Trading Signal occurred in FEMKX trading system: Sell FEMKX, Buy CASH.
US Stocks suffered the worst week since March, 2009 as investors worried that the Greece' debt crisis may spread to other Euro zone countries. Stocks started their slide on Tuesday, at one point Thursday afternoon, the Dow Jones Industrial Average plummeted 998 point in 15 minutes interval before recovery and at the end of the day closed down 350 point. Panic set in and sell off continued on Friday. The S&P 500 index closed this week at 1110, down 6.4%, the Dow Jones Industrial Average decreased 5.7%, and the Nasdaq composite index lost 8.0% for the week. The S&P 500 index has fallen 9% from its high of 1219. The official definition of a correction is 10%-15% below its high so we are not quite there yet.
Although the sell-off was intense, the monthly chart of S&P 500 index still shows that the index is above the support level and its long term momentum, indicated by the STO[15,1], is still above 80 (see chart 1below). The multi-year uptrend is still intact before the tend line is broken and the momentum fell below 70,
The FEMKX, however, was more sensitive to the sell-off. Its weekly momentum indicator, slow STO[15,1], fell from 83 to 60.16 in one week, below our sell threshold of 75, ans the 28 week support line was broken. A sell signal is issued and we will move to cash position. We have held FEMKX for 53 days with a loss of 7.3% for this trade.
Chart 1: Monthly Chart of S$P 500 index
Chart 2: Weekly Chart of FEMKX
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