Nervous sentiment drove up the volatility of stock markets this past week. Investors tried to reduce their risk exposure on every small bad news that came out, whether it is geopolitical tension or even Apple's OS trouble. DIJA dropped more than 250 points in one day Thursday. For the week, S&P 500 index fell below 2000 level again and closed at 1982, down 1.375%. Dow Jones Industrial Average lost 0.92%, and Nasdaq composite index decreased 1.48%.
In the weekly chart below, we can see S&P 500 index is still consolidating at the 2000 level and waiting for the trend line to catch up. Looking back earlier this year in February and March time frame, the index spent 8-9 weeks consolidating around 1900 levels before its final breakout so there should be no surprise this time. We just have to let this consolidation run its course but keep a vigilant eye as sentiment can change suddenly.
A trading signals was issued in RSP model portfolio this week. SSgA emerging market index (42625) is replaced with Fidelity CONTRA Fund, FCNTX, due to AMI rank change and its failure to sustain the up trend. 42625 was held for 46 days with a loss of 3.33%.
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| Weekly Chart of S&P 500 Index |
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