As of Friday, September 30, 2016 at the close of trading EquitySurge™ has continued a strong buy signal for USA equities.
The third quarter ended with stock indexes near their all-time-highs, with the S&P500 Index closing at the 2168 level. However the market remains in the sideways consolidation mode it has been in since mid-July, and it is likely this up-and-down, back-and-forth action will continue for a while longer.
Our cardinal indicator, liquidity – the measure of money flowing into the stock market, is telling us this sideways consolidation should resolve at some point into a strong new up leg in prices for equities. Liquidity measures closed out the third quarter at their highest level so far in 2016, a very bullish sign for higher stock prices to come.
Will we see more sell-offs, pullbacks, and perhaps another mini-correction in the stock market near-term? Probably. However as long as liquidity remains in the strongly bullish position that it has been, any upcoming stock price weakness will be a buying opportunity for an eventual breakout higher.
The most obvious near-term catalyst for the stock market is the USA presidential election in early November. The stock market is likely to remain range-bound between now and then with sell-offs down to support levels followed by rallies back up to resistance levels. While there are strong feelings on both sides of the political spectrum about the outcome of this election, the bottom line for the stock market is that liquidity is telling us to keep buying dips.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.