As of Wednesday, August 3, 2016 at the close of trading EquitySurge™ has continued a hold signal for USA equities. This signal means to hold existing long stock market positions, but do not buy additional positions.
We have been discussing the expectation of a downturn/correction in stock prices over the past couple weeks, and yesterday we finally saw the first signs of that downturn beginning in earnest.
However there is developing evidence that this downturn may only reach the upper limits of the range we have been eyeing, and not the lower levels discussed. This means we may need to be ready to buy additional equity positions around the 2120 level on the S&P500 Index, rather than the 2100 level or below.
The market needs to show us additional evidence that a more shallow drop is in store to be sure, but it is starting to look like a brief, shallow decline is what’s going to happen, and if this turns out to be the case you do not want to miss the buying opportunity as the market will likely take off higher after the dip.
So the best course of action at this point may be to continue holding existing long equity positions with the expectation of an imminent decline, but one that now may only dip to the 2120 level before turning around and heading markedly higher. Be prepared to possibly make a quick buy around the 2120 level to add to existing long stock positions. We will update just as soon as we have more evidence that a shallow decline is in store rather than something deeper.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.