As of Tuesday, November 22, 2016 at the close of trading EquitySurge™ has continued a sell signal for USA equities.
Stocks rose again today, with new all-time-highs achieved for the Dow Jones Industrial Average and the S&P500 Index. Liquidity rose modestly, but is still giving us a clear warning signal about this rally in equities.
As mentioned before, stocks could continue to float higher during this Thanksgiving holiday week, but the real test will be in early December when it will be back to business as usual for traders and investors.
The stock market is becoming over-bought at this point, which means that several key technical indicators are showing exhaustion. With liquidity telling us that something is wrong, we are very inclined to keep taking profits on longs into these new all-time-high prices to build a cash position.
This rally could continue longer as there is also “bullish seasonality” during the holiday season of late November through December. However unless liquidity begins climbing precipitously from current levels, something we doubt will happen, it is better to be safe than sorry and count our blessings by taking profits as the market climbs into a top. Do not be greedy and hold out for every last ounce of gain this rally may hold, as a reversal lower in prices could occur at any time.
We would feel much better about continuing to hold longs and see how high this market can go if liquidity was confirming the rally off the election lows, but it is not doing that, so we will check emotions at the door and listen to what our key indicator of liquidity is telling us.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.