ETFs Alpha Test posted HERE

For months, these stock market forecasting models have posted mildly negative short-term forecasts — and sadly, they have been correct. With most flavors of market indexes down roughly 10%, the models appear ready to turn up — perhaps, 1% in November, but then up roughly 8%-9% over the next 6 months. (Of course, not all the market models agree, but, looking at the spaghetti plot above, it does look like things are finally turning up. ) All in all, the next 6 months expect stock market performance to be distinctly above average. Probability of at least breaking even is about 98%.

Unless the Republicans in the House of Representatives shut down the U.S. Government or a broader war spreads in the Mideast.

As far as my forecasting models are concerned, the most pressing economic problem is that long-term interest rates have shot up. Most other economic variables have remained strong. As the Federal Reserve jacked up short-term interest rates, the 10-year borrowing rate stayed quite low. The bondholders seem to have given up now, and long-term interest rates have risen. Interest rates are likely to stay higher longer. Statistically, that is a negative factor for corporate profits and then for stock market prices. Overall, higher interest rates point to lower market PE ratios and a lower stock market. But, for now, my models expect things to get better. Happy Thanksgiving.!

As has been the case for months, the overall stock market situation is that the Federal Reserve is tightening the purse strings, but Federal Government spending remains in heavy stimulus mode. The result is like driving a car while pressing both the brake pedal and the accelerator. It works. The car keeps moving. But, it is hell on the equipment. I don’t expect things to change much until the next presidential election. By then the traitor Donald Mussolini may be in power and things might be very bad.