主题：03/08/2009 Market View -- 宁子

SUMMARY:

- Early bounce runs out of buyers, market fades but for once so does volume.

- After a 56% loss on SP500 in 17 months, is there value yet?

- Mark to market hearings to provide a spark to relieve the oversold condition, and market action shows some adjustment just in case.

- TXN provides its mid-quarter update and rallies . . . 14 cents.

More selling to start a week but selling volume finally subsides.

Not a lot of news to kick off the week, but there were some wrinkles that harkened back to days of old such as . . . mergers and acquisitions. MRK is buying SGP. That was pretty much it. A pretty weak attempt at a Merger Monday of old. The UK is nationalizing more banks, COF joins the 80+% group in terms of how much it is slashing its dividend. Buffett, spending 15 hours this week on CNBC (a.k.a. the Buffett network with 3 hours per morning), started the week off with a zinger, stating the US economy had fallen off a cliff. The World Bank made the bold prediction of a further worldwide economic contraction. As always the WB is well ahead of the curve, and only Buffett's pronouncement could have pushed such insightful, completely new conclusions into the shadows. LIBOR was up again, showing more upside strength as well with all times moving higher (0.33% overnight versus 0.32%; 0.56% 1-month versus 0.55%; 3-month 1.31% versus 1.29%). This advance is gaining speed as the 3-month is over 20 BP from its post-TALF low.

Stock futures were lower and stocks started lower, but they rebounded from the open and turned positive by midmorning. All the indices stalled below the Friday peak, however, and the selling started. A familiar price slide ensued into the last hour as all indices closed lower than they started (and they started lower). Another Monday, another week starting with losses.

TECHNICAL. Higher start, lower close as the buyers could not maintain the morning recovery. Intraday the action remains bearish, but that is no surprise given yet another sharp selloff the past three weeks.

INTERNALS. New lows were manageable even as NASDAQ and SP600 hit new bear market lows (498 NASDAQ, 463 NYSE). Breadth was not good but not the gutting seen on many downside sessions (-2.5:1 on both exchanges). Those are both positives and they have been positives of late whether extreme negative breadth or new lows holding below the November levels on the undercuts. Volume was interesting as well. Lowest volume in two weeks on the exchanges as they modestly sold. What this shows us is that the early buyers simply ran dry and stopped buying versus a surge of selling. Many shorts are wary of putting on new downside positions here given the sharp leg lower the past 7 sessions after that short lateral move to end February. Thus no sellers piled in, but note that the lateral move in February did not produce a bounce but collapsed into this last downleg.

CHARTS. Higher start led to a bit of a rally but it all caved in. NASDAQ and SP600 touched new bear market lows but rebounded to hold above those levels. Volume faded to significantly lower levels, but not below average as you would want to see. It shows the sellers were not driving the downside. They are on a respite. This action gives the market a chance to set up for a rebound attempt, but it does not mean it will rebound. Again, it tried a lateral move in February but that imploded. In short, this is a start of yet another attempt to relieve this oversold condition and it is not sufficient in itself. The indices have just completed the second leg lower since breaking from the lateral consolidation from December to early February and they will likely try to bounce again to test near resistance at the 10 day EMA as they did with that late February lateral move where the 10 day came down as the indices worked laterally and then they started lower again. Maybe some mark to market changes will change the lay of the land a bit, i.e. change the character, but it will have to prove it given the continuing downtrends on the indices. Of all NASDAQ and NASDAQ 100 were quite bearish as NASDAQ 100 catches up with the other indices in testing the November lows. AAPL, CSCO, DELL and other large cap techs had touch sessions.

LEADERSHIP. China is still showing life even though many of those stocks were lower, but they were just resting on low volume, e.g. BIDU. ASIA took off. The rest of the market showed some leaders here and there. ASPG in telecom. HANS in beverages (Monster). Chips continue forming up lateral moves (NSM, VLTR). Even some retail stocks are doing the same thing (e.g. TJX, AMZN). The point: they are there but are few in number right now and relatively scattered. The interesting thing is that they are still holding up and setting up despite the major indices in continuing downtrends. SOX remains in its lateral move, mirroring the lateral move, more or less, of the individual chips.

SUMMARY. A down day but on a lack of buyers versus sellers. Market is oversold with this second leg lower of the same downtrend that started when the lateral consolidation broke down. The lack of sellers suggests the indices may try another lateral move or, if the trigger is there such as a change in mark to market, an actual rebound move. In either case it is not a change of character out of the downtrend, and if they don't break higher they are new downside opportunities. Once more we have some potential government action overshadowing market action. We are even hearing that a veteran will be put in Treasury soon to either give support to an outmatched Geithner or even replace him. The former could help while the latter would just confirm everyone's suspicions that another Administration is clueless as to how to handle the crisis and who to have in charge of fixing it.