For Monday, July 23, 2012, We Recommend Against Investing

We recommend selling your equity positions or hedging for a risk-neutral position.

Technical Comment:

The S&P 500 declined 1% on Friday with volume below Thursday but above the 30-day moving average.  If the S&P 500 declines about 28 points (-2.1%) on Monday our automated forecast would likely change to an uncertain forecast.

Subjective Comment:

The S&P 500 market decline on Friday was with interesting volume.  Typically on a Friday the volume is lighter going into the weekend.  For this reason we consider Friday a strong-volume down-day.  After Wednesday and Thursday being strong-volume up-days, Friday’s market action demonstrates technical weakness remains the dominate trend.  When combined with the weak economic news and the money supply trends, we remain firm in our opinion that a stock market and economic crash is coming in the near future.  Sell your US stocks.  Hold and accumulate cash.  Avoid all bonds.  Our best guess is the crash will happen within the next 3 to 4 months.  If money supply growth accelerates, this opinion would change.

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