For Thursday, October 11, 2012, We Recommend Investing for Growth

We recommend investing with leveraged index funds to take advantage of growing US stock markets.

Technical Comment:

The S&P 500 declined 0.6% with volume above Tuesday but below the 30-day moving average volume.  The decline was sufficient to trigger the stop-loss algorithm and change our forecast to an uncertain trend.  If the S&P 500 advances about 5 points on Thursday (+0.4%) our automated forecast is likely to return to a growth trend.

Subjective Comment:

Wednesday technically satisfies the criteria for a second consecutive strong-volume down-day.  This marks the beginning of a pattern that might predict a declining market.  Tuesday’s and Wednesday’s market volume were both stronger than the prior day, but also both below the 30-day moving average.  The pattern formation is concerning but not sufficient for us to sound an alarm.  We continue to hold the subjective opinion that US markets will be going up in response to US banks accelerating their originations of new loans.  We are assuming the technical change in our forecast following the down-day on Wednesday is a false signal and recommend holding your equity positions.  Hold your price inflation hedges for the long term and continue to avoid all bonds.

One Response to For Thursday, October 11, 2012, We Recommend Investing for Growth

  1. I would still conclude that bond investments as well as stock investments are somewhat dangerous right now. In fact at any given time, there is some level of risk associated with any investment. It’s the nature of investing. Risk is a funny thing. When the stock market is rip roaring, most everyone is willing to take a little more risk than they really should, and when the market is depressed, most are so fearful that little to no level of risk can be tolerated. Neither of these extremes makes for good investing. Thanks for the post.