⇑⇑ Strong Buy
As of Thursday, March 12, 2020 EquitySurge™ has generated a STRONG BUY signal for stocks.
The selling in the stock market has exploded this week with multiple lock limit down moves in both the after hours futures markets and during regular trading sessions. This has caused fear to skyrocket with the VIX Index hitting historic levels.
However, today we got some much needed seismic moves in the financial landscape, most notably from the US Federal Reserve which announced an unprecedented liquidity program. The details are explained all over the news media, but suffice to say this new program is providing a fire hose of liquidity to all corners of the financial markets and should go a long way toward tamping down fear and initiating the beginnings of some confidence building and a bottoming process in the stock market.
And while we are very aware that the Fed cannot cure the COVID-19 virus, their flooding the financial system with massive liquidity will go far in stemming the huge losses experienced this week.
Our biggest wish going forward however is for not only the US Congress to follow the Fed’s lead with some kind of aggressive fiscal stimulus package to help offset the devastating economic implications of virus-induced closures and cancellations, but also that the rest of the world’s governments also do the same.
It’s been more that 10 years since the Great Financial Crisis, and while arguably the world’s Central Banks enacted policies that saved the global financial system from literally melting down back then, it has been the lack of aggressive fiscal stimulus that has kept the global financial system addicted to continued Central Bank intervention and vulnerable to a global disruption such as the current virus pandemic.
The financial field has been plowed under again, and global governments have been given a second chance to plant the right seeds for a sustainable and fruitful economic harvest. Let’s hope they act decisively, aggressively and quickly.
RRG® Graph Commentary:
All of the indicators in the RRG® graph are solidly in the Leading quadrant, but the VIX Index is rotating in an orbit in the very upper right corner. This is sending us the strong message that the selloff in the stock market is overdone and to keep accumulating long stock positions at these steeply reduced prices. We are not trying to call the bottom in this already something like 27 percent decline, but rather we are reminding investors to buy stocks when prices are low, especially when leading indicators like the RRG Graph are telegraphing a great buying opportunity.
Current RRG Graph:
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