Market Direction Model - Model switches to BUY on October 20, 2021

Published:

20 Oct 2021 10:25 ET

MDM has switched to a BUY signal.

Schumer just said they are getting closer to an agreement on a stimulus package. Major averages in the U.S. have been bouncing. With inflation on the rise, the yield on the 10-year Treasury continues to climb. The U.S. dollar also continues to rise in anticipation of tapering to come sooner than expected with two rate hikes priced in for 2022, but this may be the illusory Potemkin village. Key economic indicators have disappointed in recent months. Economic momentum is languishing. The Fed knows it must buy time to postpone tapering or the markets will have a taper tantrum as they have many times before. Since March 2020, major averages have not had a correction beyond the low-teen percentages. While major averages are due for a 15-20% correction, another major multi-trillion dollar stimulus package will force the Fed's hand to continue to print. Vive la QE!

Suggested ETFs (Note: Many members buy the standard ETFs or their preferred ETFs. This list serves as a guide as to which ETFs we think may outperform, but the key point is to be on the right side of the market regardless of which ETF or ETFs one chooses.)

"Stuff" stocks, ie, commodity-related plays should continue to do well, thus the S&P500 and its related ETFs should continue to show strength. That said, techcentric NASDAQ Composite and TECL often lead with outperformance on a percentage basis under more normal conditions.

1-times

SPY (S&P 500)

QQQ (NASDAQ-100)

2-times

SSO (S&P 500)

QLD (NASDAQ-100)

3-times

UPRO (S&P 500)

TQQQ (NASDAQ-100)

TECL (Direxion Trust Technology)

NOTE: This is a suggested list. Investors may wish to become acquainted with the full range of available ETFs, and should make an effort to understand how these ETFs are created and what their components are, as well as being aware of the downside risks involved, especially with leveraged ETFs. Certain ETFs may be more appropriate depending on one's risk tolerance levels. Typing in keyword 'ETF' into the FAQ keyword search bar or going here https://www.virtueofselfishinvesting.com/faqs/search?p=1&q=etf and visiting this site https://etfdb.com/ can be instructive.

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