For Tuesday May 14, 2013, We Recommend Against Investing

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Investment Recommendations:

Avoid US stock markets right now.  Price inflation hedges remain good long-term investments.  Continue to avoid all bond investments.

 Technical Comments:

The S&P 500 advanced 0.1% on Monday with volume below Friday and lighter than the 30 day moving average.  Over the past 3 weeks the daily market data has had more growth on strong volume, but Monday saw very minor growth on weak volume.  Monday does not change the prevailing technical trend, but it does not support it either.  The strong-volume days that have occurred in the past 3 weeks have been of moderately above average volume.  Much stronger volume would be a better indicator of a future trend.  If the S&P 500 declines about 42 points on Tuesday (-2.6%) our forecast could change to an uncertain trend.

Subjective Comments:

The warning signs in the US money supply remain our primary concern, and the daily market data seems to be consistent with the erratic US M2 money supply growth rates.  News about the Federal Reserve possibly slowing their money printing programs came out over the weekend, and that could have contributed to the light volume and essentially unchanged markets on Monday.  We are highly unlikely to change our subjective investment recommendation before Thursday this week when the next money supply and banking reserve data will be published.

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