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The Price Action Lab Report-Week of July 18, 2022 [Premium Articles]

Market analysis for the week of July 18, 2022. The analysis focuses on major market indexes, ETFs, commodities, and forex. Access to the full article requires a Premium Articles subscription or an All in One subscription.

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Report contents

  1. Weekly summary.
  2. Market performance recap.
  3. Major market indexes.
  4. Equity index and fixed income ETFs.
  5. Commodity ETFs and ETNs.
  6. Spot currency pairs.
  7. Charts to watch.

1. Weekly summary

  • Stocks finished the week with losses but significantly off lows.
  • Bonds yields fell and bond prices were higher.
  • Commodities sold off for a fifth week in a row.
  • Crude oil spot prices plunged during the week.
  • The US dollar rally continued and precious metals fell.

Recap (July 11, 2022 – July 15, 2022)

Large-cap stocks ($SPX) ended the week down 0.9%. Tech stocks ($NDX) fell 1.2%. The Dow 30 ($DJI) lost 0.2%. Small caps ($RUT) were down 1.4% for the week. The S&P 500 high beta large-cap index ($SP5HBI) dropped 1.3%. The S&P 500 low volatility large-cap index ($SP5LVI) fell 0.5%. In the last four weeks, the S&P 500 has recovered slightly from the bear market territory and is down 19.5% from all-time highs. 

The rebounds in equity indices from the lows of Thursday were significant.

The NASDAQ-100 and the Russell 2000 rebounded 5.3% and 4.8%, respectively. The S&P 500 and large-cap high beta indexes both recovered from lows by 4.5% and 3.9%, respectively. The odds of a “summer rally” are higher. Investors have started focusing on “good news,” or interpreting news as having a positive impact on equities. The risks are still high, and another bull trap is possible, as history has shown. Our analysis of social media posts shows that individual investors and traders are cautious and many are out of equities, while fund managers appear optimistic and are adding to long positions. It is difficult to say whether risk-on at this point is due to confirmation bias or sound analysis.

US Treasury Bonds ($SPBDUSBT) gained 0.7%. The 10-Year Note yield fell 17 basis points to 2.93%. Crude oil prices plunged 6.7% due to speculation about supply and price normalization. The CRB index ($CRB) fell 3.5% due to a broad sell-off in commodities. Spot gold (@GC) lost 1.8%. The US dollar index rallied 1% and is one of the few assets with a positive return this year at +13%.

Year-to-date, the NASDAQ-100 is down 26.6% and 27.7% below its all-time highs. The Russell 2000 is down 22.3% year-to-date and 28.6% below its all-time highs. On the positive side, the CRB index is up 19.5% year-to-date and the crude oil spot is up 32%.

The ensemble of our six systematic strategies is down 4.2% year-to-date, as compared to an 18.9% loss for the S&P 500 index and a loss of 14.8% for the 60/40 portfolio with SPY and AGG ETFs. The allocation of the six strategies to equities will be 0% for next week, and 86% will remain in cash.

2. Market Performance Recap


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Specific disclaimer: This report includes charts that may reference price target levels determined by technical and/or quantitative analysis. No updates to charts will be provided if market condition changes occur that affect the levels on the charts and/or any analysis based on them. All charts in this report are for informational purposes only. See the disclaimer for more information.

Disclaimer:  No part of the analysis in this blog constitutes a trade recommendation. The past performance of any trading system or methodology is not necessarily indicative of future results. Read the full disclaimer here.

Charting and backtesting program: Amibroker. Data provider: Norgate Data

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