For Monday August 26, 2013, We Recommend Against Investing

Note: We originally published the wrong image regarding our forecast. The image was corrected on 8/26/2013. undefined

Investment Recommendations:

No Change: 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 0.4% on Friday with volume slightly above Thursday but below the 30 day moving average.  With Friday there were two strong-volume up-days this past week as determined by our pattern recognition software.  This is not enough to predict market growth.  Volume was very low this past week.  The last time volume was this low for 5 consecutive days was August last year.  Strong-volume up-days when volume is so low must be viewed with caution.  Our forecast returned to a growth trend, but this was the reversal of our stop loss algorithm and that is not a good signal to use for investing in the market.  Should the S&P 500 decline about 6 points on Monday (-0.4%) our stop loss algorithm would likely trigger again and change our market forecast back to an uncertain trend.

Subjective Comments:

Even with the two strong-volume up-days on the S&P 500 this week, the Dow dropped for the third straight week.  For the week the outflow of funds from US equities was the largest since November 2011.  As we discussed in detail in yesterday’s post, US M2 money supply continues to show very weak growth compared to 2012.  US markets will continue to decline until a much more dramatic crash happens, and our best guess is the crash will occur before the end of this October.

Welcome to all our new subscribers!  We’re very excited you’ve chosen to follow our blog.  We only post once per day and our writing can get repetitive from day to day.  This is on purpose.  We focus on the very specific topic of forecasting US equity markets based on the S&P 500 daily data and our interpretation of the US M2 money supply using Austrian Business Cycle Theory.  If you read the posts for the past few days you will be caught up.

Enjoy your weekend, everyone!

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