For Friday, Sep 30, the market forecast is for growth

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

Here are some options:

2x Leveraged ETFs


Russell 2000

S&P 500




3x Leveraged ETFs


Russell 2000

S&P 500




Technical Comment:

The S&P 500 was up 0.8% on Thursday with volume higher than Wednesday and higher than the 30-day moving average volume.  The S&P would have to drop about 12 points on Friday to switch our forecast from growth to uncertain.

Subjective Comment:

The one-day increase in US markets on Thursday was on higher volume, which is a bullish indicator but only a one-day data point.  The developing multi-day pattern could still develop for either continued weakness or growth.  The macroeconomic environment was little changed Thursday compared to Wednesday.  European sovereign debt combined with a tight Euro (money) supply policy continue to exert downward pressure on European and US markets. The German national legislature voted to fund more bailouts for the Eurozone, but this hardly comes as a surprise despite tough talk to the contrary by politicians. The expanding Dollar supply is pushing US markets up.  Although Thursday was a mild day compared to the past several weeks, we expect continued levels of high volatility.

In the US the Federal Reserve published their weekly money supply statistics on their web site.  Based on the weekly seasonally adjusted M2 data, the annualized 3-month growth rate for the week ending September 19th was 21.2%.  Weekly data has a higher volatility compared to monthly money supply statistics.  More significant than the very high growth rate of 21.2% is that M2 has been growing in excess of 20% every week for the past two months.  This is the accelerating growth rate of the US money supply we have been warning about here in our daily discussion.  Required reserves also increased at a 3-month annualized growth rate of 60%, confirming that banks are lending at an accelerating rate.  By comparison, the rate in August was 48%, July was 19% and June was 21%.  Excess reserves are estimated to be $1.55 Trillion as of September 21st, which has been declining.  All of this data confirms the excess reserves created by Quantitative Easing are being lent by banks and the fractional reserve money multiplier is occurring.  The growth rate of the US money supply is faster now than at any time in the past 3 years.  Bank fractional reserve lending with $1.55 Trillion of excess reserves, if it continues, will drive very high rates of monetary inflation, followed by price inflation and rising US stock markets.  We expect the money growth rate to eventually overcome the downward forces from the Eurozone crisis.

We don’t think the US market has yet arrived at a definitive trend up or down.  It is not clear if a Greek default or other developments in Europe will slow US bank lending, or if the Federal Reserve will resume more Quantitative Easing.  It is probably best to wait for a clear trend to develop before getting back into the market.