Fund Rankings Update, 3/27/2015

Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, sETF have been posted in "Rankings", "Trading Logs" pages, and  http://ycprankings.awardspace.us/RankingTables.htm.

Economic data showed that the 4th quarter GDP grew at 2.2% while corporate profit decreased by 0.8%. Worries about slowing economy and impact from strong dollar pushed the major stock indices down and erase most of the gain for the year. For the week, S&P 500 index closed at 2061, down 2.63%, Dow Jones Industrial Average lost 2.29%, and Nasdaq composite index decreased 2.69%.  

In the weekly chart, S&P 500 index looks to be trading between 2040 - 2120. It is currently traded at the lower end of the channel and near its 28 week moving average. The up trend is still intact as the index is still above the moving average support level. However, the volatility is high as market is looking for direction and the earning report season is approaching.

Weekly chart of S&P 500 index

Two weeks ago we thought that oil price was very likely to fell below the $43 support and may have difficulty forming a "W" bottom. As shown in weekly chart below, oil price briefly went down below $43 but pulled itself right back and has formed a "W" bottom with support at $43 and resistance at $55. The momentum is still very weak but is trying to break out from the over sold condition. There is a good chance for $WTIC to break the $55 resistance and reach the resistance from its 28 week moving average. 

Weekly chart of light crude oil price

Fund Rankings Update, 3/20/2015

Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, sETF have been posted in "Rankings", "Trading Logs" pages, and  http://ycprankings.awardspace.us/RankingTables.htm.

Investors' fear of rate hike was calmed by the Fed's keeping its easy money policy and even lowering the rate outlook by the end of the year after its policy meeting. Major indices shed three week's of loss and moved up strongly with NASDAQ composite index broke the 5000 level and reached an all time high in 15 years. For the week, S&P 500 index closed at 2108, up 2.66%, Dow Jones Industrial Average gained 2.13%, and Nasdaq composite index increased 3.17%.  

The strong up trend in stocks can be seen from the weekly chart of S&P 500 index. After touching its 28 week moving average support level last week, the index bounced right back to continue the up-trend. The up trend is expected to continue with higher volatility as investors are still nervous about rate hike this year.

Weekly chart of S&P 500 index 

The biotech stocks have been particularly strong since late last year due to merger activities and new drug testing results. In SELECT model portfolio, the Select biotech fund, FBIOX, has been held for five months with a gain of 50% so far. However, in the weekly chart below, FBIOX looks overextended in the past few weeks. Currently, the index is 23% above its 28 week moving average, about the same level as it had experienced in March, 2014.  During that time, FBIOX had a 25% correction and fell back to its moving average support after the sharp rise. We do not know what will happen this time around but caution is warranted as exponential rise followed by a deep correction back to the 28 week moving average is commonly seen. 

Weekly chart of FBIOX

Weekly Fund Rankings Update, 3/13/2015

Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, sETF have been posted at "Rankings", "Trading Logs" pages, and  http://ycprankings.awardspace.us/RankingTables.htm.

1. Trading signal occurs in FEMKX model portfolio: Sell FEMKX, Buy CASH.
2. Trading Signal occurs in RSP model portfolio: Sell 42627, Buy 05084.

Investors' fear of rate hike and strong US dollar delivered the third week of loss to stock markets.  However, small cap stocks outperformed large cap stocks with Russel 2000 small cap index actually ended up 1.2% higher. For the week, S&P 500 index closed at 2053, down 0.86%, Dow Jones Industrial Average lost 0.6%, and Nasdaq composite index decreased 1.13%.  

S&P 500 index has fallen to its 28 week moving average and is trying to hang around the 2060 support level . We may see another couple weeks of consolidation around this level before it bounces up as in the past. As mentioned last week, if this support fails, the next logical support level is around 1990 - 2000 level.

Weekly chart of S&P 500 inex

Oil prices tumbled this week, light crude oil prices index $WTIC fell 9.6% in a week with 4 % drop on Friday. In the weekly chart, $WTIC is forming the second bottom of a "W" formation. A few weeks ago, we discussed about buying at this second bottom of around $45 as a more risk tolerant trading strategy. However, from the weekly and daily charts, $WTIC may very likely fall even lower as its momentum is extremely weak. The prudent strategy would be to wait for a MACD "cross above" buying signal in the daily chart.   

Two trading signals occurs in model portfolios this week. For FEMKX timing system, the stochastic momentum indicator, STO, fell below 75 and a sell signal was issued to move to cash position. FEMKX was held for more than 3 months with a loss of 5.2%. Emerging market funds have not been able to develop a consistent up trend due to falling oil prices, strong dollar and stagnant global economy, and have been under performing the general markets. For RSP model portfolio, the REIT index fund fell below 7th rank in the ranking table and is replaced with the current top rank fund, Pyramis Small Cap Core fund.  The fall of REIT index fund largely attributes to the rate hike concern and the technical correction to the quick run-up early in the year.  The fund was held for 67 days with a loss of 0.47%.

Weekly Fund Rankings Update, 3/6/2015

Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, sETF have been posted at "Rankings", "Trading Logs" pages, and  http://ycprankings.awardspace.us/RankingTables.htm.

US economy added 295, 000 jobs in February despite the cold weather.  However the strong job report ignited a big sell-off Friday as investors feared that strong economy growth will cause the Federal Reserve to raise interest rate sooner and higher. The next Fed meeting will be held in 2 weeks, and we will know then if the Fed will change its current accommodating money policy.   

After touching the top boundary, S&P 500 index fell back to middle of its trending channel in the weekly chart. In the daily chart, the short term momentum is falling quickly and the MACD indicator showed a "cross below" pattern on Wednesday. This "cross below" pattern signaled that a short term correction is already in progress.  From the daily chart, we can observe a strong support at around 2064, that is where S&P 500 index is right now. If this support does not hold, the next level will the the 200 day moving average which stands at 2000.  At this moment, the uptrend in the weekly chart is still intact even with the short term consolidation in progress. 

Weekly chart of S&P 500 index

Daily Chart of  S&P 500 index