Todd Market Forecast Stock Market Update for the close on Thursday 08/18/05
www.toddmarketforecast.com
Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.
DOW + 4 on 750 net declines
NASDAQ COMP. -5 on 700 net declines
STOCK MARKET ANALYSIS:
We always like to have something provocative and clever to say about a trading session, but there are times when the market just doesn't give you much to work with. There's an old saying, "you can't swim in a buffalo wallow". Today, the S&P had a range of only 6.71 points.
There are a number of cross currents going on right now. Some of our indicators are quite oversold and the put call ratio continues to show too many puts being bought. These tend to be bullish factors.
However, breadth is acting quite poorly at present. During the latest rally, the advance decline line was very strong. There were a number of days when the averages were down with far more advancing issues than declining ones. We now have just the opposite.
Probably the thing that concerns us the most is the relative under performance of the Nasdaq Composite. This very important gauge has been in an orderly and persistent downtrend since its peak on August 2nd. Until that changes, the over all stock market is unlikely to give much satisfaction.
Our best bet is that any rally now will be short lived, but take heart. There are good things in the works for the stock market a few weeks out.
NEWS AND FUNDAMENTALS:
The leading indicators up 0.1%. The expectations were for them to rise 0.2%. Initial claims were 316k. The consensus was for a reading of 310k. The Philadelphia Fed index checked in a 17.5, better than the anticipated 14.0 and also better than last month's 9.6. This means that manufacturing is expanding in that region.
On the stock front, Altria rose 4% after the Illinois Supreme Ct. Through out a billion dollar verdict. Flower's Foods, Gamestop, Payless Shoe Source and Steinmart beat estimates and rose 12%. 10%. 6% and 4%. Northwest Airlines added 10% after an upgrade by Bear Stearns. Six Flags jumped 18% after its biggest shareholder proposed a management shakeup.
On the negative side, Barnes and Noble equaled estimates, but still lost 5%. BEA Systems and Hot Topic dropped 5% and 10% on earnings. Children's Place sank 6% on a wider than anticipated loss.
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 back in cash. Remain there 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 sell signal for bonds since July 21, 2005.
We are on a buy for the Euro and a sell for the dollar since August 3, 2005.
We are on a buy signal for gold as of August 3, 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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