As of Tuesday, March 19, 2019 EquitySurge™ has generated a SELL signal for stocks.
The quick, sharp, but shallow pull-back we expected to happen, did in fact happen right on schedule and down to the price zone in the SP500 Index we thought would provide support, the 2750-2730 area.
After reversing from the pull-back lows set on March 8, 2019 during the brief correction, the stock market has rallied sharply higher back to the price levels of last September-October, 2018.
However, the post-pull-back rally has left all kinds of gaps on the SP500 Index chart, and we are now seeing multiple negative technical divergences, which is leading us to think that another, deeper leg lower is upon us.
We don’t have enough information yet to give lower price targets for this looming correction, but it looks like prices will head substantially lower than the brief pull-back we just had a couple weeks ago.
Liquidity indicators are now showing signs of stress, and that and other negative technical divergences, along with the message of caution coming from the Daily and Weekly RRG Graphs, makes us sellers at current prices.
We still think this all resolves as a healthy correction that will be followed by strong buying that will lead to a retest and eventual topping of the all-time-highs set last Fall, but for now it looks like decently lower first.
RRG® Graph Commentary:
The indicators in the DAILY RRG® graph are now pointing down and back toward the Lagging quadrant. This is telling us to be very cautious with long stock positions. The WEEKLY RRG® graph has the indicators in the bottom of the Weakening quadrant, heading toward the Lagging quadrant. This leads us to believe that a larger correction is looming for the stock market and that we should likely sell long equity positions.
Current DAILY RRG Graph:
Current WEEKLY RRG Graph:
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