For Thursday February 7, 2013, We Recommend Investing in US Markets

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Technical Comment:

The S&P 500 advanced 0.8 points (not percent) on Wednesday, which is virtually unchanged.  The market had been up and down before ending the trading session flat.  Volume was above the 30 day moving average but below Tuesday’s volume.  The bull market pattern of strong-volume up-days and light-volume down-days continues.  The occasional light-volume up-day, like Wednesday, does not break this pattern.  It would take multiple strong-volume down-days in a short period of time before the bull market pattern would break down.  Should the S&P 500 decline about 11 points on Thursday (-0.8%) our automated forecast could change to an uncertain trend from our stop loss algorithm.

Subjective Comment:

Another clue that the bubble-boom is in full swing was the announcement today that Home Depot plans on hiring 80,000 employees.  That’s a 14% year-over-year increase.  Austrian Business Cycle Theory (ABCT) explains why some sectors of the economy, such as housing and related industries, boom sooner and stronger than others.  The sectors more sensitive to interest rates react when money printing drives down borrowing costs.  Today the Ludwig von Mises Institute published another article about ABCT that we encourage you to read.

Continue to invest in leveraged index funds that grow with US markets, and consider putting part of your portfolio into price inflation hedges.  Stock investments are going to grow now through the first half of 2013 at least (assuming no radical changes in the growth of the US money supply).  The accelerated money printing will eventually cause price inflation to grow much stronger.  Price inflation hedges will payoff in the longer run.  Price inflation will result in bond prices falling, so we urge our readers to avoid all bonds indefinitely.  If you own any bonds, sell them as soon as you can.

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