主题：03/27/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 41.04; +0.68

VXN: 41.45; +0.87

VXO: 43.39; +1.96

Put/Call Ratio (CBOE): 0.92; 0

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: 28.9%. A fraction more bulls (28.4% last week) but not really commensurate with the market gains. Not a lot of belief in it just yet. 29.7% three weeks back, down from that 'optimism' 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: 43.3% versus 44.3% the prior week. Slowing the decline from 47.2% as here as well there were not many believers in the run higher. 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: -41.8 points (-2.63%) to close at 1545.2

Volume: 2.06B (-18.07%)

Up Volume: 460.521M (-1.991B)

Down Volume: 1.633B (+1.486B)

A/D and Hi/Lo: Decliners led 2.97 to 1

Previous Session: Advancers led 4.23 to 1

New Highs: 18 (-6)

New Lows: 13 (-3)

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

After coming to 13 points from 1600 on Thursday, NASDAQ gapped lower and closed at the session low, never really attempting any upward movement. Disappointing it did not challenge the resistance but it is also in the top of the range, holding well over support near 1500. Low volume. No heavy selling. Just ran out of buyers. Those are positives, but whenever an index makes it back up to key resistance that has pushed it back before it is a gut check moment. We will see how it responds early in the week; some upside and we close out some more positions as we use the upside to bank gain and see if it can make the breakout move.

SOX (-2.08%) lost some ground after the Thursday breakout, but it is holding over the prior highs after coming close but not quite taking out the November peak. Big and important moves by the chips, clear market leaders. How they respond early this week is key. Recall back in December we were talking about the chips and their relative strength and building patterns. They were showing strength then and while they had a couple more tests to make, they finally broke to a new post-November high and are leading the market higher.

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

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

SP500/NYSE

Stats: -16.92 points (-2.03%) to close at 815.94

NYSE Volume: 1.443B (-20.26%)

Up Volume: 192.082M (-1.127B)

Down Volume: 1.246B (+765.008M)

A/D and Hi/Lo: Decliners led 3.07 to 1

Previous Session: Advancers led 3.86 to 1

New Highs: 12 (-6)

New Lows: 87 (-4)

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

The large caps turned back before hitting 850, 875, or 900 to 910. It also turned back below the 90 day SMA (828). As noted earlier, the loss was in line with other losses on the upside run. Just the location where this one occurred as well as the time on the calendar make it more interesting as they say. Very low volume here as well and that leaves SP500 in technically good position to test the 800 level and try to find a higher low. Again, the concern is approaching earnings season and whether SP500 will make a normal test of support or the sellers use this run to jump all over the downside.

SP600 (-3.34%) move dup to test the bottom of its January range and there it stalled, at least on Friday. It is holding at the December low but it has not shown any leadership quality thus far, just tagging along with the other indices as they recovered.

DJ30

Similar action after DJ30 rallied toward resistance at 8000, bumping into the bottom of the January/early February consolidation range and fading modestly on very low volume. As noted earlier in the week a test back to 7552 (the November closing low) is a logical point for it to fade to, but sure would like to see a sprint up toward 8175 to 8250 first. We will see how it responds to start the new week, but we keeping our expectations low.

Stats: -148.38 points (-1.87%) to close at 7776.18

Volume: 323M shares Friday versus 397M shares Thursday. No sellers at least.

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