主题：03/26/2009 Market View -- 宁子

SUMMARY:

- Stocks start higher again, get a decent bond sale, finish strong again.

- Big money still chasing stocks into quarter end and we will use that to our benefit.

- Thursday bond auction lends market support as opposed to Wednesday's sale.

- Use run to quarter end to take gains while cutting back on new positions.

New-found appetite for stocks keeps the market tracking toward the next key level.

Lots of news Thursday to throw in the mix with the stock market rally from the early March lows. Jobless claims were roughly in line (652K) though continuing claims hit yet another record high (5.56M). Q4 Final GDP beat expectations at -6.3% (-6.6% expected). Geithner outlined his plans for regulation beyond basic financial institutions and the market didn't seem to think it was too radical. Analysts were active, raising RIMM's estimates and upping the likes of GOOG to buy. Earnings were THE surprise with BBY topping expectations by 20 cents and raising 2009 guidance. Others joined in as TXI beat by 27 cents and GME (GameStop) upped its guidance as well. Surprises in earnings are nirvana for market bulls given the pessimism levels are so high regarding the economy.

All of those positives were just sauce for the goose so to speak in that the market wanted to move higher anyway and these stories simply helped pave the way for that move. Stocks are ready to run and are indeed running toward the quarter end as big money funds chase stocks to populate their portfolios before quarter end with solid stocks. Thus stocks opened higher and rallied once more, and unlike Wednesday, received a boost early afternoon as Thursdays bond auction attracted a lot of willing buyers. In an auction of 7 year bonds, a relatively rare occurrence, subscribers topped the over 2.5 to 1. In other words, for every dollar of bonds offered, there were 2.5 dollars bid. Much stronger than the weak Wednesday showing where the bids barely covered the offering. The market never looked back, easily handling a half-hearted afternoon selling attempt to rally and close at the session high.

TECHNICAL. Bullish intraday action once more as stocks started higher on the open with gaps and then continued the move higher all session. A modest selling attempt mid-afternoon was again met with buyers that pushed the indices to close at session highs once more.

INTERNALS. Strong once more with solid 4:1 breadth and volumes surging up further above average, particularly on NASDAQ (2.6B shares). Strong upside volume again as big buyers are in the market running after the rally they missed two weeks back. No problem with that as they are pushing our positions higher.

CHARTS. Another solid upside session as the indices work toward next key resistance, notching higher highs, at least on this leg. Still a lot of serious work to make more important higher highs given the resistance overhead. SP500 cleared the 90 day SMA after bumping that level for three days. It still has 852, 875 and the 910ish ahead of it, but it is making progress. NASDAQ is already pushing the 1600 level we saw as the peak on this move (closed at 1587); 4% moves will get you higher in a hurry. That means NASDAQ may just run on up to the January peak at 1653. SOX broke to a new post-November high with a solid breakout of its own. All are on the path for a run to that next key resistance (875 to 900 on SP500; 1600 to 1653 on NASDAQ; 8000 on DJ30). That is a long run off the March low and they will be ready for a test after that. Looking at 7500 on DJ30, 800ish on SP500, and 1500ish on NASDAQ, higher if it makes it to 1653.

LEADERSHIP. Techs and chips were back in the leadership saddle and the market fared very well. They were not the only gainers as breadth shows the moves were broad-based. Key financials are showing some war and tear from their runs, but techs, after a brief rest, rallied again. Metals and commodities were on the rise again. Retail surged nicely. The same leaders that started the move were again in solid shape Thursday. That bodes well for the market as leaders continue to set up, break higher, rest, and break higher again as more and more solid stocks emerge to add to the leadership depth.

The driving force behind the rally's building strength.

The indices continue their move toward next resistance as money continues chasing stocks into the quarter end. Will they keep it up into earnings? The first hints at earnings are helping stoke the upside fires, and the further initial results to start the season can continue that run. After these surprise become 'old news', however, the market will have travelled a long way on this run and will need a test. From the strength in leadership, volume, and internals, it looks as if the test won't be that bad, i.e. making a higher low or holding at a logical level and then provide the launch of another solid upside move. That scenario could of course change if new questions arise regarding the economic data and recovery potential, but the excellent strength on this move is convincing even if it is driven at this juncture by big funds chasing down the bus of performance they missed off the early March low.

Given this scenario we have been trading with a plan, i.e. buying when the market and individual stocks said 'buy me'. We have also been taking gain on the way up. In that way we have banked nice profits thanks to others buying up our stocks, and then we are heavier in cash at the top of the move and in great position to ride out the test and see how things set up. Thus over the next 3 to 5 sessions as the market enjoys upside toward resistance we will be net sellers, locking in gain. That is why we have not been crazy buying more positions as the move continues. We did a lot of our buying earlier and less and less along the way though we don't pass up a good opportunity that augments our existing positions. Again, we know the market cannot rise forever and will put in a good test. That test will likely make a key low and then surge higher for an even better run if these internals remain strong. We will likely play some downside on that move from some financials that did not change their overall character even on this run higher and then see how the bounce sets back up.