主题：03/24/2009 Market View -- 宁子

SUMMARY:

- A hangover from the Monday party leaves the market lower.

- Another massive power grab attempt as the Administration milks this 'crisis' for all it is worth.

- Geithner gets some 'hand' with respect to Congress.

- Good leadership looking for another run to end the quarter and move into earnings season.

Big rush higher leaves a vacuum to fill on Tuesday.

It would have been nice to see a continuing move to the Bank Plan push on Monday, but early on that was not going to be the case, at least at the open. As often happens, after a big surge higher the market takes a powder and shows a sluggish session. That is what happened Tuesday. Most everything that was up Monday was heading the opposite direction Tuesday, at least as far as equities were concerned. Oil was up a big more (54.05, +0.25). Gold was down more (926.40, -26.10). Bond yields were basically flat (0.91% 2 yr, 2.69% 10 year). The dollar was stronger, however, substantially so (1.3455 versus 1.3632), recovering some significant ground after getting b**ch-slapped following the Fed's '4% mortgage in every pot' new New Deal.

The market still had leaders moving upside (materials, metals, elite financials, China) and after Bernanke and Geithner finished their questioning in from of the House Financial Services Committee they helped move DJ30 and SP500 back to the upside and indeed positive by mid-afternoon. Maybe it was that B & G both showed some backbone they lacked in prior hearings. Bernanke actually got ticked off at a stupid question, and when the questioner asked why he would not answer it 'yes or no' Bernanke basically told him because it was a stupid question. Then there was Geithner, the man-child looking more like Beaver Cleaver than Secretary of Treasury, finally acting with some air of confidence and authority.

Maybe that helped the market rebound. After a bit of time, however, the market came back to reality. Geithner had outlined yet another of the largest power grabs in federal history, i.e. saying legislation is to come granting the federal government the authority to seize ANY private company that the feds deem is in distress and would be in the public interest to seize given the breadth of its business. That is monstrously frightening, '1984'-like federal power seizure. GE is a big company with many important businesses to the public, say its defense components. If it gets into trouble, at least by the government's perspective, then it would be open season.

When it came back to reality, the positive move on the large cap NYSE indices faded. It was not a bad fade, just back into the range they ran in for most of the session. The last 20 minutes, however, were rocky as the indices logged half or more of their gains in that short time span. That pushed modest losses to significant 2% to 3.6% (outside of DJ30 and its -1.49% decline) declines. Not a great follow up to Monday, but the indices were not left in bad shape with lower volume and still holding key over key levels.

TECHNICAL. Intraday the market had the old weak to stronger action going for it, though NASDAQ was a notable laggard all session, and by early afternoon it looked pretty solid with SP500 and DJ30 turning positive. That couldn't hold and they faded back to their earlier levels. That was okay. The last 20 minutes, however, were not. Modest losses doubled and more as sellers slipped in late and took modest losses to losses of 2% and more.

INTERNALS. -2:1 breadth was not positive but not deadly as it would be in more 'normal' times. The key to the move, even with the last 20 minutes when trade levels moved higher, is that volume remained lower, and significantly so (-14% on NYSE, -9% on NASDAQ). Trade came in below average on both exchanges. Lower volume shows no sellers moving in and trying to turn the market again but more of a lack of buyers. The late dip was not great but at least the volume was lower.

CHARTS. Despite the slight early afternoon peak positive by SP500 and DJ30, the indices made no headway. Indeed the last 20 minutes of selling turned modest losses into significant losses. There is still support at the recent peak for NASDAQ and SP500 as well, though that does not leave a lot of room to work with. If this is the second leg higher off the March low, however, that is where the best hold is. The indices still have a lot to move through. SP500 is in the bottom half (more like quarter) of the January to mid-February range, and there is a wad of overhead supply up to 880, then 920, and after that the January peak at 944. NASDAQ has 1595 to 1605 and then the January peak at 1666. Lots of work to punch through but if this leg is for real they should do it before too much time passes.

LEADERSHIP. Materials were solid, particularly steel as that metal firms up after some hard times earlier in March even as copper made its upside move. Some key financials (MS) made good moves, but they had a hard time holding them into the close. Others are setting up for a new move, however, e.g. WFC. China stocks were solid as well. Energy, a Monday leader, held up quite well and looks good moving higher. There is leadership out there and it is moving, in position to move, or is close to being there. Every rally needs this.