For Wednesday November 20, 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, although it is probably safe to hold any currently owned equities through the end of the year.

Technical Comments:

The S&P 500 declined 0.2% on Tuesday with volume above Monday but below the 30 day moving average, making Tuesday a strong-volume down-day.  If a lot of strong-volume down-days occur quickly, a bearish predictive pattern can develop, but currently no patterns are present.  The most recent pattern that developed was a few weeks ago and it was a 50/50 pattern predicting equal odds of a market advance or market decline.  If the S&P 500 declines about 47 points on Wednesday (-2.6%) our market forecast is likely to change to an uncertain trend.

Subjective Comments:

It is important to always watch what the Fed does by looking at the money supply data.  Listening to what the Fed says is never a good idea.  Another horrible idea is what the Chicago Fed Head Charles Evans tweeted today.  He said:

We may need to purchase 1.5 trillion in assets until January 2015

This would be a 50% increase in the rate of money printing in 2014 compared to the current rate seen throughout 2013.  Money printing always has been and always will be horrible.  Unfortunately we have been suffering for a century under the Fed’s reign of money printing since its establishment in 1913.  What is needed is an end to central banking in all its forms.  Central banking is central planning, and all central planning is anti-freedom / anti-liberty.  Free markets and free enterprise with respect for human rights (and property rights) with a stable legal system brings forth prosperity.  Central planning leads to disaster and money printing is a surefire way to destroy a market economy.  Just watch what is happening in Argentina, again.

The daily market data and money supply growth rates remain unpredictable.  We recommend holding current equity investments if you want to minimize your capital gain taxes this April.  Do not enter equity positions right now, neither long nor short, but be ready when a pattern finally develops.  Price inflation hedges remain a good long-term investment, especially if the Fed keeps printing, or prints even faster.

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