Bernanke Speaks – A Market Forecast

Posted by Stephen Todd - The Todd Market Forecast

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DOW                                          – 3 on 400 net declines
NASDAQ COMP                        – 9 on 350 net declines
SHORT TERM TREND               Bullish

The Dow was up around 80 then Mr. Bernanke began to speak. He said that interest rates would stay low as long as the unemployment rate remained above 6 1/2% and as long as inflation remained subdued.    

I’m not sure why this caused a selloff, but then I have never really understood the market’s reaction to the Federal Reserve.   

I’m more at home with the market’s technicals and these are still quite bullish. The weekly advance decline line is at September levels while the S&P 500 is well off those highs (arrows). When the internals are outperforming it is usually a good sign.


TORONTO EXCHANGE:  Toronto gained 71points.                                        
GOLD: Gold was up by $4.
BONDS: Bonds really took it on the chin.                                       
THE REST: The dollar was lower. This probably helped gold, silver, copper and crude oil to a gain. It didn’t do much for the stock market.                             


Our intermediate term systems are on a buy signal.
System 2 traders We are in cash. Stay there on Thursday.
System 7 traders We are long the SPY from 138.91. Stay with it on Thursday.                   
Oil inventories rose 0.8 million barrels. This was better than last week’s loss of 2.4 million. On Thursday we get the CPI and industrial production.    
We’re on a sell for bonds as of November 19.            
We’re on a sell for the dollar and a buy for the euro as of November 19.                      
We’re on a buy for gold as of November 8.                    
We’re on a buy for silver as of November 8.  
We’re on a buy for crude oil as of November 19.        
We’re on a buy for copper as of November 19.          
We’re on a buy for the Toronto Stock Exchange TSX as of November 21.    

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 Monetary conditions (+2 means the Fed is actively dropping rates; +1 means a bias toward easing. 0 means neutral, -1 means a bias toward tightening, -2 means actively raising rates). RSI (30 or below is oversold, 80 or above is overbought). McClellan Oscillator ( minus 100 is oversold. Plus 100 is overbought). Composite Gauge (5 or below is negative, 13 or above is positive). Composite Gauge five day m.a. (8.0 or below is overbought. 13.0 or above is oversold). CBOE Put Call Ratio ( Below .80 is a negative. Above 1.00 is a positive). Volatility Index, VIX (low teens bearish, high twenties bullish), VIX % single day change. + 5 or greater bullish. -5 or less, bearish. VIX % change 5 day m.a. +3.0 or above bullish, -3.0 or below, bearish. Advances minus declines three day m.a.( +500 is bearish. – 500 is bullish). Supply Demand 5 day m.a. (.45 or below is a positive. .80 or above is a negative).     

No guarantees are made. Traders can and do lose money. The publisher may take positions in recommended securities.

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