For Tuesday, Nov 08, 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 rose 0.6% on Monday on very light volume.  Monday volume is usually high after the weekend, however the volume was lower than Friday and below the 30-day moving average volume.  The S&P 500 would have to drop about 34 points on Tuesday (2.7%) to trigger the stop-loss algorithm within our automated forecast.

Subjective Comment:

Monday’s market data has no signals of consequence.  The low volume suggests market participants are waiting for more information before acting, perhaps news from Europe or something else.  Guess is just that, a guess and not useful information.

Greek Prime Minister George Papandreou agreed to step down to allow the formation of a new governing coalition.  An interim Prime Minister will be named on Tuesday, November 8th.  Early elections could then be held as soon as February.  Greece remains a side-show in the larger Eurozone debt crisis.  On Monday Italy moved to the center ring with rumors Italian Prime Minster Berlusconi might resign.  These rumors were later denied.  Regardless of who the political leader of Italy is, Italy has too much debt.  Italian bond yields are soaring, which means those bond prices are falling since no one wants to invest in Italian debt.  This is a much bigger problem than Greece.  Spain is not that far behind.  The money for bailouts has yet to materialize.  The European Central Bank will likely do something about that.  The new ECB President, Mario Draghi, not only lowered interest rated after 2 days on the job, but after his first week the bond purchases by the ECB have shot up.  Most of those purchases have been of Italian debt.  So far the ECB continues to sterilize their bond purchases.  With Mr. Draghi’s willingness to print Euros to lower interest rates, surely the ECB will be willing to print Euros to monetize bond purchases if money fails to appear any other way.  The Eurozone crisis will continue for several more weeks, perhaps even through the next few months.  The Eurozone economies are entering the bust phase of the business cycle and they are in for a recession.  This will continue to cause spill-over volatility in US markets.

In the US the Federal Reserve is continuing to allow (encourage) banks to create new loans rapidly.  This will continue the growth of the US money supply (M2).  With $1.5 Trillion of excess reserves remaining in the US banking system, there is plenty of money left over from QE1 & QE2 for banks to create new money via the fractional reserve money multiplier.  Investors are strongly encouraged to use leveraged index funds (ETFs) to take advantage of the coming growth in US stock markets.  Leverage is necessary to stay ahead of price inflation which is well over 10% as measured by the methodology in place in 1980.  The CPI reported by the Bureau of Labor Statistics (BLS) is about 4%, and it too will grow as the money supply continues to expand.  The Federal Reserve seems to think the BLS CPI is the number to follow, and they have said in previous announcements they intend to keep interest rates near zero well into mid-2013.  The stock market growth and the boom that has begun in the US economy is another bubble-boom that will eventually crash.  Keep following our forecast so you’ll know when to sell your investments to avoid the downturn.  That will eventually happen, but not now.  We are at the turning point at the bottom of the Business Cycle.  US stock markets will grow from here.

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