For Wednesday, June 27, 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 0.5% Tuesday on volume below Monday and lighter than the 30-day moving average volume.  The advance was just enough to reverse the stop-loss trigger of our forecasting algorithm and turn our forecast back to a growth trend.  A decline in the S&P 500 on Wednesday by about 3 points would be sufficient to turn our forecast back to an uncertain trend.

Subjective Comment:

The stop-loss algorithm appears to have generated another false start.  The market advance on Tuesday was on very light volume.  The weak pattern in daily market data has returned with Tuesday’s light-volume up-day.  If the US money supply had accelerated its growth rate the stock market would be advancing on strong volume.  We advise ignoring our automated forecast for all the reasons we have been posting over the past several days and weeks.  The US money supply growth rate collapsed three months ago from 7.5% annualized to 0%.  This will precipitate an economic and stock market crash given where we are in the business cycle.  The mini-bubble-boom that started late last summer appears to have ended and we are entering the down phase of the cycle.

We are working on the creation of a second forecasting signal to incorporate our subjective interpretation of Austrian Business Cycle Theory.  The false-starts from the stop-loss algorithm are frustrating.  Historically this algorithm produces more wealth preservation than the costs of the false starts, but that has not been the case recently.  We have not yet found a way to tune the stop-loss process to further minimize the false starts, so we’re excited about the idea of a second forecasting signal.  We will continue to provide these forecasts and commentary as an improvement to benefit our regular readers.  We welcome any input you may have on this idea as well as other suggestions.  You can post your thoughts as a comment in the blog or send us an email using the Contact Us form.  We look forward to hearing from you.

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