For Thursday December 27, 2012, We Recommend Against Investing

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Technical Comment:

The S&P 500 declined 0.5% on Wednesday with volume above Monday but below the 30 day moving average.  Our pattern recognition software does not consider Wednesday to have been a strong-volume down-day because volume was so much below the 30 day moving average.  This means very few strong-volume down-days have occurred recently.  The holidays typically see low trading volumes.  Volume will likely pick up in January if historical patterns hold and no unexpected events occur.  The S&P 500 would have to advance about 7 points (+0.5%) on Thursday to undo our stop loss trigger and return our automatic forecast to a growth trend.

Subjective Comment:

We have been commenting on the accelerating growth of the money supply and how Austrian Business Cycle Theory explains it will cause asset prices to rise, including US stock prices.  S&P 500 futures traders are currently the most bullish since late 2006.  This is an indication that professional traders have become quite bullish on the prospects of the S&P 500 rising in the near future.  If our commentary has influenced your investment decisions, we hope this additional information might make you more confident about the pending boom in the stock market.  Please note we are not speculating how long the boom might last, only that a boom is going to start soon.  Talk of the political “fiscal cliff” probably has some investors worried, but for the stock market and the US economy it does not matter what the politicians decide.  The accelerated money creation by the Federal Reserve will overwhelm any fiscal and tax policies likely to come out of Washington D.C.  For some additional perspective on the fiscal cliff, see this blog post by Robert Murphy.

Continue to position your available funds into your brokerage account(s) to be ready to invest in leveraged index funds in the near future.  This is one way to take advantage of the bubble-boom that will strengthen in the near future.  Aggressive traders can start accumulating their positions now.  Continue to hold your price inflation hedges for the long term and avoid all bonds.

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