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[TTHQ Staff]

Todd Market Forecast Stock Market Update for the close on Wednesday 06/22/05

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

DOW - 12 on 500 net advances
NASDAQ COMP. + 1 on 150 net advances

STOCK MARKET ANALYSIS:

Near term setbacks aside, we are of the opinion that the next few months should be positive for the stock market. The reasons that we have given thus far have mainly to do with liquidity. We have heard estimates of as much as $9 trillion sitting around in short term instruments. Just to put that in perspective, every home in the United States combined is worth about $16 trillion. There's no law that says this money has to come into stocks, but historically, a substantial amount has done just that.

Now, another positive element is being introduced. Yesterday, the Bank of Sweden cut interest rates. This prompted talk of cuts from the ECB and the Bank of England. We have been hearing such a discussion in this country for the past two weeks.

It has been our experience that when investors are talking about an end to tightening and even the loosening of rates, the stock market goes up. Of course, you will hear that this is bad for stocks because it means that the economy is slowing. Don’t you believe it.

Just look at the history of rate cuts. In 1995, the last rate increase was in February and the first cut didn't come in until July, but months before, the stock market had already embarked on one of its greatest upside adventures in history.

Yes, the rate cuts in 2001 had little effect, but this was a unique experience exacerbated by 9/11. There are no guarantees, even that the sun will rise tomorrow, but you have to go with the weight of the evidence and historically, rate cuts and rumors of rate cuts are healthy for the stock market.


NEWS AND FUNDAMENTALS:

Crude oil inventories lost 1.58 mln barrels. The expectation was for a drop of 2.00 mln. Gasoline stocks were up 19k. The consensus was for a rise of 50k. Distillates added 1.37 mln. The expectation was for a rise of 2.00 mln.

On the stock front, Jabil Circuits, H.B. Fuller and Lindsay Mfg. beat estimates and gained 10%, 6% and 10%. Pier 1 Imports rose 4% after an upgrade by KeyBanc. Conexant added 8% on an upgrade by Wachovia.

On the negative side, Ford and Movie Gallery guided lower and sank 5% and 15%. Airnet Systems lost 7% after it was disclosed that three contracts were lost. Chico's FAS was downgraded by Prudential and gave up 3%. Altiris was downgraded by Jeffries and sank 7% and finally, Delphi cut the dividend by 50% and gave up 5%.


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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TODD MARKET FORECAST
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