For Thursday June 27, 2013, We Recommend Against Investing


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 0.96% on Wednesday with volume below Tuesday and lighter than the 30 day moving average.  Wednesday was a light-volume up-day.  US markets continue to show daily patterns consistent with weakness.  Up-days are on light-volume and down-days are on strong-volume.  The market advance on Tuesday and Wednesday were both on light-volume, so the prevailing pattern remains of weakness.  Still, the index advance was enough to undo our stop-loss trigger, returning our market forecast to a growth trend.  If the S&P 500 declines about 16 points on Thursday (-1%) our forecast could return to an uncertain trend.

Subjective Comments:

Please ignore the change in our automated forecast.  When the stop loss trigger is undone it is not a sign of market strength.  We would want to see strong-volume up-days along with US money supply growth consistent with Austrian Business Cycle Theory (ABCT) before subjectively recommending investing for growth.  Those conditions are not present.  It’s been about a half year of very little money supply growth after a long period of strong growth.  This has setup the conditions for a market crash as explained by ABCT.  Avoid all bonds and stay out of US stocks right now.  If you choose to short bonds or the US market, be sure to do additional research.  Hold your price inflation hedges for the long term, but do not add to those positions for a while.  Instead hold and accumulate cash positions to be ready to short US markets in the future.  If nothing changes with the money supply growth rate, we see US markets crashing sometime between now and October.  We admit this is our best guess and subject to error.  When the crash we think is coming gets closer our automated forecast should identify a pattern that predicts a market decline, and this should happen with sufficient time to invest in a short position.

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