For Monday September 9, 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 0.01% on Friday with volume above Thursday and above the 30 day moving average.  This very small change in the market index is still enough for our software to classify Friday as a strong-volume up-day.  It requires multiple strong-volume up-days over a short period of time for a predictive pattern to develop, and that has not happened.  If the S&P 500 were to drop about 23 points on Monday (-1.4%) our stop loss algorithm could trigger a change of our market forecast to an uncertain trend.

Subjective Comments:

The US money supply needs to be watched very closely along with the required and excess reserves of US banks.  Required reserves did see a jump upwards, suggesting more loans are being originated.  However, the required reserves data is a very noisy data series and the uptick could be random variation.  The next update on required reserves is in two weeks.  If US banks accelerate lending then the money supply growth could grow very fast.  It would have to grow fast to keep the bubble boom going.  This would only delay the crash we have been predicting.

The strong-volume up-days noted on the S&P 500 this past week were not very strong, but they do form the beginning of a pattern.  It will take more strong-volume up-days to form a predictive pattern.  If this pattern develops and we see accelerated growth in the money supply, we will reevaluate our prediction that US markets will crash prior to the end of this October.  For now we are maintaining our prediction of a crash by the end of next month and recommend keeping your investments in cash and price inflation hedges.  Stay out of US markets and avoid all bonds.

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