Fund Rankings Update, 1/22/2016

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.


Trading signal occurs in SSPP model portfolio: Sell FRESX, Buy Cash


Stocks rebounded at the end of this holiday shortened week. Stock markets are still largely influenced by oil prices. Investors did not pay too much attention to mixed US economy data on housing and unemployment claims. Oil prices, on the other hand, went down below $28 early in the week and drag the stock markets down to the earlier 2014 level before rebounding later in the week.  For the week S&P 500 index closed at 1906, up 1.41%, Dow Jones Industrial Average gained 0.66% while NASDAQ composite index increased 2.29%.

Weekly chart of S&P 500 index

In the weekly chart, S&P 500 index has displayed a "Hammer" revers candle pattern. In the past, the pattern has signaled the end (or near the end) of the correction. The index went down to 1820, the 15% correction level, mid week under the residual selling pressure from last two weeks. It rebounded after briefly touched the level on Wednesday and went right up for two days as buying power showed up. It is encouraging to see a reverse pattern show up on a upside after 3 weeks of selling. The best scenario is for the index to consolidate at this level and build a base to bring back investors' confidence. The up trend has been broken and the index is clearly in the down trend. Previous support levels become the resistance levels.  Even the trend line (28 w MA) shows the lower high pattern, so we expect this down turn to last longer. 

To put this correction in a longer term perspective, a monthly chart of S&P 500 index for more than 20 years is shown above. This up trend started in 2009 and is about six years old. The last time we have the similar trend is during 1995 - 2000 bull markets. That up trend ended up with a 2 year bear market and a 50% correction. Of course every market cycle is different, and industry sectors still rotate under different market and economic conditions. We just have to see how it all plays out.