主题：03/30/2009 Market View -- 宁子

SUMMARY:

- Pile of bad news starts the week on the downside.

- World economic news hardly inspiring.

- Administration rejects auto restructuring plans, prefers bankruptcy for automakers. So why is the President removing CEO's versus a bankruptcy judge?

- Financials on the edge of another selloff, techs holding a pullback test. Once more we see which group tilts the market's balance.

No bounce for stocks as world economic woes move front and center once more.

Ah the smell of fear on a Monday. After failing to rally further Friday and full test next resistance the indices didn't have much of a chance out of the gates to start a new week. A veritable smorgasbord of bad economic news, much of it focusing on financials, assured a downside session even before the bell rang.

European banks were the center of the news storm as the governments in the UK, Spain and Germany had to intervene to take over teetering financial institutions. Geithner, after receiving some lessons in authoritative extemporaneous speaking that helped build some confidence in the market with his long-awaited bank plan, stepped in it once again. After some hope snuck into the picture after many banks gave the finger to more US TARP funds, the Treasury Secretary relapsed into his old ways, offering that that US banks would require 'large amounts of aid' going forward. That pretty much skewered the financials.

On top of that the Administration rejected the automakers' restructuring plans, removed the GM CEO, told Chrysler the feds were going to have a shotgun wedding between it and Fiat, and if things didn't get better it was off to bankruptcy court. Gee, several billions later and now we are going to the place that all other businesses go to when they have these kind of financial issues. Japan threw in its fifth consecutive month of declining production. MS added the icing with its report saying 'sell US stocks.' Hard to get happy after all of that. The foreign markets were lower, US stocks were lower. US Treasuries were stronger and the dollar was stronger; everyone was moving away from world equities and toward US bonds and dollars.

Stocks moved in the opposite way, gapping lower and toward support levels broken through to the upside last week. They ran through the that support on the opening dive lower. After that dump they landed at some interim support and worked laterally in a relatively narrow ranged the rest of the session. What a consolation prize. Overall trade was light but the financials sold on stronger volume, and that pushed up NYSE volume. Still light overall. Tech showed relative strength; kind of a funny statement on a day of 2+% losses, but techs did show comparative strength. The question once more is whether financials again pressure the overall market and lead it lower.

TECHNICAL. Intraday the action was crappy with an overlay of general malaise. After the initial dive stocks moved laterally for 5 hours, rallied late, but even with that push off the lows they could not breakout from the range at the bottom of the trading range. The bounce eased the sting, but it didn't change the session's character one bit.

INTERNALS. Breadth was negative. Really negative at -6.4:1 on NYSE. NASDAQ was by comparison decent at -3:1. Relative breadth strength. All that shows is that the techs were not getting the same whip the financials got. Volume was mixed with the financials selling on stronger volume, starting to distribute once more. NASDAQ volume was lower with volume falling even further below average. Financials are getting dumped some, techs are being held. Once more we will see if the financials spell the doom for the rest of the market as in February.

CHARTS. Gapped lower, sold through near support on both SP500 and NASDAQ, and could not recover much ground. NASDAQ managed to recover with a mildly respectable late bounce, but that only took it up to the top of its long intraday trading range; it broke it late, but gave it up at the bell. SP500 never made the pretense, falling through support and hanging on to the top of the late February consolidation that is now coincident with the 18 day EMA. Decent hold, but the gap down broke the short uptrend formed off the early March low. SP500 is left in a precarious position where it could easily test down to the November low at 752 (closing). That test would not really be a bad thing, setting up a higher low. The November low makes since; sometimes the market does as well. SOX broke back into its trading range, but not deeply. It is worth watching here to see if it can quickly jump right back out.

LEADERSHIP. Despite the downside leadership was showing up. Retail actually positive with stocks such as AMZN and HOTT posting gains in a weak market. Others were up but scattered with no concentration of strength. Now just because they were up does not mean leadership is out. Most pulled back, most down pretty sharply but holding support decently. The losses were more than you want to see in a session as it leaves little room to play with as the market continues to test the run higher. With the financial stocks under pressure it is up to the recent leaders, e.g. tech, chips, retail to hold the line, particularly as commodities and some energy are under pressure as well.