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[TTHQ Staff]

Todd Market Forecast Stock Market Update for the close on Thursday 05/19/05

www.toddmarketforecast.com

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

DOW + 29 on 800 net advances

NASDAQ COMP. + 12 on 300 net advances

STOCK MARKET ANALYSIS:

The economic news was mostly negative on Thursday and a spokesman for OPEC said that a production cut may be in the offing because of the supply. However, this news didn't cause a sell off in the stock market which is a good sign. It suggests to us that there is more on the upside.

This is not to say that there weren't some bullish items. Yesterday Merrill Lynch upgraded the tech sector. Today, Morgan Stanley and Smith Barney essentially did the same thing. They are apparently seeing, on a fundamental basis, what we are seeing in the charts.

The are some short term concerns. First, the listed market has now been up four days in a row and the Nasdaq has been up five. Second, there is some current resistance for the S&P near the early April highs. Third, we are now overbought by several momentum gauges. For instance, the supply demand moving average is at .84 which is extreme.

Bear in mind that in a bull market, overbought is not as important for picking tops as oversold is for picking bottoms. The market can stay overbought for long periods, but it is something to be aware of.

NEWS AND FUNDAMENTALS:


Initial claims were 321k which was lower than the expected 330k. The leading indicators were down 0.2% which was in line with the consensus. The Philly Fed index for May was a much weaker than expected 7.3. The consensus was for a reading of 17.9 and last month's was 23.5.

On the stock front, Netflix rose 4% on word of a partnership with Wal-Mart. Advanced Auto Parts, Ann Taylor, Bea Systems and Deb Shops added 6%, 3%, 5%, and 3% on good earnings. Ditto for Long's Drug, Men's Wearhouse, Petsmart and Stein Mart which gained 6%, 10%, 10% and 9%. Maxtor was upgraded by Lehman Bros. and jumped 8%. Motorola rose 2% on a stock buy back.

On the negative side, Cost Plus lost 4% on earnings. Goodyear Tire sank 2% after a downgrade by J.P. Morgan and finally, Western Digital was downgraded by Lehman, but only lost 1%.


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 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 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.

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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