For Monday, Aug 29, 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:

On Friday the S&P 500 increased 1.5% on volume lower than Thursday but higher than the 30-day moving average.  About a 30 point drop would be necessary on Monday to flip our forecast back to uncertain.

Subjective Comment:

Thursday’s volume was the highest of the week, so Friday’s upward movement on higher than average volume should be viewed as a bullish indicator for the US markets.

Federal Reserve Chairman Ben Bernanke began his much anticipated Jackson Hole speech at 10:00 AM (Eastern) on Friday.  9 minutes later the S&P 500 marked its low point of the day, over 22 points down, or a decline of 1.9%.  The speech did not announce QE3, likely causing some market participants to sell.  All Chairman Bernanke announced was that the next scheduled FOMC meeting will be two days long instead of the normal one day session.  Despite the absence of a money printing initiative from the Fed, the US markets rallied after the speech, closing up over 17 points.

We have been discussing the accelerating growth of the US money supply as the force attempting to drive US stock prices upward, counteracted by the falling markets in China and Europe.  Fed money supply data released August 25th shows 3-month annualized (April to July, 2011) M2 growth at 15.6% (seasonally adjusted) and 10.2% (non-seasonally adjusted).  Required reserves grow when banks are increasing their lending, and data for the same time period shows a growth of 18.9% in required reserves.  US Banks are lending, causing the US money supply to grow.  Money supply charts at shadowstats.com also show this accelerating growth.

The percentage change of selected European, Chinese and US Markets is shown on this graph since June 1st.  The decline in all markets has been similar movement, but the S&P 500 has fallen the least. The graph is consistent with our opinion of opposing forces attempting to influence the US markets.  We expect this trend to diverge with US markets moving up in response to the money supply growth, while the others will lag behind and fall because of their tightening money supplies. For additional bullish and bearish data from the past week, here’s a good post from ZeroHedge.

It is still not clear if the European Central Bank is buying bonds with newly printed Euros or if they are continuing their tight money policy.  China continues to tighten their liquidity to fight very high price inflation.  They have increased reserve requirements multiple times in the past several months, including an announcement on Friday requiring about $688 Billion to be added to required reserves.

Our automated forecast is for growth and has been for four consecutive days.  When things get worse in Europe and China, continued spill-over effects are to be expected in the US markets.  The strength on Friday after Bernanke’s speech shows the accelerating expansion of the US money supply might have begun to decouple the US stock markets from the world trends.  Turning points in market are volatile as momentum from the previous trend fights the new direction.  Our forecast could continue to flip between growth and uncertain with frustrating false-starts.  Monday is a good opportunity to get back into the US market.  We will continue to provide our forecast every day along with relevant information to help you make informed decisions.  Consider taking our survey to let us know what you think of our website and what we publish.

4 Responses to For Monday, Aug 29, the market forecast is for growth

  1. Pingback: For Tuesday, Aug 30, the market forecast is for growth « Development Site

  2. TSP LLC says:

    Correction: The FTSE is incorrectly labeled “Italy” on the graph. The FTSE 100 index is the London market in the United Kingdom. We apologize for the error.

  3. Pingback: For Wednesday, Sep 7, the market forecast is for growth « Development Site

  4. Pingback: For Wednesday, Sep 7, the market forecast is for growth « Thirteen Star Publishing LLC