Todd Market Forecast – Cash On The Sidelines

Posted by Stephen Todd: The Todd Market Forecast

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DOW                              + 3 on 550 net declines

NASDAQ COMP            +2 on 400 net declines

SHORT TERM TREND                      Bullish

INTERMEDIATE TERM TREND       Bearish

STOCKS: We finally had a decline of sorts. The Dow was down almost 50 points, but the tendency to buy every two hour decline is still prevalent. This is the type of psychology that happens before more serious tops.

One of these days investors are going to buy a decline and it won’t rebound. I don’t think it’s going to be all that far off. Be sure to examine the chart.

GOLD: Gold was up $7.

CHART: We keep hearing that there is a lot of cash on the sidelines and that this is one reason for the rally. Not if you look at money markets assets as a percentage of all mutual fund assets. This chart tells us that we are in danger of running out of money. Note how high it was when the market was at a bottom.

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TORONTO EXCHANGE:  Toronto was up 33.

S&P\TSX Venture Comp. The Venture Comp. was down 1.

BONDS: Bonds moved lower again.  

THE REST: The dollar was higher as was silver, copper and crude oil.

BOTTOM LINE:  Short Term Bullish – Intermediate Term Bearish

NEWS AND FUNDAMENTALS:

There were no important economic releases on Tuesday and there will be none on Wednesday.

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 ( .80 or below is a negative. 1.00 or above 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.