As of Friday, December 30, 2016 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.
Stocks closed out the year a bit weaker, with the final days of trading dominated by a sell-off. From the all-time-high price on the S&P500 Index set on December 13th at the 2277 level, the S&P500 Index closed the year at the 2239 level, off the high by about 38 points.
The year ahead looks somewhat murky right now, as our keystone indicator, liquidity, is currently telling us to get out of long equity positions. This message could end up either being bullish for 2017 with a much better buying opportunity coming in stocks (significantly lower prices), or it could be bearish with the possibility of a substantive correction in stocks of more than 10 percent, or even a bear market. Hard to tell right now.
Several weeks ago we published a chart of the S&P500 Index Futures showing the Fibonacci Retracements from the Summer high to the election night low. The 161.8% Fibonacci Retracement (an important target) resides at the 2273 level, and that is exactly where the futures topped on December 13th, and they have not returned to that level since.
The development of this chart into early 2017 should be followed closely.
For now the takeaway for 2016 is that it was a great year to have been long stocks, especially if you bought during the January-February lows when EquitySurge issued buy and strong buy signals and sold near the end of the year when sell and strong sell signals were generated. Doing so on the SPY (S&P500 Index ETF) would have given you more than a 15 percent positive return for the calendar year.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.