Trading signal occurs in iETF model portfolio: Sell EWO, Buy EWY
Trading signal occurs in FEMKX model portfolio: Sell FEMKX, Buy Cash
The Fed increased the short term rate by 0.25% and anticipated three rate hikes next year as expected. Republican finally reached agreement on tax bill and will pass it next week. All major stock indices advanced higher on the news in addition to strong November retail sales and moderate inflation data. For the week, S&P 500 index closed at 2675, up 0.92%, Dow Jones Industrial Average gained 1.33% while technology laden NASDAQ composite index increased 1.41%.
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| Weekly chart of S&P 500 index |
S&P 500 index is 6% above it 28 week moving average as shown in the weekly chart. The question is not whether we will get a pull back, the question is when. The weekly momentum of S&P 500 index is still extremely high which should carry the index higher in the next couple weeks but it will be difficult to predict short term sentiment swing from investors.
We have seen sector rotation in the last few weeks as investors adjusting their portfolios to take advantage of the Tax reform bill and strength of US economy. US stocks outperformed global regions and Financial sectors are leading the way. Several trading signals were issued last week and this week due to momentum ranking changes. Notably, the FEMKX timing system issued a trading signal to move to side line after 320 days due to degradation of its momentum. We have had a nice ride with FEMKX for a gain of 34% in less than a year.
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