For Tuesday July 23, 2013, We Recommend Against Investing

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Investment Recommendations:

Ignore our automated market forecast and 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 advanced 0.2% on volume below Friday and below the 30 day moving average volume.  Typically Friday volume is light every week, so it is unusual to see Monday volume below Friday.  This occurred this Monday and the previous Monday.  The S&P 500 set another record high closing at 1695.53, but our pattern detection software classified the advance as a light-volume up-day.  If the S&P 500 were to drop about 1.7% (-28 points) on Tuesday our stop loss algorithm could change our market forecast to an uncertain trend.

Subjective Comments:

The S&P 500 record high is not at all impressive.  Market volume continues to be very light.  Should the S&P 500 manage to close above 1700 this week it’s possible the event could be commented on by various news sources.  The market index by itself does not forecast the future trend of the market.  The combined action of the index and the volume provide the basis upon which our software looks for predictive patterns.  It has been quite some time since a fully formed pattern developed, and it looks like at least several days would be needed before a pattern might form.  Generally, the light-volume up-days are not consistent with a market that will continue to grow.  We urge our readers to avoid investing in US markets right now, and absolutely avoid all bonds.  If you still have investments in US stocks, we recommend selling now as we really think the market is at or near its top.

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