For Tuesday December 24, 2013, We Recommend Investing in US Markets


Investment Recommendations:

We recently changed our investment recommendation.  It is time to invest in US stock markets.  Price inflation hedges should be held for the long term and remain a good idea as we see price inflation heating up in 2014.

Technical Comments:

The S&P 500 advanced 0.53% on Monday with volume below Friday and lighter than the 30-day moving average.  The light-volume up-day does not contribute to nor detract from the formation of any predictive patterns, although the more time that elapses without a strong-volume down-day results in a diminished probability of a negative pattern forming.  The S&P 500 would have to decline about 35 points on Tuesday (-1.9%) to change our market forecast to an uncertain trend.

Subjective Comments:

With the holidays this week volume is likely to remain light.  Tuesday is a shortened trading session for US markets and of course markets are closed on Christmas.  We just change our subjective investment recommendation and suggest to our readers now is the time to invest in leveraged index funds that grow with US markets.  If you own price inflation hedges it is a good idea to continue and hold such investments.  There are many price inflation hedges and we encourage you to do your research to determine which are best for your situation.  We do not like TIPS bonds nor are we a fan of REITs right now as we think property values will experience another bubble, although productive farm land is another matter.  Shorting Treasury bonds is another way to hedge against price inflation.  Commodities, energy and precious metals are also alternatives.  These are our general thoughts on price inflation hedges.  What we know is the money supply continues to grow, and that will cause price inflation to eventually grow as well.

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