主题：03/23/2009 Market View -- 宁子

SUMMARY:

- A long awaited bank plan.

- Perhaps the pieces are all in place to operate the credit markets, but there seems to be one piece still missing.

- 7% gains all attributable to the bank plan or maybe a quarter end scramble to get market exposure given the rally.

- After hours SEC says it is to re-visit uptick rule

- Key resistance cleared as market tries to start the second leg higher off the low.

Was it THE plan or just A plan that sparked a renewed rally?

Treasury Secretary now has two big moves under his belt. Okay we are being nice, but we wanted a bit of symmetry and cut him a break as well given he finally unveiled his bank plan. The first was when he promised a bank plan and then basically just presented a position paper about what a great bailout plan should have in it. That sparked the lovely early to late February tank. Then he promised more again and failed to deliver, kicking off the early March dive. Again for kindness sake we are calling that one move.

Monday Geithner hit the wires early with the Plan. It actually had details, lots of them. It was the public/private collaboration as he indicated before and it created a new RTC-like body but was different at the same time. Two programs, one loan program and one securities program, are to operate side by side though on different instruments. The loan program is the one that got most of the press. It involves the FDIC to examine a group of assets that an institution wants to dump to see if they are eligible for the 6:1 leveraging program. Then the new entity will auction off the 'assets'. When that happens the Treasury and private buyer will put in the money with the feds putting 6 times the private entity. Then the FDIC guarantees it all.

The entire process requires the private participants to, well, participate. The question no one could really answer is whether the private sector will step up and do the buying and selling. Specifically, what incentive is there for a bank to sell at a price a hedge fund or other entity will be willing to buy and vice versa, what incentive is there for a hedge fund to buy at the price a bank has marked the assets to? In other words, the private parties still have to come together and strike a price agreeable to both, and that is the main stumbling block to this day, plan or no plan. It will take many weeks, even months, before we see if it is actually working.

Didn't bother the market Monday. It wanted a plan damn it and it finally got one. It was going to the dance with it whether it was a pretty plan or not and regardless if it ultimately leads to marriage or not. The news jolted the futures. Then China announced it may add more stimulus in Q2. It has to. It has to print some money to keep the yen lower to match the dollar's dive. It is worried about our spending so it is going to make sure its economy remains healthy and as a benefit its currency. It is not as tied to the dollar as in the past so it can remove any gains against the dollar by printing some of its own even if it has hundreds of billions of our dollars it can use.

Anyway, the futures surged but they still gave back half their gains before the bell and they were still up 26 points on the S&P's as the bell rang. Stocks gapped higher, paused for a half hour, then took off again to the upside as existing home sales showed a 5.1% gain. Didn't matter that 45% of the sales were foreclosures because half were first time buyers. The news was enough to give buyers a reason to move back in after that initial gap higher. A solid run to midmorning, a lateral move through mid-afternoon, then a surge and sprint to the close with all sectors running higher.

TECHNICAL. As noted, the intraday action was solid with the market never giving back any gains. Started strong, added to it, held the gains with a midday consolidation, ripped higher into the close. Nothing but positives on this day as the market resumed its upside move off the bear market low.

INTERNALS. Very solid breadth (7:1 NYSE, 5:1 NASDAQ) as all sectors posted stellar gains. Volume was significantly lower. Now given that Friday was quadruple expiration and you typically get a lot of volume, trade was not just a tad lower on NASDAQ. It fell to below average, showing less than it did Thursday or Friday when it sold back after that big Wednesday move ahead of and after (sort of after) the FOMC kitchen sink announcement. Not a lot of new buyers pushing on techs. NYSE trade was not bad, matching last week's levels and still well above average. That is livable. There was not unity in all of the market's guts, and while that is not necessarily anything bad it tells us to watch NASDAQ, a key leader off the lows, to see hot it performs and what buyers come back in as it moves higher.

CHARTS. Key moves by SP500 and NASDAQ as they pushed through 805 and 1510 respectively. Even DJ30 got in on the act, moving through its November low. SOX blasted higher and is ready for a post November high after a nice test that made a higher low. SOX, however, was just one of the pack with its 7.2% gain. It was not 100% certain all day: SP500 rallied up to 800 resistance, stalled, and even faded back similar to prior sessions. It regrouped in the last half of the afternoon, and actually followed NASDAQ higher as NASDAQ had already taken out its resistance and did not give it up. Even when they were lagging the techs were leading on Monday. The indices did what they needed to do, i.e. deliver a nice surge after a quick pause below resistance. As the indices broke higher a lot of leaders broke higher as well, moving to post-November highs. That kind of action looks as if more upside action is ahead beyond just Monday, but they will have to attract more volume.

LEADERSHIP. Financials continued their torrid run higher on more good news for the credit market. Oil continued its climb (53.89, +1.82) and that brought the energy stocks up as well. Chips did well once more though they were just runners in the pack on a day when all sectors rose. Techs were solid but definitely bringing up the rear with large techs outside of IBM and handful of others posting significant moves. Great runs for higher from newly formed patterns and others continue setting up, aided by the rally, the test, then the new surge. New stocks are starting to line up to join the move even as the early movers have tested and are surging higher again as well. Market is getting some good leadership other than the handful of chips, techs, and small business companies that led the initial move off the low.