As of Friday, July 14, 2017 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.
Another week… and new all-time-highs for the Dow and S&P500 Index. What a market!
Except when you look underneath the hype and hyperbole around these latest record highs. What is going on with this market? We don’t know, other than to say that all is not well and yet prices keep going up as every dip is met with furious buying.
- Retail sales trending down the last two quarters, Check.
- CPI down in June, trending lower so far in 2017, Check
- New all-time-highs in the stock market, CHECK!
Something is not right.
Yes, we have been WAAAYYYYYYY too early getting out of this market. BUT, we were getting long last January – February, 2016 when the S&P500 Index was trading around 1800, and we issued our sell signal in December, 2016 at the 2200 level, a tidy one-year return of 22 percent, locked-in because we’ve been in cash after that.
Yes, the market has gone up another 9 percent since then, but if you are still long, your profits are not locked-in!
Remember, the object of long-term investing in the stock market is to buy low and sell high. Most investors do the opposite, buying long after a strong move upward has already been in process, and selling way after stock prices have peaked and turned down.
This has been a stranger-than-strange market since the election night, when the futures were limit down at more than 5 percent, only to turn around in the wee hours of the next morning and basically never look back, with new high after new high being made all during 2017. BUT, there have been repeated negative technical divergences all the way up, and macro economic numbers have been weak and trending weaker.
Could stock prices keep rising? Absolutely. But in our minds, it’s long past time to take profits on long positions and build a large cash position.
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.