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Market Direction Model - Model switches to BUY on September 22, 2021

MDM has switched to a BUY signal. 

The sharp correction came largely as a consequence of China's real estate Evergrande fiasco. Their markets are bouncing as the Chinese government has stated they would pay back local bond holders, but foreign bond holders may not get paid back. There could be a knock-on effect as counterparty risk exists not just with Evergrande but with other real estate companies as China's real estate bubble continues to expand. This buy signal may therefore be short-lived should markets retest and break down through local lows. 

History however suggests that markets will slow creep higher from here as the QE bubble remains intact regardless of what central bankers wish to claim with respect to the possibility of tapering later this year. C19 restrictions continue to cripple economic recovery. As one of many examples, supply chains are is disarray due to restrictive rules brought about by C19. Watch once restrictions begin to lift potentially later this year as more get vaccinated. The Fed will take a more hawkish approach wrt tapering especially due to strongly accelerating inflation. Major averages in the U.S. may then have their standard 20% corrections which have run like clockwork since 2010 whenever the Fed tried to taper or QE was removed with the only exception being the C19 black swan in early 2020. In each case, the Fed always stepped in and relaunched or accelerated QE to save the markets. The bullish effect for stocks, bitcoin, real estate, and hard assets has been massive driving populism to record highs.



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.

This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2022 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.
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