For Monday, March 26, 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 rose 0.3% on Friday with volume below Thursday and lighter than the 30-day moving average volume.  The increase was sufficient to reverse the stop-loss trigger in our automated algorithm and our forecast has returned to a growth trend.  On Monday if the S&P 500 declines about 4 points (-0.3%) it could again trigger the stop-loss feature and change our forecast to uncertain.

Subjective Comment:

Light market volume on a Friday is normal.  It is always a more positive sign when the market index advances on stronger volume, but Friday’s advance was typical and just enough to reverse our forecast’s stop-loss trigger from yesterday.  It appears Thursday was indeed a false signal from our forecasting process.  The S&P 500 was down 0.5% for the week but remains even with the breakout point from Tuesday, March 13th when the index advanced 1.8% on strong volume.  That breakout day completed a pattern predictive of future market growth, and it is not uncommon for the market to remain flat for a little while after such a breakout.  The daily market data suggests future growth will occur.

The cause of the bubble-boom in progress for the US economy and stock markets is the digital money printing by the Federal Reserve and the fractional reserve money multiplier.  This money printing over the past few years has led to serious inflation that is grossly underreported by the official Consumer Price Index.  The more reliable CPI measure is per the calculation method in place back in 1980.  The more reliable CPI is published at Shadowstats.com, and it shows price inflation is already over 10% annually.  More evidence of the serious price inflation was published by General Mills in their 3rd quarter earnings report.  They said “the 10-11 percent input cost inflation we’re experiencing this year pressured our margins.”

Price inflation will get worse from here, and this will cause interest rates to increase as lenders demand a premium to offset the resulting loss of purchasing power.  This is why bond prices are going to fall.  Bonds you own now will lose value, so sell them as fast as you can.  TIPS bonds designed to hold their value during price inflation are indexed to the official CPI, so they will lose real value too.  We recommend investing in hedges against price inflation as well as leveraged index funds that grow with the US market.

Comments are closed.