For Thursday, Aug 25, the market forecast is for growth

We recommend any leveraged ETF that grows with the US market.

Here are some options:

2x Leveraged ETFs

NASDAQ 100

Russell 2000

S&P 500

QLD

UWM

SSO

3x Leveraged ETFs

NASDAQ 100

Russell 2000

S&P 500

TQQQ

URTY

UPRO

Technical Comment:
Wednesday saw an increase in the S&P 500 of 1.3% on volume higher than Tuesday and higher than the 30-day moving average. 1.3% might seem tame in comparison to the past few weeks, but historically it is a large change. Our stop-loss algorithm would require about a 36 point drop in the S&P 500 on Thursday to flip back to an uncertain forecast.

Subjective Comment:
The upward movement of US markets on higher volume is a bullish indicator. Two consecutive up-days on relatively high volume is encouraging. As encouraging as this is, we still recommend waiting until Monday next week before reentering US markets. The reasons remain the same, namely Ben Bernanke’s Jackson Hole address and the expiration of the ban on short selling in several European countries. There is endless speculation regarding what the Fed chairman will say in his speech. We think it best to avoid guessing and wait until Monday to see what the forecast looks like. The US money supply continues to grow at an accelerating pace which will eventually drive price inflation and stock prices higher.

We have mentioned the Eurozone problems caused by the tightening of the Euro supply by the European Central Bank (ECB). Germany’s GDP for the 2nd quarter was barely positive at 0.1%, and various economic indicators suggest it will be lower in the 3rd quarter. The ECB is buying bonds to help various European countries and Banks in their present difficulties, but it is not yet known if this bond buying is being done with money printing. Euro money supply data will eventually show if the ECB has turned to the printing press or not. Europe markets and banks will remain a source of resistance to growth for US markets in the near term.

In the US, the Bank of America (BofA) has seen dramatic swings in its stock price on speculation it is facing bankruptcy. Other roomers include the possibility BofA will be acquired by JP Morgan. We think it is unlikely BofA will fail outright as it has been protected by the Federal Reserve as one of the Too-Big-To-Fail (TBTF) banks. There is too much political resistance for a government bailout, so if BofA is about to fail, an acquisition by JP Morgan is probably the most desired alternative from the perspective of the Fed and the US government. We find the idea of TBTF to be anti-capitalist and advocate bankruptcy and/or liquidation for any failed enterprise. In the unlikely event a US bank were to fail, it would likely cause a short-term panic in US markets. Any short-term impact would eventually be reversed by the inflating money supply.

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