Wednesday, July 26, 2017

As of Wednesday, July 26, 2017 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.

Today the Federal Reserve released their statement following two days of meetings, and as expected they elected to not raise interest rates again at this meeting.

Also today the VIX volatility index briefly dropped to the lowest level on record, ever!

We remain of the strong opinion that this stock market should be sold and profits converted to cash, but you all know that…

So here is some additional perspective to consider:

Tweet 07262017 Pension Partners - High YieldTweet 07262017 Pension Partners - High Yield 2

These charts are from two Twitter posts today by the excellent strategists at Pension Partners and talk about US high yield junk bonds.

The first chart shows the current yield on the largest US junk bond ETF, symbol HYG, which is 4.75 percent. Ten years ago the yield on “risk-less” US 3 month Treasury bills was around 5 percent as depicted in the second chart. What’s wrong with this picture…

The third chart shows the effective yield on US Junk bonds has fallen to a 3-year low (5.48%), which is lower than 99% of all historical readings. Again, what’s wrong with this picture…

When will this stock market rally end? Who knows. But conditions are ripe for a correction to take place with credit markets this out of whack and the VIX at historic lows. Do you want to get caught in the coming storm?

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.

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