Stocks extended its gain for the third week with a strong rally on Monday. The S&P 500 index closed at 815, up 6.2%, the Dow Jones Industrial Average increased 6.8% and the Nasdaq composite index gained 6.0% for the week. It is encouraging to see S&P 500 index climbed above the 800 level. Let's hope that it will stay above that level. Although this is a typical bear market rally which most analysts do not expect to last long, the rally is still an important part of the bottoming process toward the recovery.
As indicated in the SELECT AMI ranking table, the AMI of a handful of the sector funds have turned positive this week. Sector funds are more sensitive and react much quicker to the economy condition change than the general stock funds. For the SELECT model portfolio, we are still holding the money market fund, since the rank of FSLXX has not dropped below 7. I think this cash position is prudent because the long term reversal has not occurred yet and the market is still very volatile. We may missed out some of the early gain in an up trend, but that is just what the system supposed to do.
Do you still remember our FEMKX trading system? We will buy FEMKX if the STO[15,1] climbs above 50, hold at least for a month, and sell it if its STO[15,1] falls below 75. According to its weekly chart, the STO[15,1] stood at 51.6 this week and warrant a buy signal. Because the longer term trend reversal has not yet begun, I will be cautious about this buy signal. I will not buy it with all the allocated money but a portion of that instead. Just to test the water, so to speak. Here is the trading record for the FEMKX timing system:
Fund Buy On Buy@ Sell On Sell@ P/L
FEMKX 03/26/07 $25.15 08/06/07 $29.53 17.42%
FEMKX 09/10/07 $28.98 12/28/07 $33.82 16.71%
FEMKX 04/28/08 $31.73 6/13/08 $30.81 -2.90%
CASH 06/13/08 $1.00 3/27/09 $1.00 0.0%
FEMKX 03/27/09 $12.95
No comments:
Post a Comment