For Thursday, February 9, 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 climbed 0.2% on Wednesday with volume higher than Tuesday and above the 30-day moving average volume.  Should the S&P 500 decline about 17 points (1.3%) on Thursday it is likely our forecast for the market trend could change to uncertain.

Subjective Comment:

Although the upward movement in US market indices was mild, it was an up-day on stronger volume.  As up-days on strong volume continue to occur the daily data patterns become more predictive of continued growth.  The large increase in the US money supply that occurred in June and July last summer continues to provide enough stimulus to drive another bubble-boom in the US economy and stock markets.  Tomorrow the Federal Reserve will publish their weekly update on the money supply.  We continue to be concerned that a continued M2 growth rate in the low 4% range will eventually result in a stall in the current bull market.  However, the daily market data suggests more growth is coming.

The Eurozone debt crisis continues to develop into economic stagflation.  Several Eurozone economies are slipping into recessions and Greece continues to be a total disaster.  When Greece defaults it could have contagion consequences.  Most US and European banks have prepared for the Greek default.  They might even be prepared for defaults in Ireland and Portugal.  If Italy or Spain has to default then there will be serious consequences for the banks that own the bad debt.  This will spill over into the US, but the downside impact to US markets will depend on timing and the growth rate of US money supply between now and when Eurozone defaults occur.  China also continues to show signs of economic decline.

Geopolitical conflicts also pose a risk to US markets.  Any potential conflict with Syria carries very scary implications.  Iran and Syria have long had close ties and agreements to aid one another in any conflict.  Russia has declared its support for Iran and China has warned against action against Syria.  All of these alliances could cause a small incident to escalate.  Any such conflicts would send energy prices much higher and accelerate the price inflation that is coming to the US.  US Gasoline prices are nearly 12% higher than this time last year and every single US state have prices above $3 a gallon.  All of the money printing from the Federal Reserve’s Quantitative Easing programs is going to fuel very serious price inflation as the next bubble-boom in our economy and markets picks up speed.  We continue to recommend investing in leveraged index funds to grow your portfolio faster than the coming price inflation.

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