For Wednesday January 16, 2013, We Recommend Investing in US Markets

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Technical Comment:

The S&P 500 advanced 1.66 points on Tuesday (+0.1%) on volume higher than Monday but below the 30 day moving average.  For the past few days US markets have been virtually unchanged, but the small changes in the indices have remained consistent with the pattern of up-days on stronger volume and down-days on weaker volume.  This pattern is most often seen when markets are advancing.  Should the S&P 500 decline about 6 points on Wednesday (-0.4%) then our automated forecast could change to an uncertain trend based on our stop loss algorithm.

Subjective Comment:

Ignore the political drama around the “debt ceiling” and “sequestration”.  None of it matters given the growth rates of the US money supply.  With the money printing from the Federal Reserve ($85 Billion a month) and the lending rates from US banks, there is so much new money being created that the business cycle of boom and bust is starting again with the boom phase.  The US economy and markets will boom, and so will price inflation.  Stay long with your investments in US markets and price inflation hedges.  Avoid all bonds.  Continue to evaluate your available funds for investing and consider adding to your leveraged index funds that grow with US markets.  Should the political drama cause a pull-back in US markets, consider it a buying opportunity.