Todd Market Forecast Stock Market Update for Wed. 04/11/07
www.toddmarketforecast.com
Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.
DOW - 89 on 1300 net declines
NASDAQ COMP. - 18 on 900 net declines
SHORT TERM TREND Bearish
INTERMEDIATE TERM TREND Bullish
The stock market has been in a short term overbought condition for
days and finally a series of catalysts took it down. This is why
declines are more difficult to trade. The stock market will frequently
remain overbought until something spooks investors. It then retreats in
a hurry. Uptrends are much more orderly.
It wasn’t hard to find the trigger on Wednesday. The FOMC minutes
strongly suggested that the Fed is still concerned about inflation and
that a rate cut is not in the cards. Of course, they have it exactly
backwards. A rate cut is just what is needed, but very few economists
understand that. Make that none.
Also, there were negative comments by the IMF about the U.S.
economy. The National Association of Realtors had a negative assessment
of home prices. Finally, an eight month high in gasoline prices and
concern about earnings finished off the bulls. It’s surprising that we
weren’t down more than we were.
We suspect that the decline will last another few days and give us
a good trading opportunity. Usually when the market retreats sharply
from an overbought condition, it isn’t over in one session. Stay tuned.
NEWS AND FUNDAMENTALS:
Gasoline inventories dropped a much worse than expected 5.5 million
barrels. The expectation was for a drop of 1.5 million. The IMF cut
estimates of 2007 U.S. economic growth by a full point to 2.2%. The
National Association of Realtors sees a full year 2007 decline for U.S.
home prices for the first time in 40 years.
On the stock front, Benihana and Chico’s FAS rose 6% and 7% on
increased same store sales. NovaMed was upgraded by Raymond James and
gained 7%.
On the negative side, Big Lots was downgraded by Wedbush and lost
6%. VeraSun Energy was downgraded by UBS and gave up 4%. Shuffle Master
was downgraded by Prudential and sank 5%.
BOTTOM LINE:
Our S&P and NASDAQ intermediate term systems are on a buy signal.
Mutual fund investors should be in a 100% invested position in the fund
of their choice.
Short term ETF traders are currently in cash. Stay there for now.
OTHER MARKETS
We are on a sell signal for bonds as of March 22.
We are on a sell on the dollar and a buy for the Euro as of Feb. 15.
We are on a buy for gold as of March 20.
We are on a buy for crude oil as of March 26.
We are bullish for all major world markets, including those of the U.S.,
Britain, Canada, Germany, France and Japan.
http://www.decisionpoint.com/TAC/TODD.html
