主题：03/20/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 45.89; +2.21

VXN: 44.66; +2.2

VXO: 46.41; +1.12

Put/Call Ratio (CBOE): 0.89; +0.12

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: 28.4%. Nothing like a rally to bring around the bulls, but not a very big run from 26.4% last week and not even hitting the 29.7% from the week prior. Not a lot of confidence just yet and that is fine. Still 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: 44.3%. Bigger drop for the bears, falling from 47.2%. Very solid still, showing plenty of worry. 47.2% 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: -26.21 points (-1.77%) to close at 1457.27

Volume: 2.512B (+6.69%)

Up Volume: 362.524M (-522.869M)

Down Volume: 2.048B (+598.535M)

A/D and Hi/Lo: Decliners led 2.12 to 1

Previous Session: Decliners led 1.21 to 1

New Highs: 9 (-3)

New Lows: 37 (+6)

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

Second day of a pullback that started after the tech index hit 1509 a couple of times and could not push further despite the goose from the Fed. Sliding back to test and looking for it to hold around the December low at 1398. That is the working hypothesis and we will have to watch how strong volume is and what the tech leaders do with respect to holding their own near support to gauge the strength of the pullback. For now things look good and indeed many have a 2 to 3 days of pullback and thus are very close to position to rebound. That makes a test of the December low and a hold important.

NASDAQ 100 (-1.41%) is showing an excellent pullback, holding over the 50 day EMA with thus far a very modest pullback. If the large caps continue to show this relative strength that bodes will for a nice, orderly, rather short-lived test before another try higher.

SOX (-3.46%) took a hickey Friday, but it held the 10 day EMA on the low and remains well in within the top half of its 4 month trading range. Looking for a hold around 212 on the low and then a higher low and run toward a breakout.

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

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

SP500/NYSE

Stats: -15.5 points (-1.98%) to close at 768.54

NYSE Volume: 2.107B (+7.93%)

Up Volume: 512.778M (-253.751M)

Down Volume: 1.947B (+774.982M)

A/D and Hi/Lo: Decliners led 2.86 to 1

Previous Session: Advancers led 1.04 to 1

New Highs: 4 (-1)

New Lows: 46 (+16)

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

Second day of the test after hitting resistance at 805ish and stalling. Volume is strong on the dive but it is expiration week so it tends to be elevated. Looking for another day of pullback to the November closing low (752) to give another bounce attempt, but then again, if the index is going to try and form a double bottom it will need to come back toward the March low at 675ish. Either way the ultimate outcome looks pretty decent thus far for more upside unless the selling runs out of control. If it moves to the march low we make a lot of money on our SDS play and likely the DIA on the DJ30 as well.

SP600 (-3.16%) as the small caps were hammered. SP600 fell to the November closing low after stalling at the 50 day EMA. This is also the bottom of the late February consolidation. The small caps are already at the November low and if they break down the move to the March low could be rather abrupt.

DJ30

A second session of pullback for the blue chips as well after bumping into the November low at the peak of the rally and starting to fade. Ended the week in good position over the 10 and 18 day EMA, but looking for a move down to the bottom of the late February consolidation at 7115ish and then we see how much strength is in the Dow.

Stats: -122.42 points (-1.65%) to close at 7278.38

Volume: 672M shares Friday versus 559M shares Thursday. Big volume all week, but again it was expiration.

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