Friday, June 12, 2020

⇓⇓ Strong Sell

As of Friday, June 12, 2020 EquitySurge™ has generated a STRONG SELL signal for stocks.

Update:

We are a couple of days late calling this Strong Sell, which is unfortunate, but nevertheless is what it is.

The stock market has made an almost vertical climb from the March, 2020 lows to back near the prior all-time-highs, with in fact the NASDAQ actually making a new all-time-high. This is exactly what we predicted when we issued the Strong Buy in March, and the market has certainly performed since then! However things are now changing in a big way.

The COVID-19 viral pandemic sell-off in stocks caught most market participants completely by surprise and foiled many long-term indicators that normally give advanced warning of an impending liquidity crisis that will lead to a stock market sell-off. It may be the case that the rapid retrace back to near the prior highs is the market’s way of giving participants one last opportunity to get out before the real selling begins.

While anything can happy in the stock market, we are deeply concerned that this sell-off that has just begun may be “The Big One” that ends the roaring bull market that has been going on in the big picture since the March, 2009 stock market lows made during the Great Financial Crisis.

Of course nothing is ever written in stone in the market, so we will be looking for any signs that this isn’t the end of the bull market and the start of a bear market, but for right now it is time to get out of stocks and observe from the sidelines.

RRG® Graph Commentary:

The indicators in the Daily RRG® graph are moving from the Lagging quadrant up to the Improving quadrant, reflecting the massive elevator shaft decline the stock market endured last Thursday. However we are concerned they will turn back down again, which is quite bearish, rather than turn green and head into the Leading quadrant, which would be bullish.

For this post we are also including the Weekly version, which is the second graph below. All the indicators are yellow and moving down in the Weakening quadrant on their way towards turning red and slicing into the Lagging quadrant. All of this is very bearish and foretells of a possibly protracted sell-off in stocks, the bear market rallies of which will be selling opportunities rather than buying opportunities. Beware!

Current Daily RRG Graph:

06122020 Daily

Current Weekly RRG Graph:

06122020 Weekly

 

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