主题：03/17/2009 Market View -- 宁子

SUMMARY:

- Market refuses to test further as techs lead a renewed rally.

- Great price gains but volume fails to deliver a follow through.

- Housing starts surge on condo building

- LIBOR continues its thaw, corporate debt market has buyers.

- Indices resume the rally toward key resistance, setting up a battle for a follow through session.

Stocks bounce right back from Tuesday, but cannot deliver a follow through.

Futures were flattish heading into the open after popping up on a 22% jump in housing starts. Sounds great, but condos were the reason. Maybe that is good; home is where you hang your heart at or something like that. PPI was reasonable though the core ticked higher more than anticipated (0.2% versus 0.1%). Analysts downgraded to MS and GS.

A lot of noise that didn't have a lot of impact. Stocks started soft but almost immediately started to move higher. GS and MS paused early but then rallied. Yeah analysts. Overall stocks started steady stair-step advances on the day. There was an attempt to sell stocks to start the afternoon session that moved to mid-afternoon, but that was shaken off and the indices sprinted into the close.

The key for the session: the recent leaders that had a tougher Monday jumped right back up Tuesday. Chips, broker/dealers, technology all bounced nicely. They started higher and but for that afternoon dip, they did not come back as the buyers used that to move in. Impressive recovery from Monday's setup, but unfortunately it could not provide a follow through to show the buyers really taking over. That was the disappointment, and when we saw the volume was coming in a bit light we thought it was a great time to lock in some gain and we banked some solid upside in the event the market cannot provide the follow through.

TECHNICAL. Intraday the action reverted to that more bullish high to low characteristic of solid rallies. A soft start, a rebound that carried into the afternoon. Then the afternoon dip as the sellers tried to move in, but buyers used it to enter and drove stocks to close at the highs. Nice action but unfortunately not enough buyers moved in late to drive volume higher as well.

INTERNALS. Very good breadth (3.2:1 NYSE, 2.8:1 NASDAQ) was follow through caliber. The price gains were top notch. Volume, however, lagged, coming in below average on both NYSE and NASDAQ. No follow through, just a further extension of the rally on lower trade. To be of the strongest quality the market needs to show a follow through session Wednesday that hits on all cylinders.

CHARTS. There were no major breaks of next resistance on the session, just a continued move toward key resistance on all the indices. That in itself, however, is something of significant given Monday was a tough day to follow as the NYSE reversed on volume and NASDAQ sported a 2% loss. Be that as it may, there was no volume and thus we are looking for a move up to the resistance we pegged on this rally at 800ish for SP500 and 1500ish for NASDAQ. What happens there depends upon the buyers. If they show up Wednesday and power the indices to that resistance on strong volume then the market hits that resistance with a stronger hand, looking for a test to be sure, but one to give it a breather before taking on that resistance. If no buyers come in, at least in heavy numbers, then the sellers will see this and when the indices hit those points that many are watching they will take a shot. A solid relief bounce to be sure and that released the oversold pressure, and if the buyers are not there then the sellers will take a shot and try to relive the high life once more.

LEADERSHIP. Those that took the day off Monday (and some starting on Friday) started right back up. Chips, techs, retail (e.g. AMZN), China. Financials did not start great but they came around and rallied (remember GS and MS). Not many leaders in financials, but some are working on it. There was a good test by the recent leaders and on Tuesday they came right back up. The market is working on building more leadership. This rally is helping stocks that were getting clobbered and had put the brakes on the selling to start building up the right side of their patterns while some are just happy to have stopped the selling. This up and down action, even if the market fails at this next key resistance, helps build bases. Thus even a failure at resistance is not a failure overall or in the slightly bigger picture.