As of Tuesday, November 1, 2016 at the close of trading EquitySurge™ has continued a strong buy signal for USA equities.
Stocks took a beating today in a broad-based sell-off, with the S&P500 Index closing down 14 points to the 2112 level.
The presidential election circus and concerns about the Fed raising rates along with the recent sharp rise in bond yields are all factors weighing strongly on the market. At this point with the election finally only a week away, and the November Fed meeting policy and statement announcement scheduled for tomorrow (Wednesday), the market may find some concrete answers to these outstanding and significant unknown variables.
Right now the major stock market indexes are entering oversold territory and at least a temporary bounce should be close. The good news from the leading indicator of liquidity, the measure of money flow into the market, is that this price drop should be viewed as another opportunity to buy or add to existing long equity positions.
Liquidity is telling us this is a temporary price pull-back that should be bought, and not the beginning of a bear market or extended slump in equity prices. However as we enter the final stretch in the presidential election and a window from now into the December Fed meeting at which point a rate increase could occur, prices could continue to be weak as buyers stay away until they see some answers and more information.
We are in somewhat uncharted territory in terms of the macro view, what with this weirder-than-weird election coupled with the prospect of less central bank accommodation for the markets and possibly higher interest rates. In times such as these it pays to listen to what the market is saying and not get caught up with what the news media is saying or what TV pundits are talking about. And right now the message from the markets, spoken through the strong voice of liquidity, is to keep buying these dips and mini-corrections to build long positions, with the expectation of a “catch-up” rally occurring sometime soon on the road ahead.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.