As of Wednesday, March 15, 2017 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.
Markets rose today after the Federal Reserve raised interest rates in a widely expected move. And when we say markets rose, we mean ALL markets rose: stocks, bonds, gold, emerging markets, you name it and it went up. While different asset class markets can rise or fall together over short periods of time, sooner than later they will diverge again.
We think in this case stocks will fall and US Treasury bonds will rise. Yes, we’ve been saying stocks are a sell for a long time now, and they have just kept rising, but the evidence continues to build the strong case for a decline in stocks that could start in earnest at anytime.
The retrace higher today in equity prices looks much more like a snapback rally following the quick, sharp decline we had in stocks at the beginning of March, rather than an initiation of a new surge higher. Take a look at the McClellan Ratio Adjusted Summation Index (RASI) chart below. This chart measures how much breadth and therefore power is behind up or down moves in the stock market. Right now the RASI is pointing down and actually dropped further today even though stock prices were up significantly. This reading is telling us that the move higher today lacked power in a big way.
If you would like to review the EquitySurge™ trading signals generated in 2016 and so far in 2017 please see the Trading Signal Performance Chart page.