Todd Market Forecast for Wednesday (12/31/08)                           
 
      
www.toddmarketforecast.com

Available Mon- Friday after 6:00 p.m. Eastern, 3:00 Pacific. 
                 
DOW                              + 108 on 2000 net advances 

NASDAQ COMP.           + 26 on 1500 net advances       

SHORT TERM TREND                          Bearish  

INTERMEDIATE TERM TREND          Bullish       

     Here's a thought. Years ending in 8 tend to be the second best of
each decade surpassed only by years ending in 5. Add to that the fact
that pre election years tend to do well especially the second half. 
     So what did we get? The worst single year performance since 1931.
Historical tendencies are useful, but unexpected financial dislocations
or geopolitical events can sure upset the apple cart. 
    On a more sanguine note, the Santa Clause rally seems to be in
force. This is normally a good sign for the new year. We are happy with
the internals. The chart below shows the New York Composite with the
advance decline line. Note that the indicator is well ahead of the
levels of mid December while the index has still not bettered similar
levels. It's usually a good sign when breadth leads.
    But short term, we are getting quite overbought. It's hard to tell
what will happen on Friday since it's the first day of the year and a
lot of weird things can happen after year end reports are fixed, but our
best bet is down.  
    Gold was again higher. The dollar rose a bit and the yen lost some
ground. Crude rose and is up 21% in the last four days, but it's not
enough to turn the trend yet. Bonds got murdered, but they are already
oversold by some indicators. I want to wait for a day or two before
changing the call.       
                                                                        
                                                                        
                                                                    
   BOTTOM LINE: 

   Our intermediate term systems are on a buy.      

    Short term traders are in cash. Stay there on Friday  
NEWS AND FUNDAMENTALS:  
   
     Initial claims were 492,000, less than the expected 575,000. Crude
inventories rose 549,000 barrels. The expectation was for a draw of 1.45
million. On Friday we get the ISM index. 
                                
OTHER MARKETS

We're on a buy for bonds as of December 15.                          

We're on a sell for the dollar and a buy for the Euro as of November 25.
             

 We are on a buy for gold as of November 21.                     

We are on a sell for crude as of December 17.          
     
We are long term neutral for all major world markets, including those of
the U.S., Britain, Canada, Germany, France and Japan.

STEPHEN TODD

A SHORT BIOGRAPHY

   Editor and publisher of the Todd Market Forecast, a monthly stock
market newsletter with an included nightly hotline. 

   Steve has published articles on the stock market in the following
publications: Barron's, Stock Market Magazine, Futures Magazine, The
National Educator, and others.

His stock market commentary is heard on the following stations: CNBC,
Bloomberg, CNNfn, Associated Press Radio, Business Radio Network, CKNW
in Vancouver, British Columbia, KFWB, Los Angeles and ROBTV in Toronto,
Ontario. 

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