Todd Market Forecast for Wednesday July 7, 2010
Available Mon- Friday after 6:00 P.M. Eastern, 3:00 Pacific.
DOW + 274 on 2200 net advances
NASDAQ COMP +66 on 1350 net advances
SHORT TERM TREND Bullish
INTERMEDIATE TERM TREND Bearish
There were a few positive news items on Wednesday, but for most of the session, observers were remarking that the rally wasn’t being driven by anything in particular, as if that were a negative.
Actually, some of the best rallies come when everyone is scratching his or her head and can’t figure out why it’s happening. Today on CNBC, a lot of analysts were telling us that this is just a flash in the pan. We didn’t hear anyone say that it was time to get on board.
We have found that when 10 day RSI becomes oversold and curls up sharply, that it is normally an indication that the market wants to go higher although there have been a couple of recent failures. We can see this in the chart below. In other words, it’s not enough to be oversold, the market has to demonstrate that it can rally in an impressive manner. We would have preferred better volume, but it was better than yesterday’s.
We’re still in the grip of a pattern of declining tops and bottoms, but we’ll stick our neck out here a bit and move back to a bullish short term posture.
The dollar dropped and this helped gold, silver, copper and crude oil to a bounce. Bonds were down for the session.
BOTTOM LINE:
Our intermediate term systems are on a sell signal.
System 2 traders are in cash. Stay there on Thursday.
System 7 traders should stay in cash for now.
NEWS AND FUNDAMENTALS:
MBA purchase applications dropped 2.0%. This was less than last month’s drop of 3.3%. On Thursday we get jobless claims and crude oil inventories.
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 sell for gold as of July 1.
We’re on a sell for silver as of July 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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