For Monday, Oct 31, 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:

US markets were little changed on Friday.  The Dow and S&P 500 closed up a fraction and the Nasdaq was down a bit.  The S&P 500 was up less than 0.1% on volume lower than Thursday and below the 30-day moving average volume.

Subjective Comment:

For the past week the S&P 500 has produced the following bullish technical signals:

  • Oct 21: On higher volume, the S&P 500 broke out above the 1216 – 1226 level of technical resistance that had persisted for nearly 3 months.
  • Oct 24 & 25: The S&P tested the 1216 – 1226 level and was able to stay above it.  It is bullish when a previous level of resistance becomes a level of support.
  • Oct 27: The large 3.4% up-day on strong volume was very bullish, and our market timing system identified a pattern that typically precedes market growth.
  • Oct 28: After a very large up-day, the S&P 500 held its gain.  It is bullish when a large up-day does not fall on the following day.

In addition to these technical signals in the market data, economic indicators are beginning to show signs of strength.  Unemployment remains high, but it is a lagging indicator and may take a while to improve.  Many US companies have reported very strong earnings this week as well.  No doubt the One Trillion Euro bailout announcement with a 50% write-down of Greek debt gave a huge boost to markets this week.  Spillover effects from the Eurozone debt crisis have been holding US markets back.  This bailout will not solve the debt problems in Europe, but it will ease market pressure for a while.

With the pressure from Europe easing, the rapidly expanding US money supply will push stock prices higher over the next several weeks and probably for a few months.  13-week annualized M2 (seasonally adjusted) has been growing at double digit rates for 17 weeks.  It had been as high as 24% and most recently is at 15%.  The growth rate of the US money supply has been very stop-and-go over the past 3 years.  The recent growth will cause a false bubble-boom for a few months at least.  We also expect serious price inflation to begin showing up as well.  Leveraged ETFs provide you a way to magnify the return on your investment and stay ahead of the price inflation that is coming.

If you want to understand how changes in the money supply impact the economy the stock market, we recommend learning about and understanding Austrian Business Cycle Theory.  It is the best economic description of cause and effect available.  Knowledge of ABCT explains why the market reacts to the money supply, how the bubble-boom happens and why it must eventually go bust.  What is more difficult to predict is the timing of when the boom will start and when the bull rally will end.  This is where our market timing system becomes useful.  No system is perfect, but ours does a very good job of identifying patterns in daily market data that have historically predicted turning points, both market tops and bottoms.  Right now the ABCT fundamentals predict a bull rally bubble-boom, our market timing system has identified a pattern predictive of growth, US companies sensitive to interest rates are reporting strong growth and various economic indicators are showing signs of strength.  Simply said, everything is pointing to market growth.  We recommend investing ASAP.

Happy Halloween!

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