主题：03/27/2009 Market View -- 宁子

SUMMARY:

- Market pensive ahead of the weekend as quarter end buying stalls.

- Prices eat into incomes but disposable income is still rising.

- Nothing showy, but economic data continues its attempt at stopping the bleeding.

- A potential transition week ahead as the quarter winds down and earnings ready to roll out.

Not a great Friday, but a somewhat normal pullback nonetheless.

Friday did not pan out with another good rally to end the week and maybe tap resistance. Didn't even try. Futures were down before the economic data hit, and afterwards they stayed down even though the US side of the equation was not that bad. Spending was up 0.2%, in line with expectations though well off the upwardly revised 1.0% in January. Spending is now up 2 months straight. Incomes, however, fell 0.2%, more than the -0.1% expected and the 0.2% gain in January. Higher prices are eating into incomes. Still, disposable real income was up for its fifth straight month.

On the other side of the ocean's the news did not have the same positive shifting undercurrents the US data is showing (manufacturing, retail sales, same store sales, home sales). Japanese retail sales posted the worst drop in ten years, not exactly what you look for when an economy is expected to emerge from depression. The UK GDP fell 1.6% versus the -1.5% expected. That was not a terribly horrible miss, but the whisper was the number was going to beat expectations. It did, just not the right way. The overall EU reported that industrial orders fell 34%. Ouch.

So, futures found nothing positive heading into the open and they accordingly opened lower. Michigan sentiment proved to be better than anticipated at 57.3 (56.8 expected, 56.6 prior), but that did not liven up the sour mood, at least not right off. Stocks sold lower but then caught a bid and rallied to session highs though the indices never came close to positive on that run. Indeed they never came close to positive. They peaked at lunch and continued the selling, hitting new session lows mid-afternoon. A bounce attempt in the last two hours couldn't hold it together and the indices closed at their previous session lows.

Seems the quarter end buyers were not interested in new positions ahead of the weekend. Perhaps they stopped buying due to the 3-day clear period on stock trades (the end of the quarter is Tuesday), perhaps it was just the weekend. Buyers left and stocks lost their bid. Didn't help matters that the dollar was up and thus some of the recent leaders sensitive to the dollar, e.g. commodities, were substantially lower. That does not excuse losses in the 2+% range, but at least sellers didn't surge into the market as the lower volume shows. They also could not take the leaders down; leaders rather normally tested their good moves. We will see if there is a new spark early in the week, end of quarter or no.

TECHNICAL. Started down, made a weak attempt at rallying that just could not catch hold, and then sold off the last 3.5 hours, finishing at the lows. This time there was no concerted buyer push in the afternoon to take stocks back to positive. Superman didn't show up. The ninth inning rally failed, the 2 minute offense ran out of clock.

INTERNALS. Nothing special. Breadth was negative. What a surprise. 2+% losses will push decliners to the -3:1 level. The most interesting feature was the plummet in volume. NYSE trade hit the lowest level in 1.5 months. Not a lot of sellers, certainly much fewer than the recent buyers. Nonetheless, it was a complete abdication by the buyers that let the few sellers push the market around without any challenge. Jimmy Carter era d j vu.

CHARTS. NASDAQ had the momentum Thursday, but it exited with the closing bell Thursday and that left the techs unable to push further toward 1600 resistance, much more the January peak. Same story across all the market as the indices faded back from just below their next resistance level. Even SOX faded from its November peak it was just getting ready to challenge, but SOX looks great still as it comes back to test the PRIOR post-November high, not just bouncing around inside its big range. Always like dealing from a position of strength. Now the losses were something of a drop in the bucket versus the moves higher in this rally and were in line with the losses on this move (SP500 losses the past two weeks: -2%, -2%, -1.3%). The move was not devastating by any stretch but it was not the lead in to next week that we wanted for a last push ahead of quarter end. We will see if there is a last gasp higher attempt early in the week. As for a test, SP500 can still test back to 800ish and NASDAQ 1500ish and still be in fine shape. You just don't want to see the leaders start to break down.

LEADERSHIP. Speaking of leadership, not many stocks were up but not many were in trouble either, at least among the leadership. They are testing but not violating near support. Kind of what you would expect after a strong run, and as noted Thursday, without quarter end and earnings it would be just a normal pullback. Indeed a test ahead of earnings, outside of a huge surge into the new month we can use to sell out our positions, is typically a good thing as it takes the froth off the move and allows good results, if there are any, can be rewarded. That remains to be seen. Leaders are holding up very well as the plays on the report show, but we are still more gun shy than not about the market move holding through earnings and thus holding upside positions through earnings.