For Thursday, December 8, the market forecast is for growth

If you choose to invest now 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:

The S&P 500 closed up a 0.2% on volume higher than Tuesday and higher than the 30-day moving average volume.  However, the reason Wednesday’s volume was higher than the 30-day moving average was from the decline in the average and not because Wednesday’s volume was notable.  Tuesday’s 30-day moving average value was above Wednesday’s volume.  The S&P 500 would have to drop about 45 points (3.7%) on Thursday to trigger the stop-loss algorithm in our automated forecast.  Otherwise our market forecast will remain for growth.

Subjective Comment:

The light volume continues to tell a story of uncertainty as market participants wait to see what the European Central Bank will do.  The Eurozone debt crisis continues to play out a predictable script with news reports of solutions, followed by quick denials of the previous reports.  Today there was mixed news regarding the likelihood of meaningful solutions from the coming summit.  The ECB will hold a scheduled meeting on Thursday as part of their periodic review of interest rates.  There are expectations their benchmark interest rate will be cut to 1.0% from the current level of 1.25%.  If this happens tomorrow, it might cause a market bounce up.  However, cutting this rate by a quarter point is not the massive Euro printing needed to prevent the pending debt defaults and crisis.  ECB President Mario Draghi testified just last week to the EU Parliament that “sequencing matters”, meaning the political leaders of the Eurozone must first do something about their debt spending before the ECB will print enough Euros to prevent defaults.  The market is waiting to see the announcement from the summit first, followed by the ECB announcing some sort of large asset purchasing program (aka quantitative easing).  The normally scheduled meeting Thursday comes before the summit, so the “sequencing” Mr. Draghi just talked about means the ECB should not announce anything of significance Thursday.  This is our speculation based on his recent comments.  The ECB’s rate decision on Thursday is scheduled to be announced at 7:45 am Eastern time, followed by Mr. Draghi’s monthly news conference which starts at 8:30 am Eastern.

It is unfortunate the debt crisis in Europe is the driving factor in world and US markets right now.  The best thing in the long term is to write-off the un-payable debts and accept the inevitable bankruptcies that go with it.  This would be very negative in the short and mid-term time horizons, but the liquidation of mal-investments is necessary to restore markets to a healthy capital structure and allow sustainable growth.  Massive money printing can delay this inevitable reckoning but not avoid it.  Continue to watch news from Europe.  The warm-up are comments from the ECB on Thursday and summit announcements on Friday.  The main event is the expected ECB massive money printing announcement that should follow the summit news.  It might or might not be announced Friday, or even this weekend.  Most likely the announcement from the ECB should come before European markets close on Monday.  Be prepared to react quickly after the ECB announces (but NOT the ECB announcements on Thursday).  If you are already invested and the market starts declining rapidly, move to a risk-off position fast.  If you are not invested and markets start moving up on Monday, wait until Tuesday before getting in.  Initial upward motion might not be long-lived as more savvy investors evaluate the information.  If markets move up sharply on very strong volume following the announcement (again, not Thursday), then investing the following day will be the right timing.

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