Trading signal occurs in sETF model portfolio: Sell ITB, Buy IAK
Trading signal occurs in RSP model portfolio: Sell 42627, Buy FCNTX
Stocks experienced higher volatility as companies started to report 2nd quarter earnings. Economic data during the week showed solid retail sale gain in June as well as better than expected growth in manufacturing activities. These positive economic data dampened investors' hope for Fed's rate cut at the end of July from 0.5% to 0.25 %. For the week, S&P 500 index closed at 2976 down 1.23%, Dow Jones Industrial Average lost 0.65% and technology laden NASDAQ composite index decreased 1.19% for the week.
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| Weekly chart of S&P 500 index |
After breaking the 3000 psychological barrier S&P 500 failed to hold the position and closed down below 3000 at 2976 with the next support level at 2950. The pullback lowers the deviation of the index from its 28 week EMA to 4.1% from 5.7% last week. Notice that the index is currently higher than the peak of 2954 at the end of April, while the momentum indicator STO [15,1] currently at 94.5 is lower than the reading of 98 at that time. This divergence shows the taping off of the advancing momentum. While the index still posses an extreme high momentum and may continue its advance, the divergence is something worth to pay attention to.
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