主题：03/17/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 40.8; -2.94

VXN: 40.36; -3.18

VXO: 41.62; -3.09

Put/Call Ratio (CBOE): 0.78; -0.02

Bulls versus Bears:

This is a reading of the number of bullish investment advisors versus bearish advisors. The reason you look at this is that it gives you an idea of how bullish investors are. If they are too bullish then everyone is in the market and it is heading for a top: if everyone wants to be in the market then all the money is in and there is no more new cash to drive it higher. On the other side of the spectrum if there are a lot of bears then there is a lot of cash on the sideline, and as the market rallies it drags that cash in as the bears give in. That cash provides the market the fuel to move higher. If bears are low it is the same as a lot of bulls: everyone is in and the market doesn't have the cash to drive it higher.

This is a historical milestone in the making. Bulls are impressively low considering we are in general a very optimistic country. The few bulls is a positive indication because it means most everyone that is getting out is out and there is money on the sidelines. In other words the ammunition boxes are full and as the market recovers investors will start opening up the boxes and firing. Little by little they will be forced to put more money into the market and there will be some rushes higher in fear they are missing the train. You relish times when sentiment is so negative because it means some tremendous buys are setting up. This could indeed be the opportunity of a lifetime, and you take advantage of it by buying quality stocks and letting them work for you as long as they will. If we can hold them for years, great.

Bulls: 26.4%. Down from 29.7% and at the lowest level since December 2008. Well down from 43.0%, the current top of the recovery as the market rallied off the November low. A rise from 25.3% in December and quickly starting to fall once the market encountered the January selling. Bullishness bottomed on this leg lower at 21.3% in November 2008. This last leg down showed us the largest single week drop we have ever seen, falling from 33.7% to 25.3%. Hit 40.7% on the high during the rally off the July 2008 lows. 30.9% was the March low. In March the indicator did its job with the dive below 35% and the crossover with the bears. A move into the lower 40's is a decline of significance. A move to 35% is a bullish indicator. This is smashing that. For reference it bottomed in the summer 2006, the last major round of selling ahead of this 2007 top, near 36%, and 35% is considered bullish.

Bears: 47.2%. Bounced back up after slipping last week. this is the peak for the run this year but is still below the December and October peaks. Hit the 34's on the lows, falling from 38.5% and 46.2% in mid-December. Still above the 35% level considered bullish for stocks, but as with bulls, still well below the level considered bearish for stocks. Bearishness hit a 5 year high at 54.4% the last week of October. The move over 50 took bearish sentiment to its highest level since 1995. Extreme negative sentiment on this move. 35% is the level that historically indicates excessive pessimism. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March. Bearishness peaked at 37.4% in September 2007. It topped the June 2006 peak (36%) on that run. That June peak eclipsed the March 2006 high (33%) and well above the 2005 highs that spawned new rallies (30% in May 2005, 29.2% in October 2005). This is a huge turn, unlike any seen in recent history.

NASDAQ

Stats: +58.09 points (+4.14%) to close at 1462.11

Volume: 2.105B (-1.69%). The hole in the session from a follow through standpoint.

Up Volume: 1.93B (+1.327B)

Down Volume: 159.283M (-1.381B)

A/D and Hi/Lo: Advancers led 2.83 to 1

Previous Session: Decliners led 1.23 to 1

New Highs: 5 (-3)

New Lows: 53 (+16)

NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg

NASDAQ rallied up to the 50 day EMA on the close, putting it inside the January consolidation. That leaves it below some resistance at 1506 from a series of interim highs and lows. NASDAQ cleared the 50 day EMA early January and again in early February, but gave it up after a couple of sessions. NASDAQ has put in a solid move off the lows and Tuesday was impressive given the Monday 2% decline. Volume has tailed off the past three sessions; not so bad on the prior two given they were something of pullbacks. Given Tuesday was solidly upside price-wise the volume was disappointing. We will see if NASDAQ can carry on through to 1500ish level AND if the buyers can give it a follow through. If not then we look for a pullback and have to see how strong. A move to the 1387ish level would be a logical test if it was going to hold up and continue a run higher after a follow through-less move up to 1500.

SOX (+4.13%). After a 3.6% loss Monday SOX tapped the 50 day EMA intraday and bounced right back up, gaining 4% Tuesday. That keeps it basically in a lateral move for three sessions and is working on a handle to its 6 week double bottom base. It is still in its 14 week lateral consolidation and forming this pattern within it that could propel it on out. Very interesting but we have to fold into the mix the fact that the other indices are getting extended on this rebound rally and SOX may take longer to set up and make a breakout.

NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg

SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg

SP500/NYSE

Stats: +24.23 points (+3.21%) to close at 778.12

NYSE Volume: 1.492B (-21.4%). As with NASDAQ, not the volume you want to see.

Up Volume: 1.352B (+264.87M)

Down Volume: 133.647M (-667.661M)

A/D and Hi/Lo: Advancers led 3.24 to 1

Previous Session: Advancers led 1.38 to 1

New Highs: 9 (+2)

New Lows: 65 (-1)

SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg

Broke through the September 2008/February 2009 down trendline on the close, but the lack of volume gives it little credibility. The 50 day EMA (794.23) is immediately overhead and then the January low at 805. Those are key levels for the SP500 and when it hits there it will be extended on this run and a test back to the November low would be logical if it is going to hold.

SP600 (+3.97%) is looking healthier, but of course it was on its deathbed so the fact that is has some color in the cheeks is nice but hardly reason to go out and get the house ready for the homecoming. After two days laterally it finally broke up through the November closing low as well as the bottom of the late February range. Nice to see it happen and that gives it some breathing room to 225 (December low), about 12 points from where it closed Tuesday. Some life, but a long way to go.

DJ30

Looked to be in trouble Monday with its high volume reversal and doji but then tapped the 18 day EMA on the Tuesday low and recovered for a gain. A much lower volume gain though unlike NYSE and NASDAQ it was above average (by a hair). Still below the November low (7552 closing) and that is the key move ahead and it has the 50 day EMA (7636) sitting right on top of it.

Stats: +178.73 points (+2.48%) to close at 7395.7

Volume: 391M shares Tuesday versus 587M shares Monday. Substantially lower volume on the rebound as the sellers left but the buyers were not swarming.

DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg