Todd Market Forecast, by Steve Todd Options

[TTHQ Staff]

Todd Market Forecast for Tuesday February 2, 2010



Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.



DOW + 111 on 1600 net advances



NASDAQ COMP + 16 on 350 net advances



SHORT TERM TREND Bullish



INTERMEDIATE TERM TREND Bullish



There wasn’t a lot to move the markets on Tuesday, but move they did. Earnings continued to be better than expected, but that’s been the case for quite some time. Pending home sales and vehicle sales were about as expected so that was probably not a factor.

This will change on Wednesday when we get the ADP employment report. Then on Friday we get the dreaded non farm payrolls. The ADP report doesn’t pack the wallop that the non farm payrolls does, but I think it’s even more relevant since it only counts private industry jobs. The non farm payrolls include government jobs and that can give a misleading picture of the economy’s health.

What was not mentioned on most media outlets is that the stock market was very oversold two days ago and I believe that this is the real reason for the rebound although decent news helps.

The daily charts have now made a high above a previous high for a number of important indices. The notable exceptions are the NASDAQ Composite and the Russell 2000 so we will nervously move back to a short term bullish posture. Also helping this evaluation is the fact that 4 week RSI has curled up from an oversold condition as shown by the chart below.







The greenback fell back for the second day in a row and this helped rally the stock market, gold, silver, copper and crude oil. Bonds also rallied.



BOTTOM LINE:



Our intermediate term systems are on a buy signal.



System 2 traders, we sold the E-mini at 1097.25 for a gain of 20.25. We sold the SSO at 37.24 for a gain of 1.33. Stay in cash on Wednesday.



NEWS AND FUNDAMENTALS:



Pending home sales rose 1.0%, month over month which was in line with expectations. December vehicle sales were 8,4 million more than November’s 8.2 million. On Wednesday we get the ADP employment report and the MBA purchase applications.



OTHER MARKETS



We’re on a buy for bonds as of Jan. 12.



We’re on a buy for the dollar and a sell for the Euro as of January 26.



We’re on a buy for gold as of Feb. 1.



We’re on a sell for silver as of January 21.



We’re on a sell for Copper as of Jan. 12.



We’re moving back to a buy for crude oil as of today Feb. 2.



We are long term bullish for all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.