YCP ETF and Mutual Fund Rankings: April 2020

Fund Rankings Update, 4/24/2020

Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, sETF have been posted in "Rankings", "Trading Logs" pages, as well as in http://ycprankings.awardspace.us/RankingTables.htm.

Stocks went sharply lower at the beginning of the week as energy prices collapsed due to weakness in global demand. Oil future went down to negative $37 at one point but moved back to positive the next day. Stocks recovered at midweek as U.S. House of Representatives passed the second relief funding package of $480 billion for small businesses. For the week, S&P 500 index went down 1.3% to 2836, Dow Jones Industrial Average lost 1.9% , and the technology laden NASDAQ composite index decreased 0.2%.

After two weeks of advancement, S&P 500 index took a pause and ended the week with an indecision pattern at the upper weekly trading range. As the bears and the bulls battle it out, the outcome of next week should tell us if the rally will continue or not.

Weekly chart of S&P 500 index

Fund Rankings Update, 4/17/2020

Stocks marched higher for another week as investors' sentiments, boosted by positive news on slower coronavirus infection and hospitalization in the US, remains elevated. For the week, S&P 500 index went up 3.0% to 2874, Dow Jones Industrial Average gained 2.2% , and the technology laden NASDAQ composite index increased 6.1%.

S&P 500 index closed the week solidly above the 50% Fibonacci retracement level of 2795 and is heading toward the 61.8% retracement level of 2935 which is also close to the resistance form the declining 28 week moving average. With the dual pressures, this 2935 level will be a strong resistance for S&P 500 index in the coming weeks. The behavior of the index around this level will provide us a very good indication about the market direction.

Weekly chart of S&P500 index

Fund Rankings Update, 4/10/2020

Stocks continued to rebound from its March low as statistics showed slowing in infection rate and fatality rate of coronavirus pandemic. News articles started to discuss ways of reopening the economy. Discussion about another fiscal stimulus package in White house and congress also boosted investors sentiment, and on Thursday, Federal Reserve announced a $2.3 Trillion program for loans to smaller businesses to boost economy. For the week, S&P 500 index went up 12.1% to 2789, Dow Jones Industrial Average gained 12.7% , and the technology laden NASDAQ composite index increased 10.6%.

In the blog last week, I mentioned that S&P 500 index has completed its first leg down and is making a counter trend rally. To see where this bear market rally is heading, I applied the Fibonacci retracement lines on the first leg of the selloff. The index fell from its high of 3393 to the low of 2191 in this severe plunge. The 38% recovery level is at 2650 which was the resistance in the previous 2 weeks, while the 50 % retracement level at 2795 has just been reached this week. Usually after sharp plunges, the index would recover 50% of the loss or 61.8% at the best. If the rebound is strong, the next level to reach will be the 61.8 % retracement level at 2935. For investors who are thinking to lighten their holdings, these two levels are good opportunities to reduce their risk exposure. One of the trading rules used by market technician is buy at the support in the bull market and sell at resistance in the bear market. In the blog last week, I also talked about the second leg down after completion of this counter trend rally. However, the completion of the counter trend rally can only be told in hindsight. As market volatility remains elevated, the index can go either way very quickly. We will continue to monitor the stock movement and analyze it accordingly.

Weekly chart of S&P 500 index

Fund Rankings Update, 4/3/2020

Disappointing coronavirus statistics from California and New York heightened the worried about the severity and prolong duration of the pandemics, and drove the stocks price downward. For the week, S&P 500 index went down 2.1% to 2488, Dow Jones Industrial Average lost 2.7% , and the technology laden NASDAQ composite index decreased 1.7%.

We are six weeks into this sharp sell-off, so it is a good time to see where we are and where we go from here. Looking back at the weekly chart of S&P 500 index during 2007-2009 great recession period, the index first sold-off below its 28 week EMA (exponential moving average) from its record high in October 2007 and rallied from its first low in March 2008. The bear market rally failed at the EMA in May 2008 and continued to make a lower low (a bear market price pattern) to reach the low of the bear market in March 2009. The first leg down took 22 weeks, the first bear rally took 9 weeks and the final leg down took 41 weeks. Total duration of the bear market is 72 weeks. In recent years, the duration of the sell-off has been greatly reduced as seen in 2015 and 2018 mini crashes due to computerized trading which intensifies the pace of selling. This time around, the index fell below its long term bull market support line indicated by the green straight line in 4 weeks, and is back testing the support. I think the index has completed its first leg down and is in the process of making a bear market rally going up to meet the declining EMA. The index is very likely to fall lower after testing the EMA to finalize its last leg down. If the scenario plays out, there is a selling opportunity when the price gets near the EMA and a buying opportunity at the end of the final leg down for portfolio adjustment. In terms of timing, I think we are still early the the game and patient is needed to wait for the opportunities. As discussed earlier, it took 72 weeks to complete the last bear market and I don't expect it will be different this time.

Weekly Chart of S&P 500 Index