For Monday, Sep 12, 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:
The S&P 500 dropped 2.7% on volume higher than Thursday and just below the 30-day moving average volume. Friday was a drop on higher volume, marking three days out of the past four with a decline on higher volume. The 32 point drop was very large. Yesterday we said a drop this large might cause our automated forecast to switch back to uncertain. Instead, the subroutine designed to minimize frequent forecast changes was triggered again, causing our forecast to remain for growth. On Monday, if the S&P 500 drops by about 25 points, our forecast could change to uncertain.

Subjective Comment:
Continued weakness in the Eurozone and very large declines in European markets dragged down US markets on Friday. The percentage declines of European markets were larger than the big declines of US markets. The larger drop in Europe is consistent with our on-going opinion that US markets are being pulled in opposite directions. The downward pressure on US markets is from Eurozone weakness, and the upward forces come from the accelerating growth of the US money supply.

Juergen Stark resigned his position as Chief Economist and Executive Board Member of the European Central Bank (ECB) on Friday. The reason for Mr. Stark’s departure is his disagreement with the ECB’s monetary policy. While he will stay until a replacement is found by the end of the year, this departure strongly suggests the ECB will resume printing Euros before the end of the year, perhaps as soon as November when the new ECB President begins his term. If the ECB resumes printing Euros, this will be highly inflationary and cause European markets to mitigate their decline and perhaps resume growing. Printing of Euros will thus reduce the downward pressure on US markets.

The growth rates of the US money supply are among the most aggressive in the history of the Federal Reserve. The amount of excess reserves in the banking system is around $1.6 Trillion Dollars, which is capable of expanding the total money supply of Dollars by about $15 Trillion. The current M2 money supply of US Dollars is about $9.3 Trillion, so the potential exists to more than double the M2 money supply. This is simply astounding. The recent volatility of the US stock markets may persist for some time, but eventually the growth of the money supply will become so strong it will overwhelm any downward forces and US stock markets will trend strongly up. The coming inflation will cause stocks to rise in nominal terms, but in real terms (inflation adjusted), they will likely decline. This is why leveraged index funds are needed; they should allow for growth that exceeds the declining purchasing power of the Dollar.

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