主题：03/24/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 42.93; -0.3

VXN: 42.17; +0.16

VXO: 43.44; +0.58

Put/Call Ratio (CBOE): 0.76; +0.06

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: -39.25 points (-2.52%) to close at 1516.52

Volume: 1.981B (-9.3%)

Up Volume: 531.349M (-1.569B)

Down Volume: 1.48B (+1.336B)

A/D and Hi/Lo: Decliners led 2.28 to 1

Previous Session: Advancers led 5.11 to 1

New Highs: 15 (+5)

New Lows: 18 (+5)

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

Lower, below average volume as NASDAQ gapped lower and basically did nothing all session. While the NYSE large caps cracked positive, NASDAQ never made the effort. It was going nowhere Tuesday no matter what happened. One of the leading indices on the way up was taking a breather regardless and the low volume was good to see. Now we see if it will hold the 1500ish level, the peak on last week's move that capped off the rally off the March low. Plenty of resistance up through 1600, and a couple of days of rest here would give it a point to bounce.

SOX (-2.41%) faded as well after it tested the January high, the post-November peak, on Monday. A rather modest pullback as SOX remains in the upper levels of its trading range. It made a quick test last Thursday and Friday before jumping Monday on the bank plan. It likely needed a bit more rest and it would not hurt it to take more rest here.

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

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

SP500/NYSE

Stats: -16.67 points (-2.03%) to close at 806.25

NYSE Volume: 1.645B (-14.16%)

Up Volume: 277.256M (-1.589B)

Down Volume: 1.358B (+1.311B)

A/D and Hi/Lo: Decliners led 2.01 to 1

Previous Session: Advancers led 7.67 to 1

New Highs: 17 (+3)

New Lows: 94 (+18)

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

SP500 faded and is back just over the key range from 800 to 805. That keeps it in the January/February consolidation range, albeit the lower sliver of that range. A key test for the financials and the SP500, but it was also a big run off of that March low, and a two-day pullback last Thursday and Friday was not a full test of that run. It likely was not ready to move again Monday and will need a bit of consolidation to do it, but looking at the financials, they are already getting into position for a new run already.

SP600 (-3.61%) took it on the chin the hardest, falling back through the 50 day EMA and landing on last week's high before the Thursday and Friday pullback. It may go all the way back to the November closing low before it is ready to try a bounce. The small caps are still struggling at getting their act together and showing some economic improvement ahead. About all they have done is rally with the other indices. Not any real leadership yet. Not any fake leadership either for that matter.

DJ30

Faded but showed the best action of the group as well as the lightest losses. Volume was below average for the first session in over a month as DJ30 faded to test and hold the 50 day MA. That keeps it over the November closing low (7552) and in excellent position to continue the Monday break higher. May take another day or two depending upon the rest of the market, but DJ30 actually looks to be in good shape.

Stats: -115.65 points (-1.49%) to close at 7660.21

Volume: 379M shares Tuesday versus 515M shares Monday. Nice below average volume as DJ30 tests back modestly.

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