As of Thursday, November 9, 2017 at the close of trading EquitySurge™ has continued a strong sell signal for USA equities.
We haven’t posted for about two months now because the market has just melted up higher on the hopes for tax cuts over that time. The rise since early September in the S&P500 Index has been about one hundred points, but it’s occurred on negatively diverging technicals (again) and low volume and volatility.
Well we were inspired to write today because of a couple of very important developments. As you all know we have been bearish for the entirety of 2017 with worries about the seemingly endless grind up in stocks during the year with no volatility. Clearly we missed some nice gains, but those gains don’t count unless you realize them.
So coming into the one year anniversary of last year’s Election Night Plunge in the S&P500 Index Futures (they were limit down 5% during the night), we want to again stress the importance of selling high.
Today in Tokyo, Japan the Nikkei 225 Index experienced a massive pop higher (up more than 400 points), followed by an even bigger plunge lower. The day’s range from high to low was 1,110 points – huge! For market technicians, this was a perfect “outside day” reversal signal. This is when a new high is set in an uptrend, a buying climax, and the buying exhausts and weak speculative longs are quickly shaken out of positions forcing prices to lower lows than the prior day (closing near the lows). The wider the range, and the more significant the volume, the higher the likelihood that a trend reversal is underway. Volume in the Nikkei last night was enormous.
If you have enjoyed gains by having long positions in stocks this year, we urge you to consider taking a hard look at whether or not you should keep those positions and potentially endure a crushing drawdown, or rather sell high to lock in those gains and generate cash.
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.