Stocks: “On The Threshold of Oversold”

Posted by Todd Market Forecast

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Todd Market Forecast for Wednesday December 26, 2012

Available Mon- Friday after 6:00 P.M. Eastern, 3:00 Pacific.

DOW                                                        – 24 on 950 net declines

NASDAQ COMP                                    – 22 on 700 net declines

SHORT TERM TREND                           Bullish


     Again, fiscal cliff concerns, but also disappointing Christmas sales weighed on the equity markets. Not even strength in Asia could keep a fourth down day out of the last 5.

   Be aware that with the stock market getting on the threshold of an oversold condition, a deal on the fiscal cliff, even a lousy one could cause a knee jerk rally so we’ll stay on the alert.

   An example of this oversold condition is the percentage VIX change 5 day moving average. Readings above 3.0 frequently portend a rebound. Today it closed at 4.8.]

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TORONTO EXCHANGE:  Toronto was closed for the Boxing day holiday.                                         

GOLD: Gold was up $1.

BONDS: Bonds were mildly higher.          

THE REST: The dollar was slightly lower. Gold, silver, copper and crude oil were all up.                              


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 in cash. Stay there on Thursday.                   


     The Case Shiller home price index rose 0.7% month over month, better than the expected 0.5%. On Thursday we get jobless claims, new home sales, consumer confidence and oil inventories.


We’re on a buy for bonds as of December 21.             

We’re on a sell for the dollar and a buy for the euro as of November 19.                      

We’re on a sell for gold as of December 18.

We’re on a sell for silver as of December 19.   

We’re on a buy for crude oil as of November 19.        

We’re moving back to a buy for copper as of today December 26.          

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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       We were # 1 in long term stock market timing for the years 1998 and 2004 and # 4 in 2010. 

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Todd Market Forcast | P.O. Box 4131 | Crestline, CA | CA | 92325