For Wednesday, April 25, 2012, the market forecast is a growth-trend

We recommend any leveraged Exchange Traded Fund (ETF) that grows with the US market, but please read our comments below before investing as our subjective opinion differs from our automated forecast.

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 advanced 0.37% (5 points) on Tuesday with volume below Monday and lighter than the 30-day moving average volume.  The increase in the market index was sufficient to reverse the stop-loss trigger in our automated process and this is why our forecast has returned to a growth trend.  If the S&P declines about 1 point on Wednesday (-0.1%) the stop-loss algorithm will likely trigger again and change our forecast back to an uncertain trend.

Subjective Comment:

The upward movement in the market was again on light volume.  The weak market pattern of light-volume up-days and strong-volume down-days persists.  There has been no pattern of strength or of predictive value to suggest US markets will go up from here.  The most recent patterns at best predict a 50% chance of decline and a 50% chance of a growing market.  Our forecast for a growth trend occurred from the reversal of our stop-loss trigger.  When the market moves sideways or has high volatility our stop-loss algorithm can be confused and cause frequent changing of our forecast between growth and uncertain.  We advise waiting before getting back into US equity markets.  A risk-off position right now is a more prudent strategy.

Tomorrow in the early afternoon (Eastern Time) the FOMC will release its announcement on monetary policy.  The Fed will also publish its forecast of interest rates and Chairman Bernanke will hold his usual press conference.  Their announcement could cause the market to react up or down, or not at all.  We think many market participants will be waiting and watching these announcements closely.  We have no idea what the Fed will do.  We watch the money supply statistics instead.

Another event that could influence the market on Wednesday are the quarterly results from Apple, Inc.  Apple had a good quarter and now has $12.6 Billion of cash on hand.  Future guidance is less optimistic.  Apple makes up a large part of the NASDAQ index and is owned by many institutional investors, so Apple’s results could move the market.  In the last 2 weeks Apple has seen its stock price decline the most in the past 3+ years.  Apple has been going down, but will their earnings announcement, which came after the market closed, cause it to move back up?  We don’t know, and that’s our point.  We forecast the market, not individual stocks.  Our forecasting process is signaling uncertainty.

Continue to position your investments in a risk-off position.  Avoid bonds and mutual funds.  If you haven’t yet researched hedges against price inflation, we encourage you to do so.  If you have checked out investments to protect your wealth against price inflation, we encourage you to take action.  Our subjective opinion will not change regardless of what happens in the market on Wednesday.  We want to see several days of strong advances on high volume before we will change our opinion regarding the US market.  We also want to see what happens with the US money supply as the steady growth rate for the past 9+ months suggests the current bubble-boom and bull-market could be nearing their end.

Comments are closed.