Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, sETF have been posted at http://sites.google.com/site/ycprankings/
Trading signal occurs in HSA model portfolio: Sell CLSPX, Buy IUTIX
Uncertainty about European debt crisis and robustness of US economy still depress investors' confidence. In a move to drag down the oil price and boost economy, the international community decided to release their strategic reserve of petroleum at the same time. This government intervention also did not bode well for investors. Commodity prices and stock prices all went down since the announcement. The S&P 500 index closed this week at 1268 down 0.04%, the Dow Jones Industrial Average lost 0.58%, while the over-sold Nasdaq composite index got a technical rebound and increased 1.39%.
In the weekly chart of S&P 500 index, we can see the divergent between its price movement and momentum indicator in April. While the price was making a new high in April, its momentum indicator was actually declining. I have pointed out my concern about this divergence in the blog dated 5/27. Two weeks ago, the S&P 500 index fell below its trend line and its momentum indicator was falling fast. Since then, the index has been trying to find a support while the momentum indicator fell to oversold area this week. The correction will not be over before the momentum indicator changes its direction and the price goes back up above the trend line. Only at that time, we will know the length (last time, the index stayed below the trend line for about 4 months before it resumed its up trend) and the intensity of this correction.
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