Weekly Market Review & Analysis For May 9, 2022

THIS WEEK, the S&P 500 market declined 3.1 percent amidst disappointing corporate reports and economic data that raised worries about growth. Its Nasdaq Composite underperformed with a 3.8 percent decline, followed by Dow Jones Industrial Average with -2.9 percent and the small-cap Russell 2000 index with -1.1 percent.

The consumer staples with -8.6 percent and consumer discretionary with -7.4 percent sectors were the weakest of all, as the most well-known retail giants Walmart, Target, and Ross Stores each mentioned damp cost pressures in the context of their disappointing performance and cautious forecasts. In contrast, utilities with +0.4 percent, health care with +0.9 percent, and energy with +1.1 percent were sectors that all ended the week with positive numbers. 

There were many rebound attempts throughout the week, driven by an edgy, contrarian mindset due to the oversold market and the BofA Global Fund Manager Survey that revealed the highest level of cash position since 9/11, which was 6.1 percent. It also showed the most significant equity underweight position from May to 2020.

Perhaps the most significant rebound occurred at the close of the week. It helped lift market participants' S&P 500 from the bear market zone of -20 percent from a recent peak. However, it was clear that the concerns about growth exacerbated by persistent inflation and disruptions to supply chains were the primary reason for the stock market gyration.

The economic data for this week was rather disappointing:

  • In May, the Empire State Manufacturing Survey turned negative, with readings of -11.6
  • The Philadelphia Fed Index declined to 2.6 in May
  • The initial job claims for this week were higher than what was expected at 218,000
  • The conference board's Leading Economic Index (LEI) declined 0.3 percent in April  
  • The number of homes sold declined 2.4 percent month to month in April, resulting in a seasonally adjusted rate of 5.61 million
  • The Weekly MBA Mortgage Applications Index fell 11.0 percent
  • Fed Chair Jerome Powell has spoken about inflation this week. He said that the Fed would be more aggressive with interest rate increases if inflation does not drop in a clearly defined manner; however, the Fed could get less aggressive if inflation does fall.

The U.S. Treasury Ten-year note yield fell fifteen basis points, bringing it to 2.79 percent. The two-year yield dipped one basis point to 2.58 percent.

Market elsewhere

In the overseas trading market, the stocks in the Asia and Pacific region surged higher in the trade session on Friday. H.K's Hang Seng Index spiked by 3.3 percent, and Japan's Nikkei 225 Index rose by 1.3 percent.

All major Eurozone markets traded higher during the Friday session, but they closed below their highest levels. There was a rise in the U.K.'s FTSE 100 Index which shot up by 1.2 percent, the DAX Index in Germany climbed by 0.7 percent, while the French CAC 40 Stack Index moved higher by 0.2 percent.

Gold was on the up part of the ledger this week, despite eminent stagflation, wobbly stocks, and a more hawkish Fed playing the market psychology. Gold was trading at 1,846 and was up by $35 during the week. Silver was trading at 21.73 with a gain of 66¢ over the same period. Precious metals have gained some support in the wake of the market turmoil, but it has yet been able to "rattle some of the recently established tactical short positions."

The Euro has seen a significant bounce throughout the week of trading to surpass the 1.06 mark; however, it seems to be struggling with the Key Res 1.062 level. This is why we are likely to witness sellers rushing into this market. This means that fading rallies will remain the most common way traders play the Euro market.

Bottom Line

The market has been volatile over the entire month as the market has failed once and again to build any long-term upward momentum. The indicators exhibit greater volatility but with very little expansion for the coming week.

It isn't easy to envision any long-term continuation to contend solid rebound. The markets are struggling with tightening monetary policy, increasing interest rates, soaring fuel and food prices increasing U.S. Dollar, Chinese COVID severe locking downs, and Russia SMO within Ukraine.


The Merge date has been announced! The crypto community is eagerly anticipating what's now called The Merge. This is that Ethereum changes from proof-of-work to proof-of-stake. The Ethereum developers are doing all they can to ensure that this change happens by August.

If they fail to make the transition on time, the digital bomb could go off and cause a slowdown to the network. Proving of stakes will be launched on Ropsten on the 8th of June. It is Ethereum's test network. Not just are Ethereum programmers testing here; however, other third parties utilize Ethereum's blockchain.

What date will the project be finished?

However, the story about this test network is just an excuse for investors to invest. It's time for the real deal. Ethereum creator Preston Van Loon told the Permissionless conference they're sure The Merge will be completed within three months.

What exactly is "The Merge"?

The Merge occurs when the present Ethereum blockchain is merged with the proof-of-stake beaconchain. In terms of technicality, Ethereum has proven proof of stake network; however, there isn't much being done using it. 

Ethereum will be saying goodbye to the current proof-of-work mechanism as soon as the two systems merge, and miners must find new work. The Ethereum network will be at the disposal of any person who can improve Ethereum (these individuals will be referred to as strikers). 

Rewards will come in the form of bitcoin-based miners incentivized by crypto, applicable to strikers. The amount that strikers are compensated for will be contingent on the amount of ETH is invested and what their share.

This article was printed from TradingSig.com

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