For Wednesday April 3, 2013, We Recommend Against Investing


Investment Recommendations:

We are seeing more data that suggests continued growth in US markets.  We’re not yet recommending investing but that could change in the coming week or two.  Price inflation hedges remain viable investment options.  Continue to avoid all bonds as they will fall in price when price inflation accelerates in the near future.  Avoid TIPS bonds and municipal bonds as well.

Technical Comments:

The S&P 500 advanced 0.5% on Tuesday with volume above Monday but below the 30 day moving average.  Our pattern recognition software classified Tuesday a strong-volume up-day even though volume was below average.  The prior 3 trading sessions have all created patterns suggesting market growth could be in the near future.  There have been two strong-volume up-days and a weak-volume down-day.  The up-days were on below average volume but still are considered strong relative to their prior day volume comparisons.  This is not a fully formed pattern of predictive value.  It would be better to see the strong-volume occur with above average volume.  Still it is noteworthy to see the past 3 days compared to the prior 3 weeks which had the opposite patterns that predict market declines.  If the S&P 500 declines about 16 points on Wednesday (-1%) our stop loss algorithm could trigger and change our automated forecast to an uncertain trend.

Subjective Comments:

The daily market data seems to be changing and suggesting market growth could be ahead.  The accelerating growth rate of the money supply also suggests the bubble-boom could continue.  We remain unconvinced when it comes to our investment recommendation, but the data continues to demand close attention.  If the present patterns continue and strengthen we are likely to change our investment recommendation to “invest for growth”.  Price inflation remains a very real concern and will accelerate in the future thanks to the massive money printing.  Should US banks accelerate lending the bubble-boom will accelerate and price inflation will rapidly accelerate.  Be prepared to invest in leveraged index funds as a strategy to grow your wealth faster than price inflation can erode your purchasing power.

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