As of Tuesday, January 24, 2017 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.
Stocks advanced on Tuesday, with the S&P500 Index closing at a new record high of 2280. The 2300 level is clearly in play now, and only 20 points away, so it’s likely the market will advance there in fairly short order.
The problem is that liquidity is still strongly telling us to exit longs, and is warning us about continuing to own stocks.
This is where playing the stock market gets tough. On the one hand you have stocks advancing higher and you want to participate, but on the other hand a key and reliable indicator of stock price direction, liquidity, is telling you to get out. What to do?
There is no doubt that stocks can become overextended to the upside and downside and stay in those conditions for what seems like forever before they finally turn. Just remember the famous adage from legendary investor Warren Buffett: “Be Fearful when others are greedy and greedy when others are fearful.” Liquidity is drying up and the stock market is advancing higher on declining volume and money flow. There are many investors who missed the buying opportunities during 2016 at far lower prices than where the market is today, and those investors are now piling in near the top in hopes of capturing some of the gains that started a year ago when the S&P500 Index was around the 1800 level.
Keep your wits about you and heed the advice of Warren Buffett and liquidity.
If you would like to review the EquitySurge™ trading signals generated so far in 2016 please see the Trading Signal Performance Chart page.