主题：03/11/2009 Market View -- 宁子

SUMMARY:

- Market clings to some 'day after' gains. Not great, not bad, just typical.

- Cart before the horse: Treasury needs yet another two weeks to announce its plan while we crammed a stimulus plan down in a week without even reading it.

- What LIBOR means to you and indeed everyone in the nation.

- Looking for some more upside but preparing for the downside if the buyers give up and the sellers swarm.

Buyers try to run with the ball again but lack overall enthusiasm.

After a blast higher from a downtrend you can have a couple of outcomes and still remain positive. A further surge on volume is quite a positive indication. A so-so upside day is also workable, and that is pretty much what the market showed Wednesday: an early run, a falter at some resistance, a slide back to flat on lower trade. Not great, but with this market the fact the market did not sell off immediately and on volume was a positive, kind of a moral victory of sorts. Of course moral victories don't put much money in the bank. There were some really good moves from individual stocks, and if quality stocks can continue to move that allows the market to take a breather and try to set up for a follow through to the Tuesday short covering rally.

Techs were pretty solid with NASDAQ 100 leading the market (outside of SOX), aided by AAPL with its announcement of a smaller iPod. Maybe AAPL will lead tech again; it did clear its 50 day EMA on the move. AEO reported surprising earnings and a decent outlook. Treasury's Geithner said he only needs another two more weeks to get that bank plan in place, trotting out a short outline of how it would work.

Other news was not so great. SPLS (office supplies, an indicator of small business) was not so fortunate as it missed. NSM is laying off 850 and will sack another 875 down the road. China's February oil imports fell 18% year/year, and with inventories rising just 749K (less than expected), oil had a tough session, closing down 2.80 at 42.91. LIBOR didn't go up; it didn't go down either. Greenspan wrote an opinion piece saying 'don't blame me' for the housing bubble, saying his absurdly low interest rates had nothing to do with fostering the housing boom then bust. True he had accomplices spanning many years such as the Clinton and Bush Administrations, certain senators and House reps forcing banks to make risky loans, and many of the same in Congress consciously ignoring the warning signs in Fannie and Freddie (Rep Frank and his 'there is nothing wrong with' the GSE's comments).

With that kind of drama the higher open and early move higher the first half hour was not bad. Couldn't keep up the move past that, however. The indices bled back slightly through lunch and then even started a rebound as the afternoon session got underway. The move peaked in the last half hour and faded to flat on NYSE. Techs were the day's leaders along with the chips and financials as the latter continued their rebound move. They need to keep it that way for the rebound attempt to survive, particularly as the small caps continue lagging, putting in a down session and bringing up the rear on the day.

TECHNICAL. Rather blas action intraday with the indices starting higher and moving up from there but then fading basically to flat on the NYSE indices. Somewhat bearish intraday action but quiet as well.

INTERNALS. Matched the session, i.e. flat. Volume was lower but above average. The buyers were not there to really push it and the short sellers were not stepping back in yet. Nothing negative showing up such as negative breadth that would indicate just a very few masking overall weakness. Not a great positive but with this market you have to watch that sort of thing that might show creeping weakness returning.

CHARTS. The index charts did not close that well. The late fade left the NYSE charts showing candlestick doji at the 18 day EMA resistance. The significance of the 18 day EMA is that it is the second level of resistance a stock or index encounters in a continuing downtrend. Really weak indices will stall at the 10 day EMA. If they manage to move through they can still stall at the 18 day, and that is still quite close resistance and still an indication of pervasive weakness. Even NASDAQ and NASDAQ 100 stalled out Wednesday below their 18 day EMA and showed candlestick doji. The SP600 is the only index that didn't, but alas, it stalled out and showed a doji below its 10 day EMA. Pervasive weakness there. Have to be careful here. Typically you have a day off or a light session after a huge rally. That is what we got. The question is what the market does each day here. For the upside to succeed you want the market to hold the gains just as it did. You want to see a follow through session (2% gains, strong volume, strong breadth) Friday through next Wednesday. You want to see SP500 at least get up to 750ish to allow a chance for a renewed bottoming process to start. This rally could be the start of the bottom; NASDAQ, NASDAQ 100 and SOX all held the prior lows. A rally up to that next resistance lets stocks and indices form better bases.

LEADERSHIP. As noted, there were some really good moves in quality leaders that had set up well prior to this rally. While Tuesday was dominated by those stocks jerking back up in their downtrends thanks to the shorts covering up, Wednesday's upside moves were dominated by quality patterns moving higher. AMZN, BR, ISIL, DRIV, FCX, STAR. The strong leaders pick up where the short covering rockets fizzle out. It is important that these stocks lead while the market rests as that allows more good stocks and indeed the indices to set up patterns under their cover. This is part of the surge, pause before a follow through, a follow through surge, another pause, etc.

SUMMARY. It wasn't a great day, but it was not a bad day as the market did not turn over and sell off. The index charts do make you kind of nervy, however, as they show those doji at the next typical resistance point in an ongoing downtrend. Leadership continued higher though not all leaders that surged Tuesday enjoyed the same success Wednesday. That is the nature of trying to dig out of a hole. Keep the stops tight, and if we have to get back in after a dip recovers, so be it.