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[TTHQ Staff]

Todd Market Forecast Stock Market Update for the close on Thursday 06/16/05

www.toddmarketforecast.com

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

DOW + 12 on 1100 net advances

NASDAQ COMP. + 14 on 900 net advances

STOCK MARKET ANALYSIS:

The stock market shrugged off negative economic news on Thursday and moved higher on the second best volume in four weeks. Of course, the volume was largely a function of quadruple witching, but you have to be impressed when the Dow closes higher for the 13th out of the past 14 sessions in spite of another 2% rise in crude oil.

This is pretty consistent with what it has been doing lately. Since May 20, the Dow has rallied 107 points and during this time crude oil has moved higher by 18% to a near record. The stock market doesn't move higher by much, but inches up almost every day.

The advance decline line has now made another all time high. We would like the long term bears to explain that one. An all time high for market breadth would seem to contradict the notion put forth by some analysts that we are experiencing a cyclical bull market within the confines of a long term secular bear market. We saw prominent coverage of this idiotic idea a few days ago in the Wall Street Journal.

Yes, we know. The NYSE advance decline line has a lot of preferreds and bond funds that are influenced by the drop in long term rates, but historically a drop in long term rates has also been very helpful to the stock market, sometimes on a delayed basis.

We could have a short term decline at any point, but the bias would still appear to be to the upside for the next several months.


NEWS AND FUNDAMENTALS:

The Philadelphia Fed index went negative for the first time since May of 2003. It came in at -2.2, which was below expectations of + 10.0. This means that manufacturing is actually contracting in this area of the country. Initial claims were 333k, slightly more than the expected 330k. Building permits dropped 4.6% and housing starts were 2.009 mln annualized. The consensus was for a rise of 2.050 mln.

On the stock front, Abercrombie and Fitch rose 2% after an upgrade by A.G. Edwards. A.K. Steel added 4% after raising prices. Bed Bath and Beyond jumped 4% on a Lehman upgrade. Carnival and Winnebago rose 5% 7% on good earnings. Ford advanced 2% after an upgrade by Deutsche Bank. Goldman Sachs came up short on earnings, but still rose 3%. Microchip Technologies tacked on 3% after an upgrade by Banc of America.

On the negative side, GM lost 3% on problems with the union over health care. Ventana Medical Systems sank 4% after a downgrade by Bear Stearns. Ultralife Batteries gave up 2% after guiding lower.

BOTTOM LINE:

Our S&P and NASDAQ intermediate term systems are back 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.

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 since April 11, 2005.

We are on a buy for the dollar and a sell for the Euro since March 22, 2005.

We are on a sell signal for gold since April 14, 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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