For Monday, Oct 10, 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 closed down on Friday by 0.8% on volume higher than Thursday and higher than the 30-day moving average volume.  The magnitude of the drop was smaller than the typical up or down amount over the past several weeks.  At times during the day the market was up before finally closing down.  The higher volume on a down-day is not bad by itself, but if several down-days on higher volume happen relatively close together it can form a pattern that predicts further downward motion.  A drop of about 33 points on Monday (2.8%) on the S&P 500 would likely be enough to switch our forecast from growth to uncertain.

Subjective Comment:

The underlying forces driving the movement of US markets are the downward pressure from the Eurozone debt crisis and the upward pressure from the rapidly expanding US money supply.  Our daily posts for the past several weeks have described this in detail.  The Eurozone economies are crashing along with their stock markets as the tight Euro monetary policy remains in place.  The Dollar swap funding from the US Federal Reserve might help some of the European banks holding large amounts of sovereign debt avoid bankruptcy.  These Dollar swaps are a pre-bailout of European banks.  Greece will default.  It is likely the European Central Bank will lower interest rates in November.  It appears the politicians and bureaucrats have decided to let Greece default and hope to prevent the problems from spreading to other countries.  This strategy will not work.  We expect other countries to default as well.  However this drama plays out it will probably cause volatility in US markets.  This volatility will continue to cause our automated forecast to flip between growth and uncertain.  On Friday more European banks were downgraded, and so was Belgium.

Eventually the rapidly expanding Dollar supply will cause a manipulated-boom in the US.  Jobs data released on Friday showed unexpected growth.  Part of the surprise job growth was the inclusion of about 45,000 Verizon employees who returned to work after a strike last month.  Those workers should never have been considered unemployed, but they were.  People expecting a smaller jobs number must have forgot this obvious correction.  If the forecasts had included these workers, those attempting to guess at the number were still off on the low side.  It might be easy to criticize the forecasters after the data shows they were wrong.  We did not make a forecast ourselves, but we are not surprised that the jobs number was stronger.  This is consistent with our thesis the expanding Dollar supply will cause a manipulated economic boom in the US.

We will continue to monitor the markets and look for signs the US is growing despite the downward pressure from Europe.  If the ECB engages in large money printing it could reduce the downward pressure.  While this might “soften” the landing in Europe, it would likely unleash the upward force of the growing Dollar supply.  The Eurozone crisis is drawing out what appears as a bottoming of the US market.  High volatility with mixed signals forecasting both growth and decline are common at turning points, and this is what we continue to see in the S&P 500 daily data.  Consider investing some money in leveraged index funds now and be prepared to invest quickly when conditions change to the upside.

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