Notably, I believe we are poised to test the previous all-time high (circa. 4,800) in the coming months. As usual, I will let the market prove itself, one level at a time.
PERFORMANCE RECAP
1. SP500 Sector Performance
Over the week, all the 11 S&P 500 sectors have achieved gains. Real Estate led the way and rose by 4.5%. By contrast, Consumer Defensive was the weakest, and fell by 3.8%.
Year-to-date, 6 sectors have seen positive results. Technology has been the most successful sector, with a 47% gain. On the other hand, Utilities has been trailing behind.
2. S&P 500 Weekly Heat Map
Over the last week, 87% of the stocks in the S&P 500 index have risen in value.
The best-performing stocks were:
Target Corp (TGT, 20%)
Enphase Energy Inc (ENPH, 19%)
Catalent Inc. (CTLT, 19%)
Meanwhile, the worst-performing stocks were:
Vertex Pharmaceuticals, Inc. (VRTX, -6%)
Walmart Inc (WMT, -7%)
Cisco Systems, Inc. (CSCO, -9%)
In addition, 60 stock within the S&P 500 reached a new 52-week high, while 9 set new lows, indicating the momentum is back 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 and improving. 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 the following conditions (the 1st is the most important):
EMA9 is above the EMA30: 🟢
Price is trading above the EMA9: 🟢
Price is trading above the EMA30: 🟢
EMA9 is rising: 🟢
EMA30 is rising: 🟡
I also use MACD as an additional tool to detect trend changes. The MACD is about to cross above its signal line, signaling potentially more gains ahead.
2. S&P 500 Short-Term Outlook and Key Levels
Positive momentum remained this week, and as long we stay above the 4,400 support, I am looking for a retest of 4,600. It should be a challenging level, given this is where we failed this summer. However before that, we might be due for some consolidation after 3 weeks of gains and many indicators signaling that we need a pause.
In the longer term, if we are genuinely in a bull market, the natural target would be to, at minimum, test 4,800, the all-time high of the index. On the other hand, a break below 4,110 would be a setback to the bullish case.
3. Momentum Analysis of the Week
This week's momentum analysis is about the market breadth indicators. In this post from Wednesday, I looked at the percentage of stocks above or below key moving averages. 83% of stocks are trading above their 20-day moving average, indicating a solid short-term upward trend. Yet, only 48% are above their 200-day average, suggesting the long-term trend might not be as healthy as it looks.
EARNINGS RECAP
1. Q3 Earnings Season Summary
469 companies from the S&P 500 index have released their Q3 2023 earnings, with 82% posting higher EPS than expectations. This is higher than the previous four-quarter average of 74%, and the historical average of 67%.
2. Q3 and 2024 Expected EPS & Revenue Growth
Q3 2023 earnings for the S&P 500 are expected to be up 7%. Excluding the energy sector, the figure is +12%.
The earnings are projected to be up 11% in 2024, higher than the 9% growth seen on average over the last decade. Earnings are expected to increase year-over-year in all the 11 sectors, with the Healthcare and Communication Services sectors leading the way. On the other hand, the Materials and Real Estate sectors are projected to see a softer performance.
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, 44% of the respondents had a bullish outlook on the stock market, a 1-point increase from the previous 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 rose from 1.6 to 1.7, still flashing a “contrarian” buy signal.
THE WEEK AHEAD
1. Economic Calendar
The upcoming week is short due to the Thanksgiving holiday and will be light on the economic data front. The most important event will be the release of the FOMC Meeting Minutes, shedding light on the Federal Reserve's latest discussions and potential policy shifts.
2. Earnings Calendar
The Q3 earnings season is well under way next week, and 11 companies from the S&P 500, including NVIDIA and Lowe’s, 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 NVIDIA Corp. ($NVDA). In this post, I break down key data points around NVIDIA’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.
I'm tired of everyone fear mongering just because everyone's portfolios are in the green now!
However, this is great analysis. Market will have ATHs soon.
Price is king, always. Nice recap.