For Thursday October 24, 2013, We Recommend Against Investing


Investment Recommendations:

Avoid US markets and watching closely to see if an up-trend develops before investing.  Cash positions (including currency) and price inflation hedges are recommended right now.

Technical Comments:

The S&P 500 dropped 0.47% on Wednesday with volume below Tuesday but above the 30 day moving average.  Our automated system classified Wednesday a light-volume down-day even because volume was below Tuesday.  Should the S&P 500 decline about 37 points on Thursday (-2.1%) our stop loss algorithm could change our market forecast to an uncertain trend.

Subjective Comments:

It is interesting to see the S&P 500 give up almost all of its Tuesday gains on the following day.  Volume was below Tuesday but still above average.  For our subjective opinion we were looking for sustained evidence of a resuming boom, and the decline on Wednesday does not give us confidence we are seeing a true bubble-growth up-trend right now.  Turning points always have a lot of ups and downs, so the possibility either way can’t yet be ruled out.  What will be very interesting is the money supply data that is published tomorrow.  If a dramatic shift occurs in the money supply we will have a serious clue what will develop.  If the M2 money supply continues its current mild growth rate then we think US markets will eventually decline while seeing fits of up and down action along the way.  Stay tuned for tomorrow’s update, and stay out of US markets right now.

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