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[TTHQ Staff]

Todd Market Forecast Stock Market Update for the close on Thursday 07/21/05
www.toddmarketforecast.com

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

DOW - 61 on 1200 net declines

NASDAQ COMP. - 10 on 800 net declines

STOCK MARKET ANALYSIS:

The stock market had a lot to contend with on Thursday. Another London bombing and the Chinese currency re evaluation. Regarding the Chinese move, our government has been hounding the Chinese to do this for years in order to bring the trade deficit down. Let me make a bold prediction. The trade deficit with China will not be affected one iota It will be the same a year from now.

Why? Dropping the dollar's value against a trading partner seems like it would work, but it doesn't. We tried this in the late 1970s with the Japanese. It didn't work because Japan had placed structural impediments to our exports. The same is true now with China. We have heard that one of the definitions of insanity is doing the same thing over and over and expecting a different result.

Why did the stock market rally after the last London bombing and go down after this one which was a much milder event? The last time stocks were oversold. This time, they were a bit over extended.

Today, the stock market had a solid decline on heavy volume. Since this took place with a market that has been quite overbought, we suspect that the direction will be more down that up over the next couple of weeks. We still expect much higher prices on an intermediate term basis.

After the close, Google reported earnings that were below expectations. That may impact trading on Friday.




NEWS AND FUNDAMENTALS:

The leading indicators rose 0.9% which was better than the expected rise of 0.5%. The Philadelphia Fed Index came in at 9.6 which equaled expectations, but was better than the reading of -2.2 for June.

On the stock front, Ebay blew away earnings expectations and surged 20%. Cirrus Logic, Capital One, America West and Office Depot beat the earnings consensus and rose 14%, 4%, 3% and 12%. Union Pacific also gained 3% on earnings.

On the negative side, a lot of stocks met expectations, but went down anyway. Among them were Dow Jones, EMC and Jet Blue which lost 4%, 2% and 8%. Cypress Semiconductor gave up 2% after a smaller than expected loss. International Game Technology beat estimates, but still sank 6%. Finally, Merck, Nokia and Owens-Illinois came up short on earnings and lost 2%, 12% and 8%.


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 switching to a sell signal on the bond market as of the close today.

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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