For Wednesday February 20, 2013, We Recommend Investing in US Markets

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Technical Comment:

The S&P 500 advanced 0.7% on Tuesday with volume below last Friday but above the 30-day moving average.  After Friday’s strong-volume down-day last week it is somewhat positive to see Tuesday advance with strong volume, but it would have been more encouraging if Tuesday’s volume had been stronger than Friday’s.  Regardless, there has been no complete formation of a predictive pattern in the daily market data.  If the S&P 500 declines about 10 to 11 points on Wednesday (-0.7%) our automated forecast could change to an uncertain trend.

Subjective Comment:

Continue to hold investments in US equity markets but don’t accumulate more just yet.  Avoid all bonds, and continue to hold price inflation hedges.  Your price inflation hedges might have lost value recently, but these should be considered long term investments because price inflation will accelerate as a result of the massive money supply growth.  Depending on your situation you might consider accumulating more hedges against price inflation if you are able to hold for the long term.  Otherwise continue to accumulate cash until the updated money supply data becomes available this Thursday.  It is unlikely the market data will create a pattern that would trigger a sell signal, but we will continue to process the data every day through our algorithms.  If the US M2 money supply resumes aggressive growth we are likely to recommend further accumulation of leveraged index funds.  Stay tuned.

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