主题：03/12/2009 Market View -- 宁子

SUMMARY:

- Classic upside action as market starts weaker, powers higher.

- Mark to Market hearings more of the same: will get back with you in a few weeks.

- Retail sales follow recent trend, beating expectations and showing nice revisions.

- White House backtracks further on its job creation, er, job salvation, prognosis.

- Economic signals continue to show improvement.

- Three upside sessions head into Friday and key resistance.

Soft start, strong finish as rally finds new buyers.

Futures started lower but you could tell it was just some softness after a good move, something you see when a rally starts coming into its own a bit. Jobless claims were worse than expected at 654K, putting in the sixth straight week above 600K. That did the futures no favors but it did not sink them. Why? Because retail sales fell less than expected (-0.1%) and January was revised up to 1.8% from 1.0%. Once more the data, while not blazing higher, is better than expected.

There was other news. GE had its credit rating cut to AA, but that was better than what most feared. GM said it 'didn't need no more stinking money.' We hear GM dealerships are overrun with customers right now thanks to promotions. Talked to three dealerships today and one had 32 appointments for today alone. LIBOR held the same levels since Tuesday. No turn down, but this is what happens before turns, i.e. the trend flattens. BAC, a la Citi, came out and said it was making money again as well.

Stocks started lower but then shortly after the open turned upside, and by midmorning they were positive. There was a boost along the way by the Market to Market hearings where congressmen took turns beating on the SEC to get some changes made to the accounting rules. The end result was another one of those 'we will get back to you in three weeks with some changes' letdowns that seem to surround any banking plan the past couple of months, but the momentum is clear: there will be some changes made. Nonetheless stocks continued higher with a remarkable, arrow straight 45 degree climb into the close. Good powerful bear market rally. It was not a follow through session. It had the strength with the 4% gains, strong above average volume, great breadth, and strong leadership moves, but it was too early to really show that the longer term buyers were in the market. Does being early matter? No. Back in March 2003 when the rally took off again there were several follow through caliber sessions in a row that started early and continued on through the fourth, fifth, seventh, and eight sessions. It needed a breather after that, but that is normal. In any event, on Thursday the bears certainly were not willing to step in front of this buying so early after gutting the market the prior 4 weeks.

TECHNICAL. Intraday action, as noted, was classically bullish: soft start, recovery to positive, then a steady, very straight beeline to the close with some 4% gains. The intraday action was even more bullish than on Tuesday.

INTERNALS. Solid 7.7:1 breadth on NYSE, 3.4:1 on NASDAQ. Volume jumped back up to match Tuesday levels on NASDAQ and rallied on NYSE to last week's levels. With the 4% gains on the indices this was follow through type data though it was a day early. Still needs to show something Friday to Wednesday, and given Friday is the fourth day of the move it likely will see some profit taking. Thus we look for next week for another follow through move to show that the longer term buyers have indeed taken up the torch at least for a bit. A follow through is not the end all confirmation of a new bull run but it is something that has to happen. You have to see the buyers step in and announce their presence with authority (from 'Bull Durham,' again; use that one often) after that initial surge from short covering.

CHARTS. All the indices, even SP600, cleared the 18 day EMA. After pausing Wednesday and showing those doji just below the 18 day EMA, they brushed by that resistance with relative ease. SP500 cleared the November intraday low then ran right into the November close at 751. After three upside days that was all it could do and that is the first key test of the move, and with Friday ahead it could be a place where the market takes a breather. Nothing unusual about that, but as we have seen, once the market decides to move in one direction it can surpass what we all thing is logical. It is a key level to test and SP500 is there. NASDAQ broke over its December low and it moving to its January bottom. Lots of resistance from here on up to 1500, and then at 1600 as well. It is a process of working back up, and there is no shortcut. SOX is solid, but it too has a lot of key points ahead. The key with SOX is that it never made a new low as we have been discussing, holding and bouncing to lead the market. Remember that it was leading in December and early January before the selling started. It was at a higher level than it is now. Thus while it is out in front it also has to clear that overhead supply as well.

LEADERSHIP. Techs and chips were breaking higher out of good patterns. Financials were up again on the bounce and the mark to market information. Segments of the financials are in good patterns, e.g. MS while most are just rebounding in their downtrends. Metals and commodities are trying to make breakouts, but the solid patterns are in a narrower group here as well. For now it is pretty much the same story: some good sectors with stocks breaking higher from good patterns while most stocks and sectors have to work on building foundations to move higher. That is all part of this rebounding upside then testing, rebounding and testing process.