For Tuesday November 12, 2013, We Recommend Against Investing


Investment Recommendations:

Avoid US markets and watch closely to see what trend develops.  Cash positions (including currency) and price inflation hedges are still recommended.  There is too much uncertainty in US markets right now to make an investment recommendation, but things are turning bearish again after having been bullish for most of October.

Technical Comments:

The S&P 500 advanced 0.07% on Monday with volume very light, much lighter than Friday and below the 30 day moving average.  Monday was a light-volume up-day and as such does not disrupt the development of predictive patterns.  No fully formed patterns have been identified by our automated detection and forecasting process.  If the S&P 500 were to decline about 49 points on Tuesday (-2.8%) our forecast would likely change to an uncertain trend.

Subjective Comments:

Volume was exceptionally light on Monday.  This sets up the likelihood of a strong-volume day on Tuesday.  It will be very interesting to see if a strong-up or strong-down occurs.  A bearish predictive pattern has been developing, so a strong-volume down-day would further its development.  Both our bearish signals and bullish signals tend to cluster, and there was one of each pattern detected in October.  The US M2 money supply growth will also be very important to watch.  If you haven’t been following our posts recently or would like to review, we recommend this post from last week and this one from yesterday.  Both have graphs that are relevant to the current economic conditions.

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