Trading signal occurs in SELECT model portfolio: Sell FBIOX, Buy FSRPX
Trading signal occurs in ETF model portfolio: Sell IBB, Buy IDU
Trading signal occurs in sETFT model portfolio: Sell IBB, Buy ITB
Trading signal occurs in iETF model portfolio: Sell EWK, Buy Cash
Stocks plunged this week on worried about global economic slow down and the devaluation of China's currency while ncertainty about the timing of Fed's first rate hike rubbed salt into the wound. For the week S&P 500 index closed at 19701, downp 5.77%, Dow Jones Industrial Average lost 5.82% and Nasdaq composite index ended up lower by decreasing 6.789%.
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| Weekly chart of S&P 500 index |
From the weekly chart, S&P 500 index has fallen below its trading channel of 2040 - 2130 in a violent way giving this rally a long overdue correction. In the 2014 sell-off during September-October time frame, the index fell from 2019 to 1820 with a 10% drop. At that time the index ended up a hammer formation (candle with long tail and short body) and rebounded right above the trend line in the next week to resume the uptrend. The chart pattern this past week showed a long boy candle which indicates that the selling has not quite ended although we may see some bounce next week. The next support level on the down site is around 1900.
The bio tech sector has suffer larger loss in this sell-off and caused position changes in several model portfolios this week. SELECT, ETF, and sETF model portfolios have trading signals issued to sell bio tech funds and move to more defensive funds. For international funds, iETF model portfolio has issued trading signal to move to cash position. Please see detail in the "Trading logs" page.
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