Fund Rankings Update, 4/3/2020

Weekly Average Momentum Index (AMI) rankings of HSA, SSPP, RSP, SELECT, ETF, iETF, sETF have been posted in "Rankings", "Trading Logs" pages, as well as in  http://ycprankings.awardspace.us/RankingTables.htm.

Disappointing coronavirus statistics from California and New York heightened the worried about the severity and prolong duration of the pandemics, and drove the stocks price downward. For the week, S&P 500 index went down 2.1% to 2488, Dow Jones Industrial Average lost 2.7% , and the technology laden NASDAQ composite index decreased 1.7%. 

We are six weeks into this sharp sell-off, so it is a good time to see where we are and where we go from here. Looking back at the weekly chart of S&P 500 index during 2007-2009 great recession period, the index first sold-off below its 28 week EMA (exponential moving average) from its record high in October 2007 and  rallied from its first low in March 2008. The bear market rally failed at the EMA in May 2008 and continued to make a lower low (a bear market price pattern) to reach the low of the bear market in March 2009. The first leg down took 22 weeks, the first bear rally took 9 weeks and the final leg down took 41 weeks. Total duration of the bear market is 72 weeks. In recent years, the duration of the sell-off has been greatly reduced as seen in 2015 and 2018 mini crashes due to computerized trading which intensifies the pace of selling. This time around, the index fell below its long term bull market support line indicated by the green straight line in 4 weeks, and is back testing the support.  I think the index has completed its first leg down and is in the process of making a bear market rally going up to meet the declining EMA. The index is very likely to fall lower after testing the EMA to finalize its last leg down. If the scenario plays out, there is a selling opportunity when the price gets near the EMA and a buying opportunity at the end of the final leg down for portfolio adjustment. In terms of timing, I think we are still early the the game and patient is needed to wait for the opportunities. As discussed earlier, it took 72 weeks to complete the last bear market and I don't expect it will be different this time. 

Weekly Chart of S&P 500 Index