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The Price Action Lab Report-Week of August 29, 2022 [Premium Articles]

Market analysis for the week of August 29, 2022. The analysis focuses on major market indexes, ETFs, commodities, and forex. Access to the full article requires a Premium Articles or an All in One subscription.

Announcements

  1. In this report we introduce a section for strategy ETFs. Interest in these ETFs is growing for use in diversification strategies.
  2. Due to the Labor Day holiday on September 5, 2022, and the annual vacation period from September 1 to September 7, 2022, there will be no Price Action Lab Report next week.
  3. All premium article subscribers can request a free subscription to the book, 15 Lies About Trading and Investing, for holiday reading. Please use the same email address as the one you use to receive the weekly report notifications.

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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. Strategy ETFs
  7. Spot Currency Pairs.
  8. Charts to watch.

1. Weekly Summary (August 22, 2022 – August 26, 2022)

  • Stocks plunged after a technical bull trap.
  • Bond prices fell and yields rose amid rate uncertainty.
  • Commodities advanced due to gains in base metals and grains.
  • Crude oil and gold spot prices were little changed.
  • The US dollar rally against major currencies continued.

Large-cap stocks ($SPX) plunged 4% after a technical bull trap (see section 2) triggered by the Fed Chairman’s comments. Tech stocks ($NDX) and Dow 30 ($DJI) stocks plunged 4.8% and 4.2%, respectively. Small caps ($RUT) fell 2.9%. The S&P 500 high beta index ($SP5HBI) dived 3.9%, while the S&P 500 low volatility index ($SP5LVI) lost 3.4% from overbought territory.

US Treasury Bonds ($SPBDUSBT) fell 0.2%. The 10-Year Note yield gained five basis points to 3.04%. Crude oil spot prices and Spot gold (@GC) were nearly unchanged on the week. The CRB index ($CRB) rebounded by 2.4%, mainly due to gains in grains and base metals. The US dollar index’s rally against major currencies continued with a weekly gain of 0.6%.

Year-to-date, the NASDAQ-100 is down 22.8% and 23.9% below its all-time highs. The Russell 2000 is down 15.4% year-to-date and 22.2% below its all-time highs. On the positive side, the CRB index is up 28.7% year-to-date and the crude oil spot is up 24.2%. The US dollar index is up 13.7% year-to-date.

The ensemble of our six systematic strategies is down 4.2% year-to-date, as compared to a 14.9% loss for the S&P 500 index and a loss of 12.4% for the 60/40 portfolio with SPY and AGG ETFs. The allocation of the six strategies will be only 8.3% next week.

I wrote last week about the long-term uptrend in stocks and investor risks:


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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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