For Tuesday February 11, 2014, We Recommend Against Equity Investing


Investment Recommendations:

Sell US equity positions and hold cash.  Price inflation hedges should be held or accumulated for the long term as price inflation is starting to accelerate.  Avoid all bonds, including the new MyRA bonds announced recently.

Technical Comments:

Monday the S&P 500 advanced 0.16% on volume below last Friday and below the 30-day moving average.  Monday was the first below average volume day in a month and a light-volume up-day, as classified by our pattern detection software.  The presence of light-volume up-days is reducing the likelihood of a fully formed pattern predictive of a market decline, but the formation of a growth pattern remains suppressed by the recent market declines.  The S&P 500 would have to decline about 42 points on Tuesday (-2.3%) to trigger our stop-loss algorithm and change our automated market forecast to an uncertain trend.

Subjective Comments:

Our technical analysis combined with recent changes in the growth rate of the US money supply leave us recommending a risk-off position relative to US stocks.  Continue to wait to see what trend will develop and hold some cash ready to invest when the opportunity presents itself.  Otherwise avoid all bonds and consider price inflation hedges for part of your portfolio.

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