For Wednesday, February 8 2012, the market forecast is a growth-trend

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 moved up 0.2% on Tuesday with volume above Monday and slightly above the 30-day moving average volume.  If the S&P 500 declines about 21 points on Wednesday our forecast would likely change to uncertain.

Subjective Comment:

The daily market data has resumed patterns typical of strength.  When down-days are on light volume and up-days are on strong volume, that is bullish.  Down-days on strong volume are bearish, but it takes several such negative days accumulated in a short duration to form a predictive signal.  We had two such negative days recently, but the past two days have been bullish.  As the negative days fade further into the past without additional negative days developing the data from the market becomes more bullish.  The small movement in the index and mildly strong volume suggest participants are continuing to wait for further indications of future market direction.  We think there are plenty of indications now that the near-term direction for US markets is up with the only downside risks being external shocks.

We recommend investing in leveraged index funds to grow your portfolio faster than the rate of price inflation.  Austrian Business Cycle Theory describes how a bubble-boom is created by the expansion of the money supply, and this is exactly what is happening in the US economy and stock markets right now.  As the growth accelerates price inflation will pick up.  Official CPI from the US Bureau of Labor Statistics is currently 3.0%.  If the BLS were to calculate CPI using their methodology from 1980, CPI would be above 10% right now.  When price inflation accelerates, interest rates will rise as lenders will demand an inflation-premium.  This in turn will cause bond prices to fall, and that’s why we strongly urge you to liquidate your bond holdings now and invest in leveraged index funds tied to the US market.

The Austrian Business Cycle Theory has been available for quite a long time but it is frequently ignored as it is not considered to be main-stream.  There was a time in history when most people considered the world to be flat, but the popularity of this fallacy did not make it true.  Belief in Keynesian economics is strongly entrenched.  Those beliefs are tragically incorrect.  ABCT is a robust and detailed economic explanation of the business cycle.  Economies are very complex so factual and accurate descriptions will also be complex.  We encourage you to learn more about ABCT.  Here is a link to multiple resources where you can learn more courtesy of the Ludwig von Mises Institute.  There are articles to read as well as videos to watch.  Enjoy!

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