主题：02/26/2009 Market View -- 宁子

SUMMARY:

- New budget and its tax allocations roadblock an early market advance.

- Jobless claims hit a 1982 high and continuing claims post a record of their own.

- Durable goods orders tumble, revisions sharply lower.

- Market trying to hang on with some good but much thinner leadership ranks.

The government talked and the market listed.

There were bad initial jobless claims (667K) and terrible durable goods orders (-5.2%), yet futures were still up. The data knocked them back some, but as the open neared futures were back up to pre-data levels. The market opened positive, and when January new home sales came out at -10.2%, once again investors shook off the data and continued higher.

Once again, however, the government spoke and the market fell. When the brand new budget was released, all the cheerleading and fancy names and slogans did not hide the facts. The market rolled over, sold into negative territory, and closed a the session lows. NASDAQ gave up close to 55 points high to low. DJ30 218. SP500 27 points. As one commentator put it, the is an angry budget looking for retribution as it raises corporate taxes, eliminates or radically reduces deductions for the 'rich', and will place even more of the tax burden on the small businesses that fuel the US economic engine. Despite claims that tax increases would only impact the top 1%, then the top 2%, and then the top 5%, the proposals severely limit deductions for those making $209K versus the $250K the President said even today. No wonder investors gave up. Another day with the sword of Damocles hanging over the market, and on Thursday it dropped and cut off the hand that feeds the federal government.

TECHNICAL. Intraday the action was poor. The old start higher then rollover and close negative and at the lows. The only thing they did not do was crash back through the November lows.

INTERNALS. Breadth was fine at -1.1:1 NYSE and -1.6:1 on NASDAQ. New lows were very well contained, coming in much lower than the last time SP500 and NASDAQ hit these levels. Volume did not jump on the rollover, but it was still strong and above average on NASDAQ. NYSE was above average as well, but it was significantly off the Wednesday levels. Not a terrible internal session and that gives the market some backbone as the indices test key levels yet again.

CHARTS. The indices sold right back down to levels hit Monday as once again the government talked and the markets listed. A tap at near resistance at the 10 day EMA on SP500 and then back down to the November closing low. NASDAQ is right up against the December lows again. SP600 is at the November closing lows. DJ30 is moving laterally in a 4 day range after breaking the November low. SOX could be instructive here. For the second day it rallied up to the 50 day EMA and the 90 day SMA, and it backed off considerably on the close. Thursday it closed negative, showing a shooting star on the candlestick chart just below resistance. Not the most bullish signal. That keeps it above the January low but it has the look of a lower high setting in, and the short term indicators have turned bearish once more on the chips.

LEADERSHIP. Leaders are getting thinner. Yes GS and several other stocks from several sectors continue to set up and look solid, but their ranks are thinning. A rally cannot survive without leadership to drive it. thus the indices need to make lateral moves and allow more potential leaders to set up and try and give the market the lift it needs.

SUMMARY. The indices continue to hold key support levels for sure, and you don't' want to get too negative as things settle a bit here at the old lows. What we are watching is SP500 of course. If it continues lower we are looking to add to the SPY downside play as well as look at some other downside plays. Many patterns have turned from indicating near term pops to near term drops. One thing, however, is that despite the terrible budget implications and the market rollover Thursday, the indices did not break the prior lows. Again, you have to have some respect for the range that continues to hold. It is getting sloppy, so we are ready to play the downside, but we need to see the break lower.