For Thursday, March 22, 2012, the market forecast is a growth-trend

We recommend any leveraged Exchange Traded Fund (ETF) that grows with the US market.

2-Times Leveraged ETFs

NASDAQ 100

Russell 2000

S&P 500

QLD

UWM

SSO

3-Times Leveraged ETFs

NASDAQ 100

Russell 2000

S&P 500

TQQQ

URTY

UPRO

Technical Comment:

The S&P 500 declined 0.2% on Wednesday with volume below Tuesday and lighter than the 30-day moving average volume.  If the S&P 500 drops about 5 points on Thursday (-0.4%) our forecast could change to an uncertain trend.

Subjective Comment:

The mild decline in the S&P 500 on Wednesday was on light volume.  The recent daily market data continues to show signs of market strength because the up-days have been on strong volume and down-days on light volume.  Last Tuesday the daily data completed a pattern that predicts future growth and the market has been holding its gains since then.  We expect continued growth in US markets fueled by the prior and on-going growth of the US money supply.  As this will also drive price inflation higher, we recommend selling all your bonds immediately.  Invest in hedges against price inflation but not TIPS bonds, and invest in leveraged index funds that grow with US stock markets.

We have not observed anything of particular interest lately, so we will mention some possible future events that could cause uncertainty for US investors:

  • The Chinese stock market is declining and will crash in the near future along with the Chinese economy.  This is becoming more obvious in the financial press.  If you’re interested in examples of how badly their economy has been mismanaged by the central planners, do a Google search for “China Ghost Cities” to find articles and videos.  When you consider the Chinese mal-investments in the context of Austrian Business Cycle Theory it becomes apparent why their economy must crash.

 

  • The Eurozone debt crisis continues, although Greece is no longer the focal point.  Portugal might pop up in the headlines, but it is of less concern than Spain and Italy.  If the debt crisis begins to raise Spanish or Italian bond yields to the 7% range, then things will get very ugly.  The European Central Bank has been adding liquidity to banks, but the Euro money supply remains mired in slow growth.  The Eurozone is facing a stagnate economy and price inflation.  If the Euro money supply begins faster growth then a bubble-boom could be ignited.  Otherwise Europe is facing further market and economic declines as prior mal-investments are liquidated.

 

  • A war with Iran appears to be more likely.  Israel and the United States are putting a great deal of pressure on Iran.  We offer no geopolitical insight here.  We’re only mentioning it because the outbreak of hostilities could impact the US market.  The impact would likely be negative as most market participants would conclude the supply of oil would be disrupted.

 

  • Price inflation is driving up the price of oil and gasoline.  This is driven by the expanding US money supply, which is also driving the bubble-boom in the US economy and stock markets.  While this is painful for consumers, the inflationary rise in the price of oil will not slow the bubble-boom.

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