For Tuesday March 18, 2014, We Recommend Against Equity Investing


Investment Recommendations:

Sell US equity positions and hold cash, but be prepared to move investment funds back into US markets.  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 bond scheme from the Feds.  Ignore the propaganda.

Technical Comments:

The S&P 500 advanced 0.96% Monday with volume lower than last Friday and lighter than the 30-day moving average volume, making Monday a light-volume up-day.  Light-volume up-days are not a sign of market strength, but they are meaningless without context.  Currently there have been strong-volume down-days, so an advance on a light volume day means there is no reversal of the recent trends.  There are still no predictive patterns.  Monday’s advance was not quite enough to reverse our stop-loss trigger, but an additional advance on Tuesday would probably restore our automated market forecast to a growth trend.

Subjective Comments:

Volume was very light on Monday, which is not uncommon the week of an FOMC meeting.  It appears highly unlikely the geopolitical tensions surrounding Crimea and Libya/North Korea will affect markets, but the FOMC statement to be released this Wednesday afternoon could have a short-term impact.

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