For Wednesday, May 30, 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 index advanced 1.1% on Tuesday with volume above Friday but well below the 30-day moving average volume.  The S&P 500 would have to decline about 20 points (-1.5%) on Wednesday for the stop-loss algorithm to trigger and change our forecast to an uncertain trend.

Subjective Comment:

While S&P 500 volume was higher than last Friday, last Friday’s volume was very low because of the 3-day weekend.  The more relevant comparison for Tuesday’s volume is against the 30-day average.  In that regard Tuesday was a light-volume up-day.  The weak market patterns of weak-volume on up-days and strong (or weak) volume on down-days continues.  The large advance in US stock indices on Tuesday must be considered in light of the index and volume patterns.  US markets are not showing any signs of strength in this technical analysis.

We analyzed the US money supply in detail last week and will not have another update until this Thursday.  The slowing growth rate in the US money supply does not give us any reason to suspect US markets will grow from here.  We also expect the Eurozone debt crisis to have short-term spill-over effects on US markets in the near term.  There are more signs from Europe that their stock markets and economies will continue to crash.  We have been warning for months to minimize your exposure to US money market funds because many of them are at risk of losses from their ownership of Eurozone debt.  Our warning has been based on this older news item, but today there is an additional warning from the US Federal Reserve to money market funds to pull their money out of Europe.  For all these reasons we do not see US markets having sustained growth for the near term.  There will be the occasional up-day like Tuesday, but not a sustained up-trend.  Our automated forecast appears for a “growth trend” appears to be a false-start.

Avoid bonds, avoid money market funds and divest of US equities or otherwise move to a risk-off position.  Hold and accumulate cash.  If you have price inflation hedges continue to hold them for the long term but do not acquire more right now.  Wait for a new trend to present itself and maintain a defensive position with your investments for the time being.

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