YCP ETF and Mutual Fund Rankings: February 2021

Fund Rankings Update, 2/26/2021

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.

Trading signal occurs in SELECT model portfolio: Sell FSAVX, Buy FSESX

Stocks suffered a large set back in a month due to sharp rise of long term treasury yields. Investors feared that economic growth due to the reopening of the economy and the stimulus package from Biden administration will be overheated causing high inflation and force the Fed to change its dovish interest rate policy. Major indices plunged sharply lower with Dow Joes Industrial Average dropping more than 1000 points in two days. Interest rate sensitive tech stocks were hit hard especially, while energy stocks, cyclical and value stocks outperformed the market. For the week, S&P 500 index went down 2.45% to 3811, Dow Jones Industrial Average lost 1.78%, and the technology laden NASDAQ composite index decreased 4.92%.

Will history repeats itself? The weekly chart pattern of S&P 500 index for the past two months is very similar to the chart pattern for the first two months in 2020. Stock market crashed after S&P 500 index reaching the record high of 3393 in mid-February, 2020 due to Codv pandemics. The index fell this week after reaching the record high of 3950 the previous week. As there is no major market disruptive event, we don't see an imminent market crash but a correction coming. The index always comes back to its moving average and sometimes the panic selling may cause it to overshoot on the downside. The 28 week EMA is at around 3600, which is 9% below its high of 3950, and a stronger support at 3500 gives a healthier correction of 13%. It will be interesting to find out where the market takes us next week.

Weekly chart of S&P 500 index

Fund Rankings Update, 2/19/2021

Stocks continued to march higher with less volatility as optimism arise from wider vaccine availability and declining Codv-19 cases. Federal Reserve Chair Jerome Powell also eased investors' concern by reiterating Fed's commitment to the low interest policy on Wednesday. On the sector front, communication and energy stocks outperformed while consumer discretion stocks lagged behind. For the week, S&P 500 index went up 1.23% to 3934, Dow Jones Industrial Average gained 1.0%, and the technology laden NASDAQ composite index increased 1.73%.

After two weeks of higher volatility trading, S&P 500 index advanced above 3900 to a new high with a narrower range. The index is not fart away from 4000 and could reach the level in a couple of weeks barring major disrupted events which we can't see any on the horizon. The one concern most analysts have is the high valuation of the stocks, and the chart has been telling us that the index is in an extreme over bought condition for a while. We have been on the caution side since end of last year, reducing market exposure as the index goes higher but not out of market for risk management. Our view of the market direction has not been changed but we will continue to monitor the market development and adjust our market assessment accordingly.

Fund Rankings Update, 2/12/2021

Expectation of further fiscal stimulus policy and progress on Codv-19 vaccination pushed stocks higher at the beginning of the week. However, higher than expected weekly jobless claims and inflation worries due to unexpected stronger retail sales pulled the markets into negative territories later of the weeks. For the week, S&P 500 index went down 0.71% to 3906, Dow Jones Industrial Average gained 0.11%, and the technology laden NASDAQ composite index decreased 1.57%.

S&P 500 index went back to the tight upward trading channel in the past two weeks. With the high upward momentum, the index is very likely to reach 4000 level in the next few weeks as we have discussed in the blog last week. We think that the index will continue to grind higher in the short term but the downside risk remains at an extremely high level. Caution and risk management are warranted as the index marching higher.

Weekly chart of S&P 500 index

Fund Rankings Update, 2/5/2021

Stocks rebounded on the optimism for stimulus package, increasing vaccination for the public and declining Codv-19 cases. The short squeeze phenomenon for a handful of targeted stocks, like Gamestop and AMC, also subsided allowing investors to turn their attention back to "traditional stocks". On the sector front, energy stocks outperformed while healthcare lagged behind. For the week, S&P 500 index went up 4.25% to 3886, Dow Jones Industrial Average gained 3.89%, and the technology laden NASDAQ composite index increased 6.01%.

Price volatility of S&P 500 index increased for the second week as the index approaching 3900. While the index reaching the new high, its momentum indicator STO[15, 1] fell lower as shown in the weekly chart below. The weekly price pattern of the index looks very similar to the pattern in early 2020 before the sharp plunge in mid February. Although we don't expect a market crash this time around, the high valuation coupled with waning momentum do give us a reason for concern.

Weekly chart of S&P 500 index