For Wednesday, Oct 26, 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:

Tuesday the S&P 500 dropped 2.0% on volume higher than Monday but below the 30-day moving average volume. Our forecast does not attempt to predict the motion of the US market for each day, but the direction of the trend expected for several days to weeks. The S&P 500 would have to drop about 35 points (2.9%) on Wednesday to cause our forecast to switch to uncertain.

Subjective Comment:

The drop on Tuesday was a very large one-day drop for the market. The driving forces appears to be continued uncertainty regarding the pending bailout package in Europe. The decline was on volume higher than Monday. Downward motion on higher volume is a technical sign of weakness, but it takes several such days over a short time period to create a meaningful pattern. While higher than Monday, the volume on Tuesday was still below the 30-day moving average. Additionally, the S&P 500 closed at 1229, which is still above the 1216 – 1226 range of prior resistance. It is bullish the market did not decline below this level. Should the market decline further tomorrow and go below the 1216 – 1226 range, that would be more bearish.

We continue to believe the US has entered a new bull market. Turning points remain volatile and no up-trend is without its occasional down-days. Tuesday appears to be only a single down-day in an otherwise growing market. The expanding US money supply will continue to fuel economic expansion and stock market growth. The expansion will happen first in industries that produce capital goods that require longer lead times, such as heavy manufacturing equipment, mining and housing. Businesses that produce and sell consumer goods will eventually experience the boom too, but not first. As companies continue to announce their earnings, this pattern will continue to demonstrate itself. This is also why the Producers Price Index jumped last week while the official Consumer Price Index barely changed. Eventually price inflation will be very high and painful. The growth we are forecasting for the economy and the stock market is the same pattern of unhealthy bubble-boom resulting from expanding currency and credit. Investing in leveraged index funds makes down days like Tuesday more painful, but if you can tolerate the risk you will enjoy the reward. The leveraged funds are necessary to grow your market-index investments faster than inflation.

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