For Thursday, Sep 22, 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 almost a full 3% on Wednesday on volume higher than Tuesday. Wednesday’s volume was also higher than the 30-day moving average volume. This marked two days in a row of downward market action on higher volume, which can sometimes precede further downward movement in the market. The beginning of a pattern for a market decline is forming but is not fully developed.

If the S&P 500 had dropped another 3 points it would have been enough to trigger the stop-loss algorithm in our automatic forecasting process. If the S&P 500 were to close down 3 to 4 points or more on Thursday, our forecast will probably change to uncertain.

Subjective Comment:
Wednesday was a huge drop, magnified by leveraged investment funds we recommend. The market was down slightly on low volume until about 2:25 pm Eastern time, shortly after the Federal Reserve published the remarks from its FOMC 2-day meeting. After that, volume picked up tremendously and the market dropped. Clearly, many participants were expecting the Fed to provide more stimulus (money printing) and sold-off in a panic when nothing of the sort was announced.

Thankfully, what the Fed announced today will not make the problems they have already caused any worse. Their plan, unofficially dubbed “Operation Twist” (or Operation Twist 2 since a similar program was tried in the early 1960’s), will purchase $400 Billion of Treasury bonds maturing between 6 to 30 years in the future. At the same time, the Fed will sell $400 Billion of Treasuries maturing in 3 years or less. Their idea is to raise short-term interest rates and lower longer-term rates in an attempt to stimulate the economy. By buying and selling the same $400 Billion of different maturities, the Fed is not creating new money. The new money creation is coming from bank lending via the fractional reserve money multiplier. The money supply growth rate was higher last month than at any time during the Fed’s Quantitative Easing programs, both QE1 and QE2.

The accelerating growth rate of the US money supply will drive price inflation and stock prices higher in the near future. Until this is fully understood by the majority of market participants there will continue to be high volatility and down days like Wednesday. This volatility at some point might trigger our stop-loss algorithm and switch our forecast to uncertain, but that hasn’t happened yet. Typically the market bounces after such a large one-day loss, so tomorrow could be an up-day. If the market declines again, it is likely our forecast could change.