Short Term Very Oversold – Sharp Rally Due

Posted by Stephen Todd via The Todd Market Forecast

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DOW                                                      – 33 on 1000 net declines
NASDAQ COMP                            – 20 on 650 net declines
SHORT TERM TREND                       Bearish
Today was a surprise. I felt that we would get a bounce today and we did for a while, but it couldn’t hold on.
The usual suspects were again present. Concerns about Greece and concerns about its affect on the world economy. Regarding Greece, a lot of people are starting to discount its exit from the euro-zone, but 80% of the Greek people want to stay in. Also, after all of the effort already expended, it’s unlikely that they will simply give up.
The short term is oversold almost to the breaking point so a very sharp rally should be close by, but the intermediate term is another story. We’ve circled the big declines since 2010 and compared to the previous two, this one is still a baby.
TORONTO EXCHANGE:  Toronto had a decent day by recent standards, “only” dropping 17 points.
GOLD: Gold had yet another solid down session.
BONDS: Bonds surged to still another multi decade high.
THE REST: The dollar was up again and this helped push down gold, silver, copper and crude oil.
   Our intermediate term systems are on a sell signal.
   System 2 traders We sold the E-mini at 1322.50 for a loss of 12.25. We sold the SSO at 51.78 for a loss of .92.
     We bought another E-mini S&P 500 at 1334.00 and the SSO at 52.64. Sell at the close on Thursday.
   System 7 traders are in cash. Stay there on Thursday.
     Housing starts were 717,000, more than the expected 690,000. Industrial production rose 1.1%, better than the anticipated 0.5%. Oil inventories rose 2.1 million barrels. Last week they rose 3.7 million. On Thursday we get initial claims, leading indicators and the Philadelphia Fed survey.
We’re on a buy for bonds as of April 19.
We’re on a buy for the dollar and a sell for the euro as of May 11.                
We’re on a sell for gold as of April 4.              
We’re on a sell for silver as of April 4.        
We’re on a sell for crude oil as of May 4.        
We’re on a sell for copper as of May 14.    
We’re on a sell for the Toronto Stock Exchange TSX as of March 22.
We are long term bullish for all major world markets, including those of the U.S., Britain, Canada, Germany, France and Japan.

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