Trading signal occurs in FEMKX model portfolio: Sell CASH, Buy FEMKX.
First quarter arnings reported by companies were not as bad as expected, which pushed US stocks higher in the first few days of the week. However, fear of Greece's inability to make scheduled payment on its bailout loan surfaced again on Friday, and to make things worse, China announced tightening of its trading regulation. Affected by the news, stocks fell sharply Friday, at one point Dow Jones Industrial Average plunged more than 350 points, wiped out the gain from the first few day of the week and ended up lower. For the week, S&P 500 index closed at 2081, down 0.99%, Dow Jones Industrial Average lost 1.28%, and Nasdaq composite index decreased 1.28%.
Even with the sharp one day drop, S&P 500 index is still trading within the 2040 to 2120 channel and above its support as observed in the weekly chart. Its momentum indicator is still flat but picks up a bit at the end. We have expected higher volatility during the earning report season and may have to wait for another few weeks to get a sense of where this market is headed.
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| Weekly chart of S&P 500 index |
Fidelity Emerging Markets fund has picked up momentum again after dipping below 75 briefly in March. As the momentum indicator climbed back above 80, a trading signal was issued to move from cash position into long position for FEMKX timing system. In the weekly chart below, we can see the high volatility of the fund due to both economic condition in the emerging markets and exchange rate. Since beginning of the year, it has made a higher high and higher low bullish pattern. Going forward, we think FEMKX is likely to trend upward with the same volatility. Detail trading record of FEMKX timing system can be seen in the trading logs page.
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| Weekly chart of FEMK |
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