Another down week due to worries about emerging markets. S&P 500 index closed at 17820, down 0.43%, Dow Jones Industrial Average lost 1.14%, and Nasdaq composite decreased 0.59% for the week.
It is encouraging to see S&P 500 index reached 1770 level and bounced back at the closing of the week in the weekly chart. On the upside, the 28 week moving average stands at 1750, and the index has bounced off from the 28 week MA three times in the past year. On the downside, however, the momentum are deteriorating in both daily and weekly charts, which indicates that the index may be hovering around the 28 week MA for a while.
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| Weekly Chart of S&P500 Index |
As this pull back is induced by the rout in emerging markets, let's take a look at the weekly chart of Fidelity emerging market fund, FEMKX. FEMKX peaked in mid October at $24.71, and heading downward ever since. It bounced off from 28 week MA in mid November and stayed above the support for two months before its final plunge last week. Its momentum indicator, slow STO[15, 1], dipped below 75 in late December, 2013 and our FEMKX timing system issued a sell signal and move to cash position at the time. Looking back, the signal maybe early but turns out to be a good call.
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| Weekly Chart of FEMKX |
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