For Monday, October 8, 2012, We Recommend Investing for Growth

We recommend investing with leveraged index funds to take advantage of growing US stock markets.


Technical Comment:

The S&P 500 declined 0.03% on Friday with volume lighter than Thursday and below the 30 day moving average volume.  If the S&P 500 declines about 24 points on Monday (-1.6%) our automated forecast could change to an uncertain trend.

Subjective Comment:

Friday saw no change in the S&P 500 index with lighter volume.  This type of market action does not suggest anything about future trends by itself.  The recent data has not developed a pattern, and Friday’s mild activity does not contribute to the formation of weakening or strengthening market patterns.

For reasons we published in our last post we are making a subjective prediction of continued market growth and advise our readers to begin investing in leveraged index funds designed to go up with the S&P 500 index, such as RSU, SSO, SFLA or UPRO.  We recommend using leveraged index funds to help your investments grow faster than price inflation, which is just under 9% annualized according to  We US banks to use their excess reserves left over from QE1 and QE2 as the source of funds to accelerate originations of new loans.  We think they’re doing this in response to the open-ended QE3 from the Federal Reserve.  The accelerated loan rate will drive money supply growth faster and we will experience a bubble-boom in the US economy and in asset prices, including stocks.  The creation of money and bank credit will also cause price inflation to go higher.  This is why we recommend leveraged investing and also the consideration of price inflation hedges as part of your portfolio.  Continue to avoid all bonds as they will not hold value as price inflation gets worse.  Also, as asset prices start climbing, many investors will sell bonds to get the cash needed to invest in assets and stocks.  Bonds are not a bad investment and will remain so for a long time.

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