For Wednesday February 13, 2013, We Recommend Investing in US Markets

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Technical Comment:

The S&P 500 advanced 0.16% on Tuesday with volume above Monday but below the 30 day moving average.  The slight advance with growing volume is consistent with a bull market, but it would have been much more reassuring to see a larger advance with even stronger volume.  It is encouraging to see the market avoid a strong-volume down-day.  Should the S&P 500 decline about 7 points on Wednesday (-0.5%) our automated forecast could change to an uncertain trend.

Subjective Comment:

Continue to hold your equity investments and price inflation hedges.  We will evaluate the US money supply growth again Thursday evening once the next data is available.  Until then we suggest accumulating cash instead of adding to your positions.  We think US M2 data has been erroneous as it is inconsistent with all other money growth data, but only time will tell.  Continue to avoid all bonds.  Price inflation will catch up to the growth of the money supply eventually.  If you’re interested in what happens after sustained high rates of money printing, check out what’s going on in Argentina.

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