For Tuesday September 3, 2013, We Recommend Against Investing


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 declined 0.32% on Friday with volume not yet available at the time this post was published.  Should the S&P 500 drop about 9 points on Tuesday (-0.6%) our market forecast would likely change to an uncertain trend based on the current settings of our stop loss trigger.

Note: US markets are closed Monday, September 2nd in observance of Labor Day.

UPDATE: Friday’s market volume was finally published.  Volume was above Thursday but below the 30 day moving average.  This made Friday a strong-volume down-day.  There were two such days in the past week of trading.  It will take more strong-volume down-days in a short period of time to create a fully formed pattern.

Subjective Comments:

US stocks declined enough in August 2013 to have their worst month since May 2012.  This is consistent with our unchanged prediction of a US market crash before the end of this October.  Most market crashes do not happen suddenly after a bull-market advance in stocks.  Typically stocks stall out and decline gradually before crashing sharply.  The weak growth in the US money supply after 9.2% growth in 2012 is why the US economy and markets must crash, as explained by Austrian Business Cycle Theory (ABCT).  Here is a brief explanation of ABCT you can read from at the Ludwig von Mises Institute.  If you would prefer an 8 minute video on ABCT, we recommend this clip of Tom Woods, Jr.  ABCT is a detailed and rich economic explanation of why the economy goes through boom periods followed by busts.  The business cycle is not a normal or otherwise inherent part of a free market economy.  It is caused by fractional reserve lending and money printing, and these are fraudulent activities that have nothing to do with free markets or Capitalism.  Unfortunately they are deemed “legal” and people worldwide suffer the consequences.  We track the US money supply and markets to determine when booms will occur as well as market crashes.  Everything we watch continues to suggest a crash is going to happen.  Our prediction on timing is our best guess.  We want to be clear that ABCT explains why booms and crashes occur, but ABCT does not provide a mechanism to predict when.  We are using our proprietary pattern recognition software and judgment of past crashes to estimate the timing of the coming crash.  Should the growth rate of the US money supply suddenly accelerate the timing of the crash could be delayed.  So far we doubt this will happen.  The money supply continues to grow, so price inflation will continue even when markets crash.  In fact it is likely the Federal Reserve would react to a crash by printing more money even faster than the $85 Billion per month currently being created.

End the Fed!  Until that happens, protect your wealth.  Get out of stocks and bonds now.  Cash positions and price inflation hedges is what we recommend for your investment portfolio.  We expect there will be an opportunity to short US markets in the near future.

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