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- The Dividend Investor's Edge Newsletter - June 13th 2022
The Dividend Investor’s Edge is a weekly newsletter designed to give you, the investor, a full picture of where the stock market is, and to equip you with important information I came across during the week, and what to look for in the week ahead, all constructed in an easy to understand format.
This newsletter is designed for investors of all levels.
Each Week I will discuss:
• An update on the Stock Markets major averages
• Stock Market: On The Horizon
• Notable Upgrades/Downgrades
• Dividend News
📈 Quick Look At The Markets 📉
As a reminder or for those of you new readers, in the “Quick Look At The Markets” section I plan to give you a recap on the prior week for the S&P 500 as a whole as well as the top performing and worst performing sectors. In addition, I will touch on volatility and fear in the market currently, which are important factors to consider when investing.
Man oh man…..that was a rough week in the stock market. The S&P 500 ended the week on a very poor not with back to back 2%+ down days. On the week, the S&P 500 was down nearly 6%, which is a sizable pull-back in a week’s time.
What went wrong? Well, a lot! There is really not a lot going right for the economy right now. This past week we goanotherer uptick in inflation, which showed May inflation grew to 8.6%. That growth was the highest over the past four decades.
Economists were expecting inflation to be in line with the prior month inflation growth of 8.3%, which could have suggested that inflation may be leveling off, but that was certainly not the case and the markets paid for it.
On top of that, we saw the June preliminary Consumer Sentiment reading drop to the lowest levels since the 1980s recession. The reading came in at a reading of 50 which was a major drop off and further signaling that we may be nearing a recession if we are not already in one.
The 10-Year Treasury ticked over 3% on the inflation news as well, which will further send mortgage rates higher over 5.5%. This was on the backs on a 22 year low in Mortgage applications, suggesting a slowdown in the real estate market.
Like I said, not a lot going right for the economy right now, and the Fed is going to continue rising rates to try and combat inflation. All this paints a picture that more pain is likely ahead, and things will get worse before they get better.
Here is a look at the heat map over the past week for the S&P 500. Year-to-date the S&P 500 is down 18.7%, after falling 5.9% last week.
Top Sectors For The Week
All sectors in the RED
Worst Sectors For The Week
Financials -6.77%
Information Technology -6.38%
Real Estate -6.15%
Fear Factor
Volatility levels have ramped back higher in lieu of the big losses from last week.
Fear and uncertainty is often expressed in the stock market through volatility. One way for investors to understand where the market as a whole is in terms of volatility is by monitoring the CBOE Volatility Index (VIX). The VIX represents the market’s expectations for near-term price changes within the S&P 500 index. The index is derived from index options with near-term expiration dates, projecting a 30-day forward projection.
The VIX ended the week with a reading of 27.75 with the 50-day moving average finishing at 26.57. A reading under 20 is when I consider things to be closer to normal, which is where things stand currently.
Here is a look at the VIX chart with the 50-day moving average:
Another resource you can look at is the Greed and Fear Index that measures market sentiment based on the following seven factors: put/call ratios, junk bond demand, stock price breadth, market volatility, stock price strength, safe-haven demand, and market momentum.
When it comes the the Greed and Fear Index, things remained at a FEAR rating but nearing closer to Extreme Fear. Currently, the index has a reading of 28, which fell a few points from where things were last week when the rating was 30.
📰 Stock Market: On The Horizon 📰
In this section labeled “Stock Market: On The Horizon” I will discuss a variety of different topics that have gone on in the market and are on the horizon.
This could be a tough week coming off the heels of how last week ended. Inflation fears will remain at the front of investors minds as will the Federal Reserve. The Fed has its monthly meeting this week and we can expect another 50 basis point rate hike.
The rate hike is expected, but the outlook and the meeting notes will be a major focus for investors. Fresh off the brutal consumer sentiment report and May inflation report, how the Fed charts out its next move will be key.
If you have not done so yet, definitely check out my growing YouTube community where I publish weekly videos on Dividend Stocks I am looking at.
Here is a look at my latest video in which I discussed 3 Dividend Stocks to consider buying in June. These 3 Dividend stocks include one REIT. Give it a view and a LIKE here:
Also, have a look at my latest Dividend Portfolio update:
I will be releasing a new video on Wednesday, so make sure you are subscribed so you do not miss it.
I got some great feedback and a lot of interested regarding the options information I discussed last week, so I wanted to follow-up on that.
Knowing the dear in the market this week, I have an open Put option for QQQ, meaning I will make money when the market falls.
Covered calls are a great approach in the current market as well for any positions you own 100 or more shares in. It allows you to hold the positions through the rough patch while also collecting premiums to help offset those loses a little.
Want to learn more about conservative option plays? Here are 2 GREAT resources to introduce you to Covered Calls or Cash Secured Puts:
Click HERE for your copy of Turbocharge Your Dividends. This easy to read book will teach you how to SELL COVERED CALLS.
Click HERE to learn how to SELL PUTS for income.
Let me know in the comments section down below what stocks you are looking at buying.
⏫ Stock Upgrades/Downgrades ⏬
In this section moving forward, I will add any notable analyst Upgrades or Downgrades I came across during the previous week.
Devon Energy (DVN) downgraded to HOLD at Evercore ISI
Occidental Petroleum (OXY) downgraded to HOLD at Evercore ISI
Target (TGT) PT lowered to $175 at Barclay’s. Bank of America downgraded TGT to HOLD
Microsoft (MSFT) PT lowered to $335 at Barclay’s
Diamondback Energy (FANG) PT increased to $196 at Piper Sandler
💰 Dividend News
In this section I will detail what I am watching and any Dividend related news.
Garmin (GRMN) raises quarterly dividend by ~9%
Target (TGT) increases the dividend by 20% (Huge raise after poor earnings results and guidance cut last week)
Caterpillar (CAT) increases the dividend by 8%
UnitedHealth (UNH) increased the dividend by 14%
Essential Properties (EPRT) increased the dividend by 4%
Other Resources
Here are a few of my latest YouTube videos to watch:
New to investing or looking for a new brokerage? Check out Webull where they have a special promotion where they will give you FREE stocks that could be priced as high as $3,000 per share for opening a NEW account. Click HERE for the promotion.
If you do not already follow me on social media, give me a follow as I put out weekly content.
Thank you for reading my newsletter! Please comment down below and share the newsletter with someone that may find it useful.
I love hearing from those of you that have reached out. If you want to see certain improvements, please let me know. You can email me directly at [email protected].
Have a Great Week!
Mark
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