Todd Market Forecast Stock Market Update for the close on Thursday 09/08/05
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Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.
DOW - 38 on 800 net declines
NASDAQ COMP. - 6 on 600 net declines
STOCK MARKET ANALYSIS:
We've had a pretty good run over the past week and a bit of consolidation is to be expected. We are still expecting a retest of the early August highs before this short term move is over.
That said, there were a couple of things that raised the warning flag on Thursday. Volume was a bit more than we would have wanted on a down session, nothing really serious. The thing that did raise our eyebrows a bit was breadth. We really don't like it when the Dow and S&P 500 are down marginally with 800 net declines. The Nasdaq wasn't much better. It was barely down, but breadth was poor. We don't think it's terminal, but we do want to keep our antennae up.
Here's an interesting little fact or perhaps large fact. The New York Composite Index, which represents every stock on the NYSE closed on Tuesday at an all time high. This isn't just some obscure index. It tells you what a very broad measure is doing. It's just amazing to us that some analysts still look at this as a cyclical bull market within the confines of a secular bear. Strength in the NYSE Composite tends to portend strength in the other indices.
Regardless of the short term, the longer term trend continues to look good. Once we get out of this weak seasonal period sometime in October, we are expecting very good things from the stock market. Stay tuned.
NEWS AND FUNDAMENTALS:
Initial claims, which did include some Katrina stats came in at 319k. The expectation was for a reading of 315k. Crude oil inventories dropped 4.4 mln, but the consensus was for an even greater drop of 6.15 mln. Gasoline sank 6.5 mln. The expectation was for a decrease of 7.70 mln. Distillates gave up 816k. the anticipation was for a drop of 1.9 mln.
On the stock front, National Semi, Converse Technology and Cooper Cos. beat estimates and rose 6%, 3% and 6%. Fleetwood Enterprises had a lower than expected loss and gained 5%. Sirius Satellite Radio added 3% after announcing program changes. Apple Computer gained 2% after a surprise addition to its iPod line. Arrow Electronics rose 5% after an upgrade by Morgan Stanley.
On the negative side, Sears Holding lost 6% on a management shakeup and worse than expected earnings. Hovnanian Ent, Charles River and Coca-Cola Enterprises sank 7%, 9% and 9% 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.
Short term traders in the SPY and QQQQ are long from 121.25 and 38.56. Keep your stops at breakeven.
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 as of August 23, 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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