Our April 2022 stock and ETF watchlist with entry points, sector analysis, and market outlook.
Market Overview
The month of March provided us with some volatility but it seems that the market is inching upwards. The war between Russia and Ukraine is still ongoing and we are feeling the effects of that across certain commodities (fertilizer, oil, etc.). Also the Fed has finally initiated the first rate hike (25 basis points) and there should be 6 more for the remainder of the year and three more for 2023. This news has calmed the market a bit and in my opinion is one of the reasons why the market has exited correction territory. Remember that uncertainty is an enemy of the market. Uncertainty leads to volatility and sell offs because institutions and investors want to KNOW what's on the horizon.
Fed & Monetary Policy
Now that we know the number of rate hikes and the basis points of each hike (should be 25 but there has been talks that 50 could happen and that the Fed isn't against that) the market seems to be much calmer. In other areas of the market there is still concerns about the same things that have been lurking around for a while now. Some of these things are the rate of inflation, QT, the supply chain, and still whispers of Covid. Other concerns are the effects of the war. We almost seen an immediate impact on oil prices and the sharp rise in other commodity prices when the war first started. Granted these spikes shouldn't be sustainable but it is a cause for concern. President Biden has issued a release of one million barrels per day from reserves to help ease gas prices. Now this is helpful news but also keep in mind that these reserves will also have to be replaced one day. I guess we'll deal with that when the time comes. This past quarter may have been difficult for some investors. There was panic selling, investors that doubted WHEN to get into the market, and investors that glided through these uncertain times. I believe that every correction or whenever we enter times of volatility is a perfect opportunity to learn. To understand that the market operates in cycles, that stocks don't always JUST go up. Times like these show you the importance of research, why you should be GLAD to average down into a company you like, and why conviction will be what carries you along your investing journey. If you don't believe that assets like equities, bonds, crypto, real estate, etc. will be more valuable in the future then simply don't invest in them. The point of investing is to have a long term outlook on things and if there is short term opportunities take advantage of them
Macro Concerns
*Also there is talk of the yield curve inverting which is causing some fears. The inverted yield curve has predicted 7 recessions over the past 6 decades. The gap between the 2-year yield and the 10-year yield fell below 0.2 percentage points in the past week for the first time since 2020. *Why is the yield curve important? The yield curve is a graphic representation that plots the yield of all treasury securities over time. This curve is usually on an upward slope. The concerns grow once we are on a downward slope and worries are full bloom once it is inverted. When the slope is downward it's showing us that short term yields are exceeding long term yields. This can lead to expectations that there is a slowing growth rate in the economy which could lead to the Fed cutting rates. *The inverted yield curve has a negative connotation within the stock market. Now when the yield curve is inverted a recession doesn't happen right away. On average over the past 5 decades the start of a recession occurs around 20 months after the initial inverted yield curve. So end of November 2023? Who knows? Just keep in mind that the market is watching this and this indicator has only been wrong once.
Monthly Performance
At the close of the month all the indexes are up. The Dow Jones (4.15%), S&P 500 (5.21%), NASDAQ (5.08%), Russell 2000 (3.07%). At the close of the month the VIX was at 20.56. The "Fear and Greed" index was at 51 at the end of the month indicating market sentiment is neutral. Z: $45-$57 (Daily Chart) Would prefer it to break past the 100 SMA which is $56.09 ATM.
Index Performance
| Index | Performance |
|---|---|
| Dow Jones (Mar 2022) | +4.15% |
| S&P 500 (Mar 2022) | +5.21% |
| NASDAQ (Mar 2022) | +5.08% |
| Russell 2000 (Mar 2022) | +3.07% |
Top Sectors
Bottom Sectors
Stock Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| NKE | $129–$143 | $134–$147 |
| ABNB | $132–$161 | $139–$160 |
| MSFT | $271–$297 | $275 |
| AAPL | $156–$165 | $144–$152 |
| Z | $45–$57 | $45–$63 |
| SQ | $102–$126 | $110–$129 |
| PYPL | $90–$139 | $108–$139 |
| MCD | $235–$246 | $226–$244 |
| WMT | $138–$142 | $134–$139 |
| TSLA | $825–$902 | $790–$829 |
| SBUX | $87–$96 | $87–$100 |
| V | $190–$216 | $187–$213 |
| PG | $145–$155 | $142–$146 |
| WM | $150–$156 | $141–$151 |
| CHPT | $15–$20 | $13–$21 |
| IIPR | $186–$215 | $180–$207 |
| SHOP | $644–$735 | $531–$708 |
| ADBE | $442–$469 | $441–$513 |
| AMZN | $2,977–$3,234 | $2,954–$3,280 |
| CRWD | $173–$226 | $189–$219 |
| NVDA | $209–$245 | $208 |
| AFRM | $39–$58 | $35–$56 |
ETF Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| ARKK | $62–$73 | $66–$74 |
| VUG | $275–$292 | $263–$293 |
| VGT | $399–$416 | $374–$412 |
| VOO | $404–$412 | $390–$407 |
| SMH | $262–$278 | $246–$269 |
Key Takeaways
- →March 2022: Relief rally after oversold conditions; Fed first hike since 2018 (+25bps).
- →Despite monthly gains, most indices remain in correction territory YTD.
- →Russia-Ukraine uncertainty persists; commodity prices remain elevated.
- →Patience required — most names still need confirmation above key moving averages.
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