S&P 500 Drops 0.8% As Tesla Falls To New Lows

Key Insights

  • S&P 500 is under strong pressure amid a broad sell-off in energy and tech stocks. 
  • Tesla is testing new lows as Q4 deliveries missed analyst estimates. 
  • A move below the 3800 level will push S&P 500 towards the support at 3780.

The Sell-Off Is Led By Tesla, Apple, And Energy Stocks

S&P 500 found itself under significant pressure in the first trading session of the year. The tech-heavy NASDAQ Composite was down by more than 1%.

The pullback was led by energy stocks as traders reacted to the sell-offs in the oil and natural gas markets. APA Corporation, EQT Corporation, and Coterra Energy were among the biggest losers in the S&P 500.

The worst-performing stock in the S&P 500 today was Tesla, which moved to new lows after the release of the disappointing Q4 deliveries report. Tesla stock is down by almost 15% in today’s trading session.

Apple  was also among the biggest losers. The stock declined by 4% as reports indicated that it cut orders for Apple Watch, MacBook, and AirPod. NVIDIA, which is down by 2.5%, led the pullback in semiconductor stocks.

From a big picture point of view, investors are not ready to increase risks at the start of the year. Today’s Manufacturing PMI report, which showed that Manufacturing PMI declined for the third month in a row, highlighted recession risks. Traditional safe-haven assets like the U.S. dollar, gold, and Treasuries gained upside momentum today.

S&P 500 Tests Support At 3800

S&P 500

S&P 500 is currently trying to settle below the support level at 3800. In case S&P 500 manages to settle below this level, it will move towards the next support level at 3780. A successful test of the support at 3780 will push S&P 500 towards the support at 3760. If S&P 500 declines below 3760, it will head towards the next support at 3745.

On the upside, the nearest resistance level for S&P 500 is located at 3815. A move above this level will open the way to the test of the resistance at 3840. If S&P 500 gets above 3840, it will head towards the next resistance level at 3860.

For a look at all of today’s economic events, check out our economic calendar.

S&P 500 Retreats In Low Volume Session

Key Insights

  • Energy stocks decline amid a huge sell-off in natural gas markets. 
  • Tax-loss selling may have put additional pressure on stocks in today’s trading session. 
  • A move below 3800 will push S&P 500 towards the support level at 3775.

S&P 500 Remains Under Pressure

S&P 500 is down by 0.7%, driven by weak performance of energy stocks. The tech-heavy NASDAQ Composite declined by 0.9%.

Energy stocks are leading the pullback amid a sell-off in natural gas markets, which was triggered by warm weather. WTI oil has also found itself under strong pressure today as Russia’s response to the oil price cap was weaker than expected. EQT Corporation, APA Corporation, and Coterra Energy are among the biggest losers in the S&P 500 today.

Tech stocks also remain under pressure. Apple gained strong downside momentum and moved below the $127 level. Apple stock is down by roughly 30% year-to-date.

Today is the last day to sell stocks for tax-loss harvesting, which may have served as a material negative catalyst for S&P 500. Trades take time to settle, so the last day for tax-loss selling is not December 31.

From a big picture point of view, the market needs additional positive catalysts to change the current trend. The hawkish Fed and recession fears have put material pressure on stocks in recent days. It will be interesting to see whether S&P 500 manages to gain upside momentum at the start of 2023 as investors usually initiate new positions at the beginning of the year.

S&P 500 Tests Support At 3800

S&P 500

S&P 500 managed to get below the support at 3815 and is testing the next support level at 3800. In case this test is successful, S&P 500 will move towards the support at 3775. A successful test of the support at 3775 will open the way to the test of the support level at 3750. If S&P 500 declines below this level, it will head towards the support at 3725.

On the upside, the previous support at 3815 will serve as the first resistance level for S&P 500. In case S&P 500 gets above this level, it will move towards the resistance level at 3840. A move above the 3840 level will open the way to the test of the resistance at 3860.

For a look at all of today’s economic events, check out our economic calendar.

Best ETFs to Buy in a Recession for August 2022

So, how is Big Money reacting? After lots of big selling, buying is picking up again in small volumes. Let me explain.

Markets and Big Money in the Last Six Months

My research firm, MAPsignals, measures Big Money investor activity. That includes institutions, pension funds, big individual investors, and so on. We follow Big Money because our research shows Big Money moves markets.

We created the Big Money Index (BMI), which is a 25-day moving average of large-scale investor buy and sell activity. Over time it has shown itself to be a leading indicator of where markets may go. The BMI went oversold in late May, which is a hugely bullish long-term signal. It rallied for a bit then hit oversold again on July 14. And like last time, it bounced up again:

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There was monster Big Money selling in stocks, up until recently – notice the red lines drying up:

The story is similar with ETFs, though the buy action is much smaller than it is with stocks:

This month’s ETF picks have long-term value appreciation in mind, even if times get tougher. They center on energy and technology, which should see growth over time and can pay some nice dividends. The best ETFs to buy in a recession for August 2022 are: MLPX, IYH, XOP, and QMOM.

Long-term investors should look for ETFs (and their stocks), with great setups. Remember, ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,500 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all from strongest to weakest.

Now, let’s get to the best ETFs to buy in a recession for August 2022.

Global X MLP & Energy Infrastructure ETF (MLPX) Analysis

This ETF can help weather recession storms due to its hefty current dividend yield of nearly 6.1%. MLPX holds excellent stocks, and their quality may prove durable during downturns. While markets overall have lost value, MLPX is up 17.4% on the year so far:

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MLPX holds many solid energy stocks. One example focusing on liquified natural gas is Cheniere Energy, Inc. (LNG). It has three-year sales growth of 35.7% and minimal debt. Here is the one-year Big Money action for LNG:

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iShares U.S. Healthcare ETF (IYH) Analysis

As a low-liquidity ETF, IYH can be volatile. That said, its holdings include tremendous U.S. health care firms and it pays a current dividend of more than 1.1%. IYH has been choppy for much of the last year, but is up more than 1.3% in the last month:

One great stock IYH holds is Johnson & Johnson (JNJ). This health care giant has seen one-year sales growth of 13.5% and sports a profit margin of 22.3%. Earnings have been strong too, growing 13.3% over three years. In the last year, Big Money bought JNJ 12 times:

SPDR S&P Oil & Gas Exploration & Production ETF (XOP) Analysis

Moving to the energy sector, XOP holds many great companies focused on exploration and production within oil and gas markets. This ETF is huge, so there should be no liquidity issues, and it pays a more than 0.9% current dividend. XOP has seen Big Money action throughout the past year and is up 57.3% in that time:

A fantastic stock within XOP is Coterra Energy Inc. (CTRA), an independent energy firm focused primarily in Pennsylvania. CTRA has growing sales (one-year sales growth of 161.2%) and three-year EPS growth of 106.0%. In the last year, CTRA has attracted lots of Big Money. Each blue bar below shows when it was a Top 20 Big Money buy:

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Alpha Architect U.S. Quantitative Momentum (QMOM) Analysis

This ETF focuses on market momentum or outperformance, using a rules-based methodology to identify up to 100 equities with high relative momentum. QMOM is another low-liquidity ETF, so it experiences some choppiness. But it’s up more than 4.2% over the past month, offers a more than 1.2% current dividend, and is loaded with great stocks:

One rock-solid stock within this ETF is Cal-Maine Foods, Inc. (CALM), a U.S. egg producer. Inflation and demand have helped CALM a lot, as has Big Money. CALM has one-year sales growth of 31.7%, three-year EPS growth of 2,061.6%, and a profit margin of 7.5%. Plus, it jumped 47.0% over a year’s time:

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Here’s a Big Money recap:

  • When Big Money buying heats up, stocks and ETFs tend to rise
  • Deep selling on great quality can be a phenomenal opportunity
  • Repeated buying usually means outsized gains

Bottom Line and Explanatory Video

MLPX, IYH, XOP, and QMOM are my best ETFs to buy in a recession for August 2022. These picks can climb higher, in my opinion, largely because they each hold great stocks. With markets rocky and possible recession ahead, these ETFs show great long-term potential and durability.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in MLPX, IYH, XOP, QMOM, LNG, JNJ, CTRA, or CALM at the time of publication.

Contact:

https://mapsignals.com/contact/

Best Energy ETFs to Buy Now for June 2022

Big Money is still flowing into energy. There are several ETF plays within energy, many of which contain powerhouse stocks. Inflows have been strong, so there could be some overextension at play and maybe a pullback. Still, the longer-term outlook remains strong.

Markets and Big Money in the Last 6 Months

My research firm, MAPsignals, measures Big Money investor activity. That includes institutions, pension funds, big individual investors, and so on. Our research shows Big Money moves markets.

We created the Big Money Index (BMI), which is a 25-day moving average of large-scale investor buy and sell activity. The BMI has been on a big downward trend since April. Generally, money has been flowing out of market, presumably into “safer” assets that have become more attractive of late. But buying is ticking up of late:

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On May 24, the BMI hit oversold territory. It stayed there for a couple days and buying has since pushed it higher, at least momentarily. The key takeaway is when the BMI hits oversold, forward-looking returns stretching from one to 24 months are positive, on average. An oversold BMI is a hugely bullish signal.

But in the face of doubt, investors have flocked to energy this year, making the traditionally defensive sector look appetizing for growth. Given these conditions, we’ve identified some energy ETFs we think have great long-term potential: FCG, FTXN, FXZ, PXE, and FFTY.

Long-term investors should look for ETFs (and their stocks), with great setups. Remember, ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,500 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all from strongest to weakest.

Let’s get to the five best energy ETF opportunities for June 2022.

First Trust Natural Gas ETF (FCG) Analysis

Natural gas is becoming more popular as a potential “bridge” energy source between heavy reliance on fossil fuels to a cleaner energy future. Big Money believes in it as it’s been buying, especially since October of last year, which always helps:

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FCG holds several big stocks. One example is Coterra Energy Inc. (CTRA), which has phenomenal one-year sales growth of 161.2% and a profit margin of 31.6%. It’s one of the biggest holdings in FCG and is becoming a Big Money magnet:

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First Trust Nasdaq Oil & Gas ETF (FTXN) Analysis

Thanks to the geopolitical situation right now, oil and gas are back. Consequently, prices for energy are up. That bodes well for energy ETFs with fundamentally sound stocks. The FTXN chart reflects the energy boom:

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One great stock FTXN holds is Marathon Oil Corporation (MRO). It has one-year sales growth of 80.9% and a profit margin of 16.9%. As you can see, Big Money has been buying MRO in chunks over the past year, with heavy buying starting in late summer 2021 and really ramping up this year:

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First Trust Materials AlphaDEX Fund (FXZ) Analysis

While not a pure energy fund, FXZ is squarely within the energy/industrials/materials mix and has rock-solid fundamentals. It’s been on an upward trend since last summer and saw Big Money action back in March:

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A fantastic stock within FXZ is Westlake Chemical Corporation (WLK), an international manufacturer and supplier of petrochemicals, polymers, and building products. It’s jumped since the new year, which isn’t surprising given its growing sales (one-year sales growth of 57.0%) and three-year EPS growth of 143.4%. WLK has been attracting lots of Big Money:

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Invesco Dynamic Energy Exploration & Production ETF (PXE) Analysis

As always with ETFs, fundamental strength within underlying assets is a high priority. PXE is loaded with great stocks. It’s been progressing well since last year, and jumped nearly 11% in the last month:

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A great stock within this ETF is Occidental Petroleum Corporation (OXY). Warren Buffett recently disclosed big buying in OXY. One of the best investors of all time buying in is a good sign. It’s had one-year sales growth of 51.5% and sports a profit margin of 10.7%. The Big Money has been scooping up OXY all year and the stock has more than doubled:

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Innovator IBD 50 ETF (FFTY) Analysis

Investors Business Daily releases an “innovator list” every year and this ETF tracks those names. While it’s not a dedicated energy ETF, but many of its top holdings right now are energy stocks. In fact, the top five holdings are all energy firms. It’s down right now, but that may prove to be a big bargain for long-term investors:

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One great stock in FFTY is Matador Resources Company (MTDR), an oil and gas exploration firm. It’s seen Big Money buying because MTDR is fundamentally strong – it has one-year sales growth of 117.7% and a profit margin of 31.4%. But it’s possibly overextended and may pull back:

Here’s a Big Money recap:

  • When Big Money buying heats up, stocks and ETFs tend to rise
  • Deep selling on great quality can be a phenomenal opportunity
  • Repeated buying usually means outsized gains

Bottom Line and Explanatory Video

FCG, FTXN, FXZ, PXE, and FFTY are my top energy ETFs for June 2022. While they’re not all pure energy plays, they all have sizeable stakes in energy companies and solid fundamentals. These picks can rise higher, in my opinion, largely because they each hold great stocks and energy is in demand.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in FCG, FTXN, FXZ, PXE, FFTY, CTRA, MRO, WLK, OLK, or MTDR at the time of publication.

Contact:

https://mapsignals.com/contact/

Best ETFs to Buy Now for June 2022

Investors continue to weather the market storms as volatility has become the norm. Selling is rampant, frightening investors with the uncertainty. Naturally, they’re seeking safety.

But money is flowing into certain sectors, which I’ll show you in a bit. First, let’s talk about Big Money – what it is, how it moves markets, and what it’s been doing lately.

Markets and Big Money in the Last 6 Months

My research firm, MAPsignals, measures Big Money investor activity. That includes institutions, pension funds, big individual investors, and so on. Our research shows Big Money moves markets. And right now, Big Money has been selling stocks and ETFs, driving markets downward:

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That’s making major indices dip along with the Big Money Index (BMI), which is a 25-day moving average of large-scale investor buy and sell activity. It’s nosedived recently and could be headed for more of the same:

In the face of uncertainty, investors seek safety. It’s coming in certain sectors, like energy, staples, utilities, and other traditionally defensive areas. Given these conditions, we’ve identified some ETFs we think have great long-term potential: IYE, FCG, FTXG, FXU, and XLP.

Long-term investors should look for ETFs (and their stocks), with great setups. Remember, ETFs are just baskets of stocks, so we need to look at them in detail. MAPsignals specializes in scoring more than 6,500 stocks daily. If I know which stocks compose the ETFs, I can apply stock scores to the ETFs. Then I can rank them all from strongest to weakest.

Let’s get to the five best ETF opportunities for June 2022.

iShares U.S. Energy ETF (IYE) Analysis

The current geopolitical situation has brought oil and gas back to the forefront while driving up prices for energy. As you can see, Big Money has been buying IYE in chunks over the past year, with heavy buying starting in October 2021 and really ramping up this year:

IYE holds several big stocks. One example is Occidental Petroleum Corp. (OXY), which has 1-year sales growth of 51.5% and a profit margin of 10.7%. Investing legend Warren Buffett recently announced a big stake in OXY too. Here is the one-year Big Money action for OXY:

First Trust Natural Gas ETF (FCG) Analysis

Natural gas is seen by some as a bridge energy source between fossil fuels and cleaner sources like wind, partly because of its ample supply. As global energy markets continue to shift, natural gas is becoming more popular. Big Money has been buying too, which always helps:

One great stock FCG holds is Coterra Energy Inc. (CTRA). This independent oil and gas company has seen big three-year sales growth of 41.5% and sports a profit margin of 31.6%. Earnings have been strong too, growing 106% over three years. The Big Money is jumping in on CTRA:

First Trust NASDAQ Food & Beverage ETF (FTXG) Analysis

We can always count on food demand, right? It’s biological. Well, in all seriousness, global demand for food as well as the products and services used to create it is strong and made stronger by geopolitical issues. That’s reflected in FTXG. While there have been some dips, the trend on this one points up:

A fantastic stock within FTXG is Archer-Daniels-Midland Company (ADM), the food processor and producer of agricultural commodities. It’s rocketed since the new year, which isn’t surprising given its growing sales (one-year sales growth of 32.4%) and three-year EPS growth of 19.1%. ADM has been drawing in lots of Big Money:

First Trust Utilities AlphaDEX Fund (FXU) Analysis

When investors seek safety, that often means utilities that pay dividends. As always with ETFs, fundamental strength within underlying assets is a high priority. We see that with FXU, which has peaks and valleys along the way, but an overall positive trajectory:

One rock-solid dividend stock within this ETF is NRG Energy, Inc. (NRG), an energy producer, seller, and distributor. Big Money has been all over it recently, with nine buy signals in the last month alone. NRG grew sales in one year by 200% and EPS by 314% over three years. It pays a nearly 3.1% current dividend and has jumped in price significantly since a year ago:

Consumer Staples Select Sector SPDR ETF (XLP) Analysis

It’s rare to get excited about consumer staples, but it’s justified right now. XLP holds huge household names and has seen Big Money lifting its price recently. It’s clear that in the past year, buying at the low points has worked out:

One great stock in XLP is Costco Wholesale Corporation (COST), the bulk warehouse retailer. COST is fundamentally strong – it has one-year sales growth of 17.5% and a three-year EPS growth rate of 16.7%. But it’s down 24% this year so far. However, it wouldn’t surprise me to see this one rise again (it’s had 48 Top 20 Big Money buy signals since 1991):

Here’s a Big Money recap:

  • When Big Money buying heats up, stocks and ETFs tend to rise
  • Deep selling on great quality can be a phenomenal opportunity
  • Repeated buying usually means outsized gains

Bottom Line and Explanatory Video

 

IYE, FCG, FTXG, FXU, and XLP are my top ETFs for June 2022. They cover mostly defensive sectors where money is flowing in as investors seek shelter. These picks can rise higher, in my opinion, largely because they each hold great stocks. With markets rocky, safety is at a premium, and these ETFs are proving to be havens right now.

To learn more about MAPsignals’ Big Money process please visit: www.mapsignals.com

Disclosure: the author holds no positions in IYE, FCG, FTXG, FXU, XLP, OXY, CTRA, ADM, or NRG in at the time of publication, but holds long positions in COST in managed accounts.

Contact:

https://mapsignals.com/contact/