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[TTHQ Staff]

Todd Market Forecast Stock Market Update for Wednesday 02/20/08
www.toddmarketforecast.com
Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.

DOW + 90 on 650 net advances
NASDAQ COMP. + 21 on 300 net advances

SHORT TERM TREND Bullish
INTERMEDIATE TERM TREND Bullish


The stock market got hit early on mainly bad news on the inflation front. In the FOMC minutes from the last meeting, the Fed said the economy would slow even more and that inflation was worsening. In spite of this, the market fought back from a deficit of 110 Dow points and closed well into the green.

We think that essentially there is a battle going on between liquidity and news. The news is bad, but there is a lot of money sloshing around and this limits the vulnerability of stocks.

For instance, we note that the total credit balance in brokerage margin accounts is over $246 billion. Back in July of 2006, it was $126 billion. Cash balances have gone from $81 billion to $128 billion during the same period. These are increases of 95% and 58% respectively. While the Dow has moved higher by about 1200 points since early July of ’06, it hasn’t cost anything in brokerage liquidity, in fact it has increased. We will try to put together a chart of this in the not too distant future.

In the meantime, gold has surged to still another all time high. It was down sharply in the early going, but as stocks recovered so did gold. It is now overbought again, but it continues to look higher.

Bonds were smacked again, but crude held its recent gains and inched higher still again.



NEWS AND FUNDAMENTALS:

CPI rose 0.4%. The core rate rose 0.3%. The expectations were for a rise of 0.3% and 0.2%. Housing starts were 1012k. Building permits were 1048k. The consensus was for readings of 1015k and 1040k. On Thursday we get initial claims, the Philly Fed, Leading Indicators and crude inventories.


BOTTOM LINE:

Our intermediate term systems are on a buy signal. Mutual fund investors and investors in the S&P 500 ETF symbol SPY are 100% long. The SPY was bought at 146.62.

Short term ETF traders are in cash. Let’s stay there for right now.


OTHER MARKETS

We are on a sell for bonds as of January 24.

We are on a buy for the dollar and a sell for Euro as of November 30.

We are on a buy for gold as of February 19.

We are on a buy for crude as of January 24.

We are long term bullish for all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.



STEPHEN TODD: A SHORT BIOGRAPHY

Editor and publisher of the Todd Market Forecast, a monthly stock market newsletter with an included nightly hotline.

Steve has published articles on the 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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