For Friday July 5, 2013, We Recommend Against Investing


Investment Recommendations:

Avoid US stock markets right now.  Continue to avoid all bond investments. Price inflation hedges remain good long-term investments, but only invest in price inflation hedges amounts that you can leave invested for a very long time.

 Technical Comments:

The S&P 500 barely changed again on Wednesday during the short trading session leading into the July 4th holiday.  The index was up 0.08% with volume below Tuesday and below the 30 day moving average.  Wednesday was a light-volume up-day.  The very light volume will likely on Wednesday will likely result in a strong volume day on Friday.  If the S&P 500 declines about 11 points on Friday (-0.7%) our forecast could change to an uncertain trend.

Note: US markets are closed Thursday, July 4th.  Markets will open on Friday.

Subjective Comments:

Headed into the holiday, trading on Wednesday was light from both a lack of interest and the shortened trading day.  Shortened days are part of the historical data upon which our pattern recognition software has been designed.  It takes multiple days for a pattern to form, so a short session or a holiday will not disrupt our algorithms.

While the US stock market was pretty quiet, world events are certainty interesting.  A military coup in Egypt has removed the president and has contributed to increasing oil prices with fears shipments through the Suez Canal could be disrupted.  Portugal also appears to be suffering political instability tied to their sovereign debt problems.  World events might trigger a decline in US stock markets, but only because the money supply growth has collapsed over the past 6 months.  Continue to avoid all bonds and accumulate cash.  Be prepared to invest in US markets once it becomes clear which way they will go.  We’re still considering a crash within the next 4 months to be very likely.

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