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[TTHQ Staff]

Todd Market Forecast Stock Market Update for the close on Thursday 05/12/05
www.toddmarketforecast.com
Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.

DOW - 111 on 1500 net declines

NASDAQ COMP. - 8 on 800 net declines


STOCK MARKET ANALYSIS:

We were somewhat surprised by the weakness in the listed market. Retail sales were very good overall and oil dropped another 3 1/2%. The story from the floor of the exchange is that in spite of good retail sales, the sour earnings report by Wal-Mart caused everyone to consider that the consumer led recovery was slowing down. We're not sure of that interpretation. Retail sales, as a whole, were very good and Wal-Mart itself was only down 2%.

Oil is another matter. We tend to think of a sharp oil drop as being good, but it's not good for oil stocks. For instance, the oil services index, OSX, sank 4 1/2%. That's like the Dow losing 460 points and this had to weigh on the overall market.

On the other hand, the Nasdaq and high techs, which don't have an oil component did much better. The semiconductor index, SOX, was actually up for the session.

As we said yesterday, this market is very choppy. Our best estimate is for a rally session on Friday. One reason is a sharp 11 1/2% single day rise in the VIX, or the so called Volatility Index. We don't look at this indicator very often. We think it's over rated, but we have found that single day jumps of over 10% tend to foreshadow rallies for the next session. We continue to look for a choppy, hardscrabble uptrend to take place over the next few weeks.


NEWS AND FUNDAMENTALS:


Retail sales rose a more than expected 1.4%. The consensus was for a rise of 0.7%. Initial claims were 340,000 which was better than expected.

On the stock front, Target, Buckle Inc., and Urban Outfitters rose 2%, 8% and 4% on earnings. Deb Shops jumped 8% on a special dividend. Matrix Services added 10% on news of a construction contract.

On the negative side, the aforementioned Wal-Mart dropped 2%. U.S. Steel lost 7% after guiding lower. American Eagle Outfitters beat estimates, but still lost 6%. Helen of Troy, Mylan Labs and Trans World Entertainment came up short on earnings and sank 10%, 2% and 21%. Finally, Napster had a smaller than expected loss, but still gave up 14%.


BOTTOM LINE:

Our S&P and NASDAQ intermediate term systems are back on a buy signal as of the close on Thursday, April 21, 2005. Mutual fund investors are 100% invested in a growth fund or S&P 500 Index fund of their choice.

SPY and QQQQ traders are on the sidelines.

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.

We are on a buy for the dollar and a sell for the Euro.

We are on a sell signal for gold.

We remain long term positive on all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.



ABOUT 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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