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Todd Market Forecast for Wednesday May 5, 2010
Available Mon- Friday after 6:00 P.M. Eastern, 3:00 Pacific.
DOW - 60 on 1850 net declines
NASDAQ COMP - 22 on 1350 net declines
SHORT TERM TREND Bearish
INTERMEDIATE TERM TREND Bullish
The U.S. stock market is influenced by events around the world, but not normally by this much. We were actually up in the early morning until word of Greek rioting triggered a sell off.
The next few days promise to be momentous. The U.K. elections are on Thursday. If David Cameron can win by enough to put together a ruling coalition, it should be a positive for the markets.
Even more important is the German vote on the Greek bailout to take place on Friday. Germans retire at age 67, Greeks retire at 53. So you can see why the bailout is extremely unpopular with the German public. A failure of the vote will most likely cause chaos in the markets.
As if this weren’t enough, one of the most awaited non farm payroll numbers is going to be released this Friday. A disappointment here could also be problematic.
The technicals are attempting to come to the rescue. Most are oversold. The CBOE put call ratio’s one day reading was 1.16. As we see in the chart below, readings this high tend to mark trading bottoms.
Weakness in the Euro caused strength in the dollar which in turn caused weakness in silver, copper and crude oil. It didn’t hold back gold, which went up as a crisis play.
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BOTTOM LINE:
Our intermediate term systems are on a buy signal.
System 2 traders, we bought the E-mini at 1160.75. We bought the SSO at 41.53. Sell both at the close on Thursday.
We generated another buy at the close. On Thursday buy the E-mini and or the SSO at the open. We’ll hold these positions until Friday’s close unless the Dow is up by 100 points at 3:45 EST in which case sell on Thursday’s close.
System 7 traders are in cash. Stay there for now.
NEWS AND FUNDAMENTALS:
The ADP employment report showed a gain of 32,000 jobs, last month showed a 23,000 loss. The ISM services index came in at 55.4, less than the expected reading of 56.4. On Thursday we get initial claims.
OTHER MARKETS
We’re on a buy for bonds as of May 4.
We’re on a buy for the dollar and a sell for the Euro as of March 24.
We’re on a buy for gold as of April 7.
We’re on a buy for silver as of April 1.
We’re on a sell for copper as of April 27.
We’re on a buy for crude oil as of April 30.
We are long term bullish for all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.
