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Todd: Market Forecast Update for close Friday Jan09

http://www.toddmarketforecast.com

Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific.

DOW - 134 on 25 net declines

NASDAQ COMP. ö 13 on 600 net declines

EDITOR'S NOTE! On Tuesday we had an interview with Report On Business Television out of Toronto. This is the national business and stock market station for Canada. You can see it by going to www.robtv.com
,
click on Past Programs, choose Tuesday and scroll down to the 5:30 time slot.

STOCK MARKET ANALYSIS:

Our monthly letter was mailed this week and in it, we make the case that the stock market will not have a serious correction until 2006. We urge you to look at the reasoning. Hopefully, you will find it compelling.

Today was a typical session in which the non farm payrolls disappoint. As we have said this number is capable of moving markets like no other. Stocks were hit early, but immediately began to rally and it look like the market was going to fool the bears again. The Nasdaq moved nicely into positive territory intraday, but then selling came in.

We would be looking for a short term bottom early next week, except for one thing. The put call ratio was very low. In other words, option buyers weren't particularly disturbed and this is disturbing to us. Since the current uptrend began back in March, pullbacks were accompanied by high put call ratios and this helped to give us confidence that the reaction was temporary. However, the day wasnât without some positives. In spite of the sharp decline, there only 25 net declining issues.

We remain quite bullish on the main trend, but a few days or even a week of pullback wouldnât exactly be a shock, in fact, it would probably make the uptrend healthier.

FUNDAMENTALS AND NEWS:

Economists estimated that the growth in jobs would be 148,000, they missed by 147,000. They usually miss it, but they outdid themselves today. This is the group that assures us that shipping jobs overseas is perfectly acceptable. Elsewhere, the government lowered the terrorist threat level from orange to
yellow.

On the stock front, Forest Labs guided higher and rose 4%. Gencorp guided higher, but could only manage a fractional gain. The Great Atlantic and Pacific Tea Company rose 23% on earnings. Instinet announced job layoffs and investors cheered to the extent of 11%. Pulte Homes rallied 5% on earnings.
Rayovac guided higher and added 10% and RF Micro Devices rose 4% on an upgrade by Piper Jaffray.

On the negative side, A T&T was downgraded by Deutche Bank and lost 4%. SBC Communications was downgraded by Merrill Lynch and gave up 5%. Ford issued a slight warning and lost 3%. IBM gave up 2% on news of an SEC investigation. Lucent was downgraded by Morgan Stanley and slumped 6% and finally, WD-40 Co. lost 12% on disappointing earnings.

BOTTOM LINE:

Our S&P and NASDAQ intermediate term systems are back on a buy signal as of the close of September 4, 2003. Mutual fund switchers are 100% invested in a growth fund or an S&P 500 index fund.

SPY and QQQ traders are in cash. Stay there on Monday. We should soon have a trade.

For new subscribers, the QQQ and SPY are exchange traded funds or Spiders. The former mimics the Nasdaq 100 and the latter mimics the S&P 500.

OTHER MARKETS

We are on a buy signal for bonds.

We are on a buy signal for the Euro and a sell for the Greenback.

We are neutral on gold.

We remain long term positive on European, U.S. and Canadian stock markets, but negative on the Japanese market.