For Thursday September 5, 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 advanced 0.8% on Wednesday with volume below Tuesday but above the 30 day moving average.  Our pattern detection software considers Wednesday to have been a light-volume up-day.  The above average nature of Wednesday has to be considered against a declining 30-day average.  Compared to the average volume of just 5 weeks ago, Wednesday would have been a below-average-volume day.  Our software looks for patterns over multiple days and places much more emphasis on volume versus prior day than against the 30 day average.  If the S&P 500 were to decline about 25 points (-1.5%) on Thursday our stop loss algorithm could trigger and change our market forecast to an uncertain trend.

Subjective Comments:

The possibility of hostilities between US and Syrian forces is dominating the news cycle and appears to be having some effect on the stock market.  It’s not clear if the effect will be good or bad, but an expansion of hostilities by US forces in the Middle East would certainly have some effect.  There are other potential news events in September that could impact markets.  We think the FOMC meeting on September 18th could create a lot of excitement if more “taper” talk occurs.  A decision to slow the printing press by the Fed would likely cause a market decline.  If the US M2 money supply remains at a very slow growth rate compared to 2012’s 9.2% annual increase then any trigger in the near future could cause a large decline.  We’re still guessing a crash will happen before the end of next month.

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