For Thursday, August 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 advanced 0.02% (0.32 points) on volume below Tuesday and lighter than the 30-day moving average volume.  A decline on Thursday of about 2 points would likely be enough to change our forecast to an uncertain trend based on the stop-loss feature in our automated algorithms.

Subjective Comment:

The S&P 500 was down most of the day and then closed virtually unchanged.  There is nothing remarkable about Wednesday’s market action.  US markets remain in a state of suspended animation where most participants are waiting to determine if the current weak up-trend will continue or if the market will turn and decline.  Commodities have been advancing based on the US drought and tensions in the Mideast, so it is possible investors are moving funds there instead of into US equities.  Tomorrow the weekly update of US M2 money supply will be available.  For now our investment advice remains unchanged.

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