As of Friday, December 2, 2016 at the close of trading EquitySurge™ has continued a sell signal for USA equities.
The stock market closed basically unchanged on Friday after the release of a better-than-expected Employment Situation Report.
Stocks seem to be struggling now after reaching new all-time-highs following the presidential election, and liquidity is certainly confirming this as it continues to tell us to exit long stock positions.
We are heeding the warning from liquidity and have been selling long equities. While it is not clear yet exactly what is wrong, the warning from liquidity is strong and consistent, more than enough for us to take profits on long positions and get to cash.
The rally in stocks since the election has been dubbed the “Trump Rally” with the idea being that stocks rose after his election due to expected policy changes and new initiatives to be enacted soon after his inauguration. While this description is certainly popular in the press, the reality is that the stock market was poised to rise after a clear and uncontested presidential election, regardless of which candidate won. Liquidity told us to stay long and keep adding to long positions in the days and weeks leading up to the election, and we were rewarded with a powerful snap-back rally following election night. However soonafter that liquidity reversed and began making it very clear to exit long equity positions as the market rose higher and reached new all-time-highs.
Whatever lies ahead does not appear to be positive for stocks as liquidity has turned quite clearly bearish after being very bullish for long equities for much of 2016. And while we are in the midst of “bullish seasonality” for stocks in the weeks leading up to the Holidays, which could lead to a sideways stock market near the recent all-time-highs, we are not taking any chance and will continue building a cash position by selling stocks near the highs.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.