Our May 2022 stock and ETF watchlist with entry points, sector analysis, and market outlook.
Market Overview
The month of April provided us with a complete 180 after we saw some move to the upside in March. The same fears are swallowing the market, with inflation leading the charge. As mentioned in the March Watchlist: "...don't forget the rate hikes, QT, and inflation are still a factor. The war is what is grabbing headlines at the moment." It is important to remember what is the core reason for any selloffs, corrections, recessions, or runs to the upside. The market and economy is at a difficult point and has signs pointing to a recession. From the briefly inverted yield curve to the fact that we experienced negative growth in GDP in the first quarter. When there is two quarters of negative GDP growth that is classified as a recession. (If you want to learn more about investing terms, click here.) Now this is speculation and fears of the market. But remember what happens when there is fear and uncertainty in the market? Volatility. A great example of this volatility was when looking at the NASDAQ from the dates of April 27th, 2022- April 29th, 2022. April 27th a 52-week low was established for the NASDAQ. The following day, April 28th, the NASDAQ skyrocketed 3%. That's a huge move for an index. Then the day after guess what? The NASDAQ established a NEW 52-week low. All this happened within a three day span. Now inflation alone didn't lead to this volatility. Companies also provided earnings reports that didn't sit well with investors. As you may or may not know, the most well know indices are heavily weighted to the biggest companies in the country. So when a company like Netflix and Amazon provide earnings that are hard to digest, which they did, their stock price falls and drags down the index due to their heavy weighting.
Crypto & Digital Assets
As I mentioned earlier in the year in the February Watchlist: " A company's financials will definitely be looked at more closely in this environment. No one will be focusing on a growth companies' "potential" whilst it generates no profit. People are fleeing to safety. Companies with strong financials are the ones that are weathering this the best, think Apple and Microsoft." In this environment things will be heavily scrutinized. New subscriber growth, have you been able to retain subscribers, the cloud segment of your business has slowed YoY. The difference of meeting or beating estimates is so impactful, it always has been but now you see a stalwart like Amazon fall almost $1,000 per share between April 4th-April 29th. People are really weighing out "how will this company perform in this economic environment?" Remember we're dealing with inflation, supply chain issues, and STILL battling Covid even though it's not grabbing headlines. Are companies able to pass this cost onto their consumers? Will consumers be willing to pay it when they themselves are dealing with inflation too? The sharp rise in rents, gas, and goods has put the consumer in a position where there simply isn't enough money going around. They too are looking to cut costs. Inflation has simply dug its roots in and is affecting everyone.
Monthly Performance
At the close of the month all the indexes are down. The Dow Jones (-5.57%), S&P 500 (-9.84%), NASDAQ (-15.12%), Russell 2000 (11.04%). At the close of the month the VIX was at 33.40. The "Fear and Greed" index was at 27 at the end of the month indicating fear.
Index Performance
| Index | Performance |
|---|---|
| Dow Jones (Apr 2022) | -5.57% |
| S&P 500 (Apr 2022) | -9.84% |
| NASDAQ (Apr 2022) | -15.12% |
| Russell 2000 (Apr 2022) | -11.04% |
Top Sectors
Bottom Sectors
Stock Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| NKE | $122–$130 | $115–$138 |
| ABNB | $134–$160 | $134–$160 |
| MSFT | $276–$288 | $274 |
| AAPL | $154–$159 | $148–$154 |
| Z | $39–$46 | $39–$48 |
| SQ | $101–$118 | $97–$124 |
| PYPL | $99–$116 | $85–$132 |
| MCD | $236–$243 | $229–$245 |
| WMT | $144–$147 | $135–$140 |
| TSLA | $804–$904 | $795–$853 |
| SBUX | $76–$80 | $71–$81 |
| V | $200–$220 | $190–$213 |
| PG | $146–$156 | $143–$148 |
| WM | $146–$155 | $144–$153 |
| CHPT | $12–$16 | $12–$15 |
| IIPR | $144–$163 | $124–$156 |
| SHOP | $416–$600 | $426–$593 |
| ADBE | $389–$410 | $351–$458 |
| AMZN | $2,485–$2,615 | $2,442–$2,675 |
| CRWD | $161–$203 | $150–$195 |
| NVDA | $176–$219 | $149–$181 |
| AFRM | $31–$36 | $30–$35 |
ETF Entry Points
| Ticker | Daily Entry | Weekly Entry |
|---|---|---|
| ARKK | $45–$58 | $47–$58 |
| VUG | $250–$262 | $248–$266 |
| VGT | $364–$389 | $365–$398 |
| VOO | $373–$393 | $369–$393 |
| SMH | $226–$242 | $218–$241 |
Key Takeaways
- →April 2022: NASDAQ -15.12% — worst month since COVID crash; bear market in growth confirmed.
- →Inflation at 8.5% (40-year high); Fed signaled 50bps hike in May.
- →Netflix -70% from ATH signaling end of pandemic streaming tailwinds.
- →Bear market strategy: continue buying assets at discounted prices systematically.
"Catch and Secure Your Wealth."™
The Wealth Catchers — a platform dedicated to financial literacy, disciplined investing, and building generational wealth.
All content on The Wealth Catchers is for informational and educational purposes only. It should not be considered financial advice. Please consult a licensed financial advisor before making investment decisions. Our content may contain affiliate links at no cost to you.