主题：03/31/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 44.14; -1.4

VXN: 44.2; -0.67

VXO: 44.4; -0.81

Put/Call Ratio (CBOE): 0.81; -0.33

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: +26.79 points (+1.78%) to close at 1528.59

Volume: 2.081B (+6%). A gain in volume but still well below average so no real indication of the market strength.

Up Volume: 1.596B (+1.302B)

Down Volume: 533.242M (-1.193B)

A/D and Hi/Lo: Advancers led 2.15 to 1

Previous Session: Decliners led 3.16 to 1

New Highs: 13 (+8)

New Lows: 15 (-16)

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

Gapped higher, rallied well, gave up half the move. Not terrible action, but not the kind that takes NASDAQ to 1600 immediately. Something of a reverse head and shoulders attempting to set up as NASDAQ tries to put in a higher low above the 50 day EMA (1480). NASDAQ sold back half its gain to the close but it held over the support near 1500. In position to move higher but appears to be waiting on earnings to make the next definitive move.

SOX (+0.64%) showed a hammer doji on the candlestick chart Tuesday, holding the 10 day EMA just below the top of the 5 month trading range. It is testing the Thursday breakout move and it needs to hold in this range and then continue the breakout run. Market needs the chips to step back up.

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

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

SP500/NYSE

Stats: +10.34 points (+1.31%) to close at 797.87

NYSE Volume: 1.639B (+8.41%). Volume rallied but as with NASDAQ, it could not make it to average. Not a lot of power behind this move right now.

Up Volume: 1.257B (+1.183B)

Down Volume: 364.315M (-1.07B)

A/D and Hi/Lo: Advancers led 3.09 to 1

Previous Session: Decliners led 6.39 to 1

New Highs: 7 (-1)

New Lows: 52 (-14)

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

Rallied through 800 and 805 up to 811 but sold back to the 50 day EMA on the close. Not devastating action as SP500 is still in the game to make a higher low but you have to watch that Monday gap lower that broke the uptrend off the March low. That in itself is not fatal either given the move up was in a tight range and that such a steep move cannot sustain itself and is tested. If successful it creates a new trendline off the test of near support. Indeed, SP500 is testing the 18 day EMA and holding for now, an important support point after a break higher if a new trend is going to form. The financials led Tuesday, bouncing back nicely. If they continue to improve, the market continues to improve.

SP600 (+1.65%) showed the same action, i.e. the surge higher, the giveback, the close at the 50 day EMA. Expecting some consolidation here as the market tries to hold the gains and set up the ramp to the next run higher.

DJ30

The blue chips posted up at the November closing low (7552) and held again, bouncing through the 50 day EMA but unable to hold all of it. Volume was up, but alas, below volume as well. Cracked the up trendline off the March low on the Monday selling, but similar to SP500, it is holding the 18 day EMA, a near support level that it should hold and rebound from if it is going to continue a strong rally. It can still come back toward 7250 and keep the rally intact.

Stats: +86.9 points (+1.16%) to close at 7608.92

Volume: 399M shares Tuesday versus 383M shares Monday.

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