Tuesday, December 13, 2016

As of Tuesday, December 13, 2016 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.

Equity markets were up again today, with new record highs for the Dow Jones Industrial Average and the S&P500 Index.

We’ve been talking about the 161.8% Fibonacci retracement price target for the S&P500 Index from the Summer high to the election low which resides at the 2261 price level. That price was hit yesterday, and today the Index traded up to the 2277 level before closing at the 2272 level, roughly 10 points higher than the 161.8% Fibonacci retracement target at 2261.

However using the S&P500 Index E-Mini Futures continuous contract, that same Fib target resides at 2273 which is precisely where the futures hit today. In addition, today was identified as being dominated by professional trading activity using one of our favorite indicators from Barry Taylor International, Pty. from Australia. Professionals tend to buy low and sell high. See the charts below for details:

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There are plenty of other indicators starting to show this blow-off top rally losing steam, but the most important is liquidity, which is still telling us that something is wrong and we should use this price strength as an excellent opportunity to take off long equity positions and go to cash.

If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.

2 thoughts on “Tuesday, December 13, 2016

  1. One Feedback: On reading the details, it is clear you are asking to unwind long and move to cash. However, the signal is SELL which is slightly different.

    Unwinding and moving to cash implies that the next turn of the market is uncertain so best to be in cash. SELL implies you know it is going down and want to bet on that direction.

    Maybe I am reading too much into this but to me it seems a difference between the signal and the text

  2. The signal to sell and go to cash means to liquidate long positions, that if were initiated according to the EquitySurge buy signals from earlier in 2016, will result in the realization of substantial profits. The sell signal also means the next bigger move in the stock market is likely down, so for most investors it’s better to sit through equity market downturns in cash or long bonds, i.e., TLT, rather than try to actually short the market since there are few good shorting mechanisms suitable for retail investors. If however one is a more advanced trader, then the sell signal can also be used to actively short the market rather than just liquidating longs and going to cash or long bonds. But shorting is a complex and more risky move. Does that answer your question? If not let me know and we can discuss further.

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