主题：03/04/2009 Market View -- 宁子

SUMMARY:

- Market rallies from the open, gives back some late but still posts solid advance.

- ISM Services not following manufacturing's mini trend.

- Bond yields improving to the upside but LIBOR still moves higher.

- Same store sales hit the tape Thursday as bounce tries to extend.

Market surges, kindles hope, but this initial lacks some fundamentals and will need help.

Again we were looking for a best case scenario, i.e. a washout before the open. Last night's gloom turned to relative giddiness in the morning, however, as China was reportedly ready to announce a new stimulus plan on top of its third month of increasing PMI readings. China is still not back to expansion, but that didn't stop anything Wednesday.

Neither did a weak ADP monthly jobs survey (-697K versus -630K expected and -522K prior). Futures were up, stocks gapped higher, and they continued to ride higher until the last half hour of the session. The sellers were not dead yet and some traders took some rare upside gains made during the session, giving back roughly a third of the move. The indices still managed to close with gains ranging from 2.2% to 3% with SOX posted a 4.59% rally. In that last half hour a story circulated about an Administration meeting next week to discuss some sort of suspension of the mark to market accounting rules. Even that possibility could not fend off the late decline. Some financials sparked to the news but even with that they closed lower on the session. Up nicely, but the same old issues showed up.

Crude oil inventories fell (-757K versus 1M to 2M expected) and oil prices surged (45.13, +3.48). ISM Services could not follow the manufacturing side with its two months improvement; it was better than expected but dropped from January. The Fed Beige Book was more like a Grey Book of doom with the Fed saying the economy was worse since January and maybe, maybe, things get better late this year. Obama's housing plan was fleshed out a bit, but it was as expected with help only to certain people and it may or may not work in supporting prices.

None of this phased the market. The market had its own agenda. It was oversold, down 11 of the prior 12 sessions, just looking for a trigger. China gave it. Fitting as China is more free market oriented now than the US. Why did it put forth another stimulus package? In order to calm the new masses of capitalists in the country who have tasted success derived from free markets, and there are enough of them to throw the country into revolt. In any event, the market was way oversold, sentiment was extremely negative, and China gave the reason to bounce. So, the market bounced.

TECHNICAL. Intraday the move was high to higher. A gap up at the open, a rally into the last hour, but then a fade with a half hour left, a fade that cut a third or more off of the session highs. Not a pure upside blowout; faded off the high late, volume did not surge.

INTERNALS. Breadth was a solid 4:1 on NYSE and 2.3:1 on NASDAQ. Solid. New lows held nicely on the test this week. Volume was strong though lower. Not significantly lower than the recent selling sessions, but it was lower. Look at it this way: the market shot higher on a rally after a downside thrashing, but volume did not surge and show an overwhelming sanction by the buyers.

CHARTS. NASDAQ did what it had to do this week, i.e. hold the November low and start a bounce. All the indices gapped up some at the open, rant toward next resistance at the 10 day EMA and the November low/December low as the case may be. An upside day after a 'government dozen' to the downside (that is, 11 versus 12). In itself it was not that impressive with the late fade and lower volume, but a start on a market bounce that could lead to something more if it shows a follow through, breaks some resistance, and gets some leadership formed up.

LEADERSHIP. Ah leadership. The China trade stocks were up, e.g. metals, materials, commodities in general, energy, engineering, but then again so were all other sectors as the move was broad. There certainly were stocks surging back up, but many off of breakneck drops, i.e. just snapback rallies. There were individual leaders moving higher out of good consolidations, bases, or breakout tests, but as noted last night, there are not sectors in great shape that are breaking out en masse or are even setting up for that matter. Leadership will have to redevelop as this rally, if it can, continues higher, consolidates, and otherwise holds its low. The market has to establish some leadership for a sustained move. Without it a rally will fail unless it develops some patterns after a follow through and on a consolidation. It can be done, it has been done, it just has to do it again here. There was plenty of leadership ready to move in December and January, but then the market sold some in January and then tumbled in February. That did in the bases and now there is work to be done.

SUMMARY. We always let the market show us what it is made of. That said the day itself was not that convincing of a new rally. It can get there as noted, but the day was not an explosion upside. The intraday action was not that great as the indices gave back a third or more of the gains. Volume did not surge. Leadership is fragmented as far as strong patterns are concerned. As one commentator said, the market had its worst January, its worst February, and March started off bad, and all we got was this sorry 149 point rally that closed 100+ points off the high. It has to form up better as it bounces higher in terms of leadership and buying strength.