For Tuesday, Nov 15, 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 dropped on Monday just under 1% on very light volume, both below Friday’s volume and the 30-day moving average.  A drop of about 19 points (1.5%) on the S&P 500 on Tuesday would likely be enough to change our forecast to uncertain.

Subjective Comment:

Given the large volatility that has become the norm for US markets over the past 4 months, a decline of just under 1% on a single day seems trivial.  1% on a single day remains a large swing and volatility remains high because of the dual forces pushing US markets in opposite directions.  The very light volume on Monday mitigates any technical significance to the one-day drop in the market.  As the Eurozone continues to crash it will attempt to drag US markets downward.  The expanding US money supply continues to provide the liquidity necessary to drive US markets back up.  Europe appears heading for a big crash with many European banks at risk for collapse.  US banks have been moving to unload their exposure to European debt.  When the Eurozone crisis gets worse, the most likely course of events will be a few days of downward movement in US markets.  The US Treasury and Federal Reserve will likely react by providing even more liquidity to US banks, resulting in a quick recovery of any dip caused by a European crash.  If the Fed does not add liquidity it could take a little longer, but US markets will recover.

The most important thing to watch for an indication of the direction of US markets and the economy are the money supply numbers updated every Thursday from the Fed.  The increased growth rate in M2 (seasonally adjusted) seen from June through August has returned to the lower growth rate seen previously.  This was caused by an increase in bank lending.  US banks might have taken a break from lending and are holding their excess reserves (all $1.5 Trillion of them) in case of a crisis in Europe.  Today Representative Ron Paul estimated US banks have over $1 Trillion of exposure to European debt.  This is speculation, of course, but it might explain why the M2 growth rate slowed.  If M2 continues to grow at its current rate, the bubble-boom the recent growth acceleration is causing will be shorter lived.  The $600 Billion added by the increased growth rate should be enough to support the bubble-boom in the US for a while longer.  Our forecast remains for growth, and there are no developing patterns in our forecasting process that suggests any weakness developing in the market.  Continue to hold your leveraged ETFs despite the volatility.  Leverage is necessary to stay ahead of the price inflation the expanding money supply will cause.

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