Trading signal occurs in RSP model portfolio: Sell FDGRX, Buy 42627
Stocks closed sharply higher as likelihood of a interest rate cut grew higher due to economy slowdown and trade disruption. With May as the worst month for stocks, last week was the best week for S&P 500 index in the past 6 months. On Tuesday, Fed chair Jerome Powell indicated its dovish stance on interest rate under the impact from trade tension, while on Friday, job report showed US economy only added 75000 jobs in May confirming the slowdown. For the week, S&P 500 index closed at 2873 up 4.41%, Dow Jones Industrial Average gained 4.71% and technology laden NASDAQ composite index increased 3.88% for the week.
S&P 500 closed 2.5% above its 28 week exponential moving average (EMA) from 1.6% under a week before. We were right in our prediction on getting a rebound this past week but were wrong in expecting the index staying below the 28 week EMA. Bulls and bears are fighting around the trend line while the momentum indicator, STO, is flat below 50 indicating an indecision in the market direction. We think the momentum this week may carry the index upward for another week or two. Afterwards, the index will continue its downtrend similar to the February-March-April period in 2018.
The decline in May has caused rotation in sector performance as economy slowdown and bond yield heading lower. A trading signal occurs in the RSP model portfolio this past week to sell Fidelity Growth Company fund and move to the more defensive SS REIT index (42627) fund.
Stocks closed sharply higher as likelihood of a interest rate cut grew higher due to economy slowdown and trade disruption. With May as the worst month for stocks, last week was the best week for S&P 500 index in the past 6 months. On Tuesday, Fed chair Jerome Powell indicated its dovish stance on interest rate under the impact from trade tension, while on Friday, job report showed US economy only added 75000 jobs in May confirming the slowdown. For the week, S&P 500 index closed at 2873 up 4.41%, Dow Jones Industrial Average gained 4.71% and technology laden NASDAQ composite index increased 3.88% for the week.
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| Weekly chart of S&P 500 index |
The decline in May has caused rotation in sector performance as economy slowdown and bond yield heading lower. A trading signal occurs in the RSP model portfolio this past week to sell Fidelity Growth Company fund and move to the more defensive SS REIT index (42627) fund.
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