As of Tuesday, January 17, 2017 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.
Stock markets sold off today, with the S&P500 Index down 6.75 points to close near the 2268 level.
Equities are rotating around near the recent price tops, however the S&P500 Index Futures have established a strong level of resistance at the 2273 level which is also an important Fibonacci retracement level from the Summer high to the election night low. That resistance level has now been in place for more than a month, and during that time numerous technical indicators have become negatively diverged, a strong sign that the rally since the election is rapidly losing steam.
In addition liquidity, our number one indicator of stock price direction, has been telling us to exit long positions and build cash. That message has only gotten louder over the past month as well.
By having a large cash position you will be able to take advantage of a better buying opportunity (i.e., lower prices) on equities that is likely coming up. But at this point with the technicals the way they are, there is also the possibility of a more ominous drop in stocks that could be the first leg down in a much deeper drop.
For all of these reasons it is advantageous to be in cash now so that you have maximum flexibility depending upon what lies just over the horizon.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.