For Tuesday May 07, 2013, We Recommend Against Investing

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Investment Recommendations:

Avoid US stock markets right now, but be prepared to move available cash into leveraged index funds that grow with US markets.  Price inflation hedges remain good long-term investments.  Continue to avoid all bond investments.

 Technical Comments:

The S&P 500 advanced 0.2% on Monday with volume below Friday and lighter than the 30 day moving average.  While the S&P 500 set another record high the Dow was down a tiny bit.  Monday was a light-volume up-day and does not alter any of the recent technical patterns.  A growth pattern is developing but not fully formed.  The prior two weeks were supportive towards a growing market in the daily data, but additional strong-volume up-days are likely needed to complete a predictive pattern.  If the S&P 500 declines about 42 points on Tuesday (-2.6%) our forecast would likely change to an uncertain trend based on our stop loss algorithm.

Subjective Comments:

There is little to say in this post except to emphasize we are starting to lean towards a recommendation of investing for growth in US markets.  Our reasoning for this is outlined in our recent posts and we encourage you to read them if you haven’t already.  We’re watching for additional strong-volume up-days this week along with accelerating money supply growth from the weekly data this coming Thursday.  If these things happen with sufficient strength we could change our investment recommendation.  However, the past 3 months have put pressure on the current bubble-boom, so even if aggressive money supply growth occurs it could still be a few weeks before the market settles into another bull run upwards.  Be patient.

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