www.toddmarketforecast.com
Todd Market Forecast for Monday June 28, 2010
Available Mon- Friday after 6:00 P.M. Eastern, 3:00 Pacific.
DOW - 268 on 2550 net declines
NASDAQ COMP - 85 on 2100 net declines
SHORT TERM TREND Bullish
INTERMEDIATE TERM TREND Bullish
The stock market got hit with everything but the kitchen sink on Tuesday. More on that in a moment, but first, let’s look at the market’s technical condition.
The S&P 500 both broke the lows of early June on an intraday basis and on a closing basis. Ditto for the NASDAQ Composite. We didn’t especially like that, but the Dow and the New York Composite held their respective lows. We see the Dow below.
Most analysts follow the S&P 500 to get technical signals, but we prefer the Dow and the New York Composite. The former because it’s the psychological market and the latter because it’s the most broadly based, comprising every common stock on the NYSE.
We’ll give the benefit of the doubt to the short term bullish case until and unless these two indices follow the NASDAQ and S&P 500 to new lows.
In the early going, Chinese growth came into question and the Shanghai index dropped over 4%. This hit Europe which had its own problems. It seems that the ECB is closing a lending facility for banks on Thursday and it is owed over $500 billion. There is some question about how much of this debt can be rolled over.
Not to be outdone, in this country consumer confidence came in much lower than expected and this poured fuel on the bearish fire.
Troubles in Europe caused a sharp rise in the dollar and a big drop in the euro. This in turn hurt our stock market and also silver, copper and crude oil. Gold, which moves independently of the currencies because of flight to safety issues managed a move higher. Bonds were sharply higher.
BOTTOM LINE:
Our intermediate term systems are on a buy signal.
System 2 traders, we generated a system 2 buy. On Wednesday buy the E-mini or the SSO, but we have a slightly different procedure this time. We have found that when the market is down sharply on day 1, it almost always trades lower at some point on day 2. We’re willing to buy on a down opening, but we want to avoid buying an up opening especially a sharply higher open. Let’s buy the E-mini at 1035.00 m.i.t or the SSO at 32.94 m.i.t. The initials m.i.t. means “market if touched”. It means that if the price is hit, the order becomes a market order.
System 7 traders should stay in cash for now.
NEWS AND FUNDAMENTALS:
The Case - Shiller home price index rose 0.7%, better than the previous drop of 0.4%. Consumer Confidence from the Conference Board came in at 52.9, much weaker than last month’s 63.3. On Wednesday we get the ADP employment report, crude oil inventories and Chicago PMI.
OTHER MARKETS
We’re on a buy for bonds as of May 4.
We’re on a sell for the dollar and a buy for the euro as of June 15.
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 May 26.
We are long term bullish for all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.
STEPHEN TODD
A SHORT BIOGRAPHY
Editor and publisher of the Todd Market Forecast, a monthly stock market newsletter with an included nightly hotline.
Steve has published articles on the stock market in the following publications: Barron’s, Stock Market Magazine, Futures Magazine, The National Educator, and others.
His stock market commentary is heard on the following stations: CNBC, Bloomberg, CNNfn, Associated Press Radio, Business Radio Network, CKNW in Vancouver, British Columbia, KFWB, Los Angeles and ROBTV in Toronto, Ontario.
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TODD MARKET FORECAST
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