Todd Market Forecast Stock Market Update for the close on Thursday 10/13/05
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Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.
DOW - 1 on 1000 net declines
NASDAQ COMP. + 10 on 50 net declines
STOCK MARKET ANALYSIS:
We saw some small specks of hope emerge on Thursday. First, the indices didn't just die toward the close as they have been doing. We also liked the fact that the Nasdaq Composite and the various high tech indices were up for the day. Relative strength in the more speculative groups is frequently a harbinger of a better market. Another bellwether index, the banking group also did well on Thursday.
This was in spite of sympathy selling brought on by trouble at Refco, a major commodity broker. This stock had its trading halted at $7.88. Last Friday it was going for $28.0. We might add that this type of trouble frequently occurs near turning points.
We are not quite ready to pronounce the decline over. The market still has to prove itself and market breadth is still dreadful, but we are starting to see some better tape action coupled with extreme fear. For instance, the CBOE put call ratio was a whopping 1.32. The last time that it moved above 1.20 was on Sept. 22 right before a multi session bounce.
On Friday, we get the consumer price index, CPI. The consensus is for a rise of 0.9%. We're are going to stick our necks out and say that it won't be this high. If it is, it could retard the market.
NEWS AND FUNDAMENTALS:
The trade gap widened to $59 billion in August and import prices rose the most in 15 years. Oil inventories rose 1.02 mln barrels. Gasoline dropped 2.65 mln and distillates dropped 3.41 mln. The consensus was for a rise of 2.0 mln, a drop of 2.0 mln and a drop of 2.3 mln respectively.
On the stock front, Lam Research and Richardson Electronics beat estimates and rose 13% and 8%. Tribune Co. came up short on earnings, but guided higher and added 2%. Impac Mortgage Holdings and Buckle Inc. jumped 9% and 5% on a stock buyback.
On the negative side, the aforementioned Refco crashed 27% before being halted. Alliance Imaging, Bell Microproducts, and Clayton Williams guided lower and gave up 9%, 27% and 5%. JP Morgan downgraded Frontline Ltd., Maxtor and Seagate. The stocks lost 5%, 6% and 3%.
BOTTOM LINE:
Our S&P and NASDAQ intermediate term systems are on a buy signal as of the close on April 21, 2005. Mutual fund investors are 100% invested in a growth fund or S&P 500 Index fund of their choice.
Short term traders in the SPY and QQQQ are in cash. Stay there on Friday.
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 signal for bonds as of August 23, 2005.
We are on a buy for the dollar and a sell for the Euro as of Sept. 23, 2005.
We are on a buy signal for gold as of October 11. 2005.
We remain long term positive on all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.
STEVE TODD
A SHORT BIOGRAPHY
Editor and publisher of the Todd Market Forecast, a monthly stock market newsletter with an included nightly hotline. Steve Todd has a degree in history with a minor in mathematics. This should be a good combination for stock market analysis.
Steve has published articles on the economy and 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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