Stocks See Multiple Rallies Fail Amid Ongoing Selloff

Plus, the week's biggest earnings reports

Deputy Editor
May 13, 2022 at 1:01 PM
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The second week of May saw the broader market's selloff intensify, with Wall Street logging its worst close of 2022 and extending its losing streak to three-straight days on Monday. By the next session, it looked like the Dow Jones Industrial Average (DJI) would mount a comeback, but it gave up a 500-point lead at midday on Tuesday. By the close, the Dow extended its daily losing streak to four, while the S&P 500 Index (SPX) and Nasdaq Composite (IXIC) each finished higher after the 10-year Treasury yield pulled back.

The Dow once again looked to be turning things around by Wednesday afternoon, with the benchmark standing around 200 points higher despite red-hot inflation data; however, April's consumer price index (CPI) weighed too heavily, and the blue-chip index, along with the SPX and IXIC, logged yet another loss. Another rally was cut short on Thursday, and while the Dow logged its sixth-straight loss, the Nasdaq ended up carving out a marginal win. By midday on Friday, the major indexes were tracking for big daily wins, but still on pace for substantial weekly losses.

The Week's Biggest Earnings Stories

Earnings season continues to wind down, but there were some heavy hitting reports that saw their respective stocks log big trading days -- for better or for worse. Following their respective financial results, the shares of Beyond Meat (BYND) and Peloton (PTON) both hit record lows, with the former falling well below its 2019 initial public offering (IPO) price. H&R Block (HRB) had arguably one of the week's more impressive reports, dazzling with fiscal third-quarter top- and bottom-line beats, while Norwegian Cruise Line (NCLH) was able to turn in a first-quarter earnings win after cruise demand popped.

Upstart (UPST) stock had one of the wildest post-earnings responses, losing more than 55% after its dreary current-quarter revenue forecast overshadowed upbeat earnings and revenue results. Meanwhile, former meme phenomenon AMC Entertainment (AMC) posted slimmer-than-expected losses for the quarter, with better-than-expected revenue to boot, calling it the "strongest first quarter in two full years."


Stocks Eyeing a Rebound

Schaeffer's Senior Quantitative Analyst Rocky White conducts a number of studies, including one that shows stocks flashing a pullback to historically bullish trendlines. Barrick Gold (GOLD) just pulled back to its 320-moving average, and the two other times its done so, investors were able to average a gain of 22.4% over the next 21 trading days. Mr Cooper Group (COOP) stock's pullbacks to the 160-day moving average, which just occurred for a sixth time, all yielded moves higher, and American International Group (AIG) also has a shot at multi-year highs thanks to a bullish signal. Meanwhile, blue chip Dow (DOW), while not moving higher every single time, has still managed a positive return after pulling back to this historically bullish trendline

Retail Sector to Headline Next Week

As we move into the latter half of May, there's still some earnings reports trickling in. On deck to report is a bevy of retail names, most notably BJ's Wholesale (BJ), Foot Locker (FL), Kohl's (KSS), Macy's (M), Target (TGT), and Walmart (WMT). Retail sales data, meanwhile, is on tap for just some of next week's economic data. While you wait, make sure to keep an eye on these three resistance levels weighing on Wall Street, courtesy of Schaeffer's Senior V.P. of Research Todd Salamone. In addition, Rocky White breaks down key S&P 500 moving averages that bulls should watch.



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