For Friday, Oct 28, 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:

Thursday the S&P 500 shot up at the open and closed 3.4% higher than Wednesday’s close.  Volume was much higher than Wednesday and the 30-day moving average.  Our forecasting process identified a multi-day pattern that typically precedes further growth in the market.  This does not change our forecast since it has been for growth for some time, but it is a technical signal from our proprietary system that predicts further growth.  The S&P 500 is now about 80 points (6.3%) above the trigger of our stop-loss algorithm.

Subjective Comment:

The explosive growth in US markets on Thursday was very bullish.  A one-day increase of 3.4% on volume 31% above the 30-day moving average volume is rare and a sign of a strong bull market.  The most obvious news supporting the market was the announcement of a One Trillion Euro bailout initiative for the Eurozone combined with a 50% “voluntary” write-down of Greek debt.  Another piece of economic news commonly watched is the advanced estimate of US GDP which reported 2.5% growth for the 3rd quarter of 2011.  While the details of the Eurozone bailout are not final, the announcement was enough to spark Thursday’s rally.  The most significant thing about Thursday’s action is the fact the increase was on very high volume.  A lot of money was spent to purchase stocks, and that money had to come from somewhere.  Investors have reserves of cash, and others sold-off Treasury bonds to switch into equities.  Ultimately, all the money is coming from the expansion fueled by the Federal Reserve.  Every day it is becoming more and more obvious the bubble-boom is in progress for the US economy and stock market.

The Federal Reserve published updated weekly money supply statistics Thursday afternoon.  13-week annualized M2 (seasonally adjusted) grew at 15.1% for the week ending 10/17/11.  This marks 17 weeks of double-digit growth.  15.1% is down from the peak of 24.1%, but the growth has been sufficient to fuel the bubble-boom for at least the next several weeks or months.  The required reserves in the banking system grew by 63.8% which is down from past weeks but still very strong.  Like last week, the week to week value of required reserves is down.  This “weekly” value is actually updated every other week, so this decline is still a single data point and not a trend, but it must be watched.  Bank lending is the source of the expanding US money supply and the current inflationary fuel for the bubble-boom.  This monetary expansion will cause masssive misallocations in the US economy.  Too much investment will go into long-term projects that will not have buyers.  The seeds for the next crash are being sown now, and we haven’t fully corrected from the last crash thanks to years of government intervention that has delayed the necessary bankruptcies.  All signs indicate the boom has begun and stock prices are going to rise as a result.  Price inflation will be very high in the not-to-distant future and that will likely mute the size and duration of this boom.  Keep checking our market timing system for the indication of the market top.  However, the top is not upon us.  The market will grow from here.  It is not uncommon for the day after a big move to reverse slightly, so Friday could dip a little.  If the market moves up, that will be another bullish indicator.  It is time to invest.