For Wednesday February 6, 2013, We Recommend Investing in US Markets

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Technical Comment:

The S&P 500 advanced 1% on Tuesday with volume above Monday’s and higher than the 30 day moving average.  Tuesday qualifies as a strong-volume up-day, and this continues the pattern consistent with bull markets.  Monday’s sharp decline was on weak volume.  Bull markets have daily data where declines are on small volume and advances happen with strong volume.  The advance was just less than 2 points shy of recovering Monday’s entire decline and reversing the stop-loss trigger to return our automated forecast to a growth trend.  If the S&P 500 were to decline about 10 points on Wednesday (-0.6%) our forecast could change to an uncertain trend.

Subjective Comment:

Continue to accumulate investments in leveraged index funds that grow with US markets, and also consider accumulating price inflation hedges.  The accelerated money creation of the US money supply is causing a bubble-boom as explained by Austrian Business Cycle Theory.  (A good article about ABCT was published today by the Ludwig von Mises Institute; it’s worth reading.)  When price inflation heats up bond prices will fall.  For this reason we recommend against owning all bonds.  If you own any bonds, sell them.

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