As of Friday, November 18, 2016 at the close of trading EquitySurge™ has generated a sell signal for USA equities.
Liquidity had a weak bounce for part of this week that now appears to have been short lived as it is already turning down again. Something is not right in the market, and liquidity is beginning to scream at us to take notice and start exiting the stock market.
While it is difficult right now to find a “reason” that stocks may turn down again, and in a big way, nonetheless our best precursor indicator, liquidity, is clearly warning us that a significant stock decline is coming and may be imminent.
Therefore we will be taking profits on equity longs by selling into price strength this coming week and moving to cash. We would rather err on the side of caution and lock-in gains on long positions now in order to have plenty of cash available to go back into equities when liquidity tells us to, rather than wait and try to eek out every last bit of gain. It is possible the stock market meanders higher during this coming Thanksgiving-shortened holiday week, and if that is the case we will gladly take those higher prices and get out.
It will probably be crystal clear why stocks sold-off once the big move down is underway, but by that time these current all-time-high prices will have evaporated into a steep decline. Best to be safe than sorry, and if for some reason liquidity suddenly turns around and climbs strongly higher (very unlikely), we will wait for a pullback in prices to get in again. Better to give up some risky marginal additional gains by going to cash now, rather than to ignore the warnings from liquidity and stay long and risk having to endure a significant sell-off.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.