Todd Market Forecast Stock Market Update for Thursday 6/15/06
www.toddmarketforecast.com
Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.
DOW + 198 on 2050 net advances
NASDAQ COMP. + 58 on 1850 net advances
SHORT TERM TREND Bearish
INTERMEDIATE TERM TREND Bearish
STOCK MARKET ANALYSIS:
We said yesterday that we were likely to get a summer rally lasting a few weeks even though we believe that the final lows won't come in until October. Today's uptrend was impressive, but when the market is as oversold as it was a couple of days ago, the chances are very good that the initial rally off the bottom will curl over in a few days and give at least a partial retest of the recent lows. In other words, we aren’t quite ready to give the all clear on a short term basis.
But don't worry. If this rally is the real thing, it will last several weeks. This is only the second day and wretched excesses such as we had on Thursday have a way of correcting.
The market was up pretty good when Bernanke began still another speech, but it really surged while he was talking. The interpretation from stock traders was that he seemed more mild in his demeanor and less gloomy. He said that while the short term effects of the oil price hikes were inflationary, the longer term was manageable. Apparently the market liked that. Of course, being oversold in the extreme was also a major factor.
Regarding the intermediate term, we are now factoring in the new system that we discussed in the last newsletter. It is currently on a sell signal. For an intermediate term buy signal, we need the five week RSI for the Russell 2000 to move above 50. Today it closed at 27 so you can see that we aren’t even close.
Some of the sharp action today may have also been because of tomorrow's quadruple expiration for options and futures.
NEWS AND FUNDAMENTALS:
The Philadelphia Fed index came in at 13.1 which was less than the 14.4 reading for May, but more than the consensus 11.8. The New York Empire State Manufacturing Index was a robust 29 which was greater than the 12.9 reading for May and better than the consensus of 12.5. Industrial Production sank 0.1%. The expectation was for a rise of 0.2%. Initial claims were 295k. The consensus was for a reading of 320k.
On the stock front, Bear Stearns beat estimates and rose 5%. KB Home, Pulte Home and Lennar were all downgraded by Morgan Stanley, but still gained 4%, 4% and 3%. Lattice Semiconductor guided higher and jumped 6%.
On the negative side, Stanley Furniture guided lower and lost 3%. Comarco had a bigger than expected loss and gave up 5%. Pier 1 Imports eased 2% on earnings.
BOTTOM LINE:
Our S&P and NASDAQ intermediate term systems are on a sell signal as of June 7, 2006 at 1256 on the S&P 500. Mutual fund investors are currently 100% in cash.
Short term traders in the SPY and QQQQ are in cash. Stay there for now.
For new subscribers, the QQQQ and SPY are exchange traded funds or Spiders. The former mimics the Nasdaq 100 and the latter mimics the S&P 500. ---- Additionally, an m.i.t. order means “market if touched” It means that your order becomes a market order if the price is touched.
OTHER MARKETS
We are on a buy for the bond market as of May 19.
We are on a buy for the greenback and a sell for the Euro as of June 8.
We are on a sell for gold as of May 15.
We are neutral on crude oil as of June 1st.
We're now on a long term negative for all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan. This is a first in many years, but it should be a fairly short time frame, meaning a few months.
STEPHEN TODD 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.
RANKED # 1 BY TIMER DIGEST
Timer Digest of Greenwich, CT monitors and ranks over 100 of the nation’s best known advisory services. If you have heard of an advisor, it is likely that he or she is monitored and ranked by Timer Digest.
Once per year, in January, Timer Digest editor Jim Schmidt gives the rankings for all services monitored for multi year time frames. The latest survey has us ranked # 1 for the past ten years.
TODD MARKET FORECAST
P.O. Box 4131
Crestline, CA 92325-4131
www.toddmarketforecast.com
e mail – toddmarketforecast@charter.net
phone 909 338 - 8354
