For Thursday September 12, 2013, We Recommend Against Investing

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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 0.31% Wednesday with volume below Tuesday but above the 30 day moving average.  Wednesday was classified a light-volume up-day by our pattern detection software, but it was the fourth day in a row of above average volume, including above average volume in 7 of the past 8 trading sessions.  While volume has not been very strong, the trend of above average volume appears to represent a subtle change in recent volume trends.  Likely the declining volume has reached a bottom level with overall volume still low compared to a few years ago, but it is still a change.  The accumulation of recent strong-volume up-days is still noteworthy, but there is not yet a fully formed predictive pattern useful for making investing decisions.  If the S&P should decline about 49 points on Thursday (-2.9%) our market forecast could change to an uncertain trend.

Subjective Comments:

We are watching closely for evidence of a change in the market direction.  If a change happens it will appear first in the daily market data, so the accumulation of strong-volume up-days combined with above average trading volume is very interesting.  US money supply data is published weekly, but the data published is typically two weeks old.  If we are seeing a change in the market driven by accelerated growth in the US money supply, it would likely be about two weeks from tomorrow before the money supply data would show a change.  It would take more strong-volume up-days, much stronger market volume, and very strong growth in the money supply for us to change our subjective recommendation.  Without these things we will remain very bearish in our outlook for US markets.  We’re still predicting a market crash prior to the end of this October.

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