Todd Market Forecast Stock Market Update for the close on Thursday 09/15/05
www.toddmarketforecast.com
Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.
DOW + 14 on 150 net declines
NASDAQ COMP. - 3 on 550 net declines
STOCK MARKET ANALYSIS:
A technically weak market was again hit by mainly negative economic news. Investors seemed to take the worse than expected reading of the Philadelphia Fed especially hard. There seems to be an ongoing debate about the effects of the hurricane and the bears have been winning over the past few days.
Yes, the Dow was up marginally and so was the S&P 500, but there were more declining issues than advancing ones. Worse yet, the under performing Nasdaq was again weaker than the listed market. Until this changes, we don't have to look for a meaningful bottom.
That said, downside momentum is waning and Friday may give us an up day, but we wouldn’t try to trade it. Especially since this is expiration Friday for a number of options and futures contracts which will probably make for a choppy day.
We want to say something about gold. It is ripping to the upside. Some say it is predicting inflation. Certainly that's what Greenspan thinks, but this is just one of the many things he's wrong about. The wedding season is fast approaching in India and this creates demand for the yellow metal.
NEWS AND FUNDAMENTALS:
August CPI came in at the expected rise of 0.5%, but the core rate, which doesn't include oil, rose 0.1% which was lower than the expected 0.2%. The New York Empire State Index was 17.0, greater than the expected 15.5. Initial claims were 398k, much larger than the anticipated 350k. The Philadelphia Fed Index was reported at 2.2, much lower than the consensus reading of 13.3 and lower than last month's 17.5.
On the stock front, Delta Airlines filed for bankruptcy and rose 8%. We can remember when that stock was $70 back in 1999. It closed today at 71 cents a loss of 99%. Pier 1 Imports added 6% in spite of a losing quarter and reluctance to predict. Red Robin Gourmet Burgers reaffirmed its outlook and gained 3%. Sterling Contstuction jumped 10% on the strength of a contract with the city of Houston. Western Gas Resources increased the dividend and rose 2%.
On the negative side, Bear Stearns beat earnings estimates, but lost 2% anyway. Dana Corp guided lower and sank 22%. Energizer Holdings eased 1% after a downgrade by Prudential. McAfee lost 7% on a downgrade by Susquehanna. Northwest Airlines declared bankruptcy and crashed 52%.
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 in cash. They should stay 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 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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