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[TTHQ Staff]

Todd Market Forecast Stock Market Update for Wednesday (03/19/08)
www.toddmarketforecast.com

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

DOW - 293 on 1300 net declines
NASDAQ COMP. - 58 on 950 net declines

SHORT TERM TREND Bullish
INTERMEDIATE TERM TREND Bearish


If you’re a bull, this is not the kind of follow through you want to see after a euphoric surge the previous day and you especially don’t want to see it on heavier volume.

Not only did the U.S. indices give up a substantial percentage of yesterday’s gain, but the emerging market’s ETF symbol EEM gave up more than it gained yesterday and so did the UK’s ETF symbol EWU and the Canadian ETF, symbol EWC. The Canadian ETF gave up much more than yesterday’s gain.

In fact, there weren’t many places to hide. Gold, which had resisted the recent carnage in the commodities market more than made up for it on Wednesday, having its worst single day decline in 28 years.

Here’s what seems to be happening in commodities. Brokers and other clearing organizations are telling hedge funds that in the light of the recent debacle with Bear Stearns, that they no longer will accept 10:1 leverage that has been the norm. Five to one may be O.K. but that they must lower their exposure. This has the same affect as a margin call.

And of course, commodity based stocks were behind much of the slaughter today. One example is Dow component Alcoa which lost almost 8% on Wednesday.

The chart shown to e-mail subscribers shows both the daily and monthly price action of gold. The yellow metal broke both the early March and mid March lows and this leaves us no choice except to go to a sell signal. This, in spite of the fact that it is already oversold. The monthly chart also looks a bit ominous. It turned down from a 5 month RSI reading of 95 which is about as overbought as any market ever becomes.



NEWS AND FUNDAMENTALS:

Crude inventories increased by 133,000 barrels. The expectation was for an increase of 2.25 million barrels. On Thursday we get initial claims, leading indicators, existing home sales and the Philly Fed Index.



BOTTOM LINE:

Our intermediate term systems are on a sell signal. Mutual fund investors are in cash.

Short term ETF traders are in cash. This is a tough market for trading.


OTHER MARKETS

We are on a buy for bonds as of February 21.

We are on a sell for the dollar and a buy for the Euro as of February 27.

We are moving to a sell for gold as of today March 19.

We are moving to a sell for crude as of today March 19.

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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