主题：04/02/2009 Market View -- 宁子

SUMMARY:

- Strength builds as stocks gap higher, run to next resistance.

- Factory orders jump past expectations, but downside revisions overwhelm the gains.

- Stocks rally into the jobs report and earnings: a pullback on the jobs report or a further bounce on RIMM?

- Be patient, wait for the entry points to come to us.

Solid surge continues as the indices rumble up to next resistance.

The jobless claims, the second warm-up for Fridays jobs report hit a 27 year high. That was the very bad recession that concluded the 1970's malaise and set the stage for the huge recovery in the 1980's and on into 2000. It was the recession where Reagan and Volcker teamed up to break inflation. Does that mean we are at the cusp of such a tremendous economic explosion? No. Reagan threw off the yoke of big government by empowering individuals and businesses with their own money, giving them a reason to work hard as the would reap the rewards. We are currently doing the opposite. Instead of empowering individuals, the 'stimulus', budget, and massive bailout mentality is empowering and growing the central government. As discussed Wednesday night, history shows countries cannot spend their way out of economic recession or depression. Thus we are not on the verge of an economic expansion, but more of a 1970's malaise of slow growth, high inflation, and high unemployment thanks to a debased currency and a debt so massive that the entire debt of the nation through President Bush II is surpassed by what has been spent or pledged in the past 2.5 months.

Pleasant picture, but the market was not going to be bothered by the long term issues. It sees a short term recovery coming just as there was in the 1970's, and as seen at that time the market can rally even in a crappy economic environment, and that makes us money. Of course it will gyrate in a range the entire time, but that is not the worry for the day, particularly Thursday.

There was too much other good news near term. China says its economy is on the rebound after 5 months of recession. Commodities and infrastructure stocks took off to the upside after struggling the past three weeks. FASB did what many expected, i.e. recommended relaxation of the Mark to Market accounting rules. It was no complete fix to the damage the rules caused, but it was a change, and the market wanted change. Hmmm. So did those voting for the new Administration. The old adage 'be careful what you wish for' is coming back home with some big teeth to bite us all in the privates. That dog with the big teeth is still a bit down the road so that was not a problem Thursday. Stocks gapped higher and continued the Wednesday solid move.

They never really looked back after that open, working higher through lunch. SP500 ran into next resistance at 850, NASDAQ rallied to its next resistance at 1600ish. Gave back some mid-afternoon but rebounded as the buyers used the dip to move in. They still could not punch through and then wandered laterally and lower into the close. Not a bad finish, just a solid move on volume up to next resistance and then a pause ahead of Fridays jobs report.

In sum it was a great session. Loved it. Sure the gap up made it hard to buy new positions, but that was not really our intent. No, the mad rush by others to buy stocks pushed our positions higher and higher. We LOVE IT when we buy in when the technical indicators say 'buy me' and then others rush in afterwards and rally our positions higher and higher. We enjoyed the ride higher, using the rush to bank more gain, mindful of the Friday jobs report that might be a slap of harsh reality, a bit of a struggle at next resistance, and earnings. Of course RIMM announced after hours and surged; earnings can be good when expectations are so darn low. We didn't buy a lot of new positions. We dabbled a bit, but after the gap higher we are waiting for a better opportunity versus chasing stocks that gapped away as they tend to pull a Wily Coyote on you and run out of road over the canyon. Test are great entry points as they are the start of a new leg of road that you can travel along quite a way before it ends. We will get a pullback and have some better entry points, and on some stocks that may be as soon as Friday morning after the jobs report.

TECHNICAL. Intraday the action was solid all the way home. Yes the indices faded late but that was after ramming into next resistance, and after that run they are not going to blast on through.

INTERNALS. Solid across the board as well with 6:1 NYSE breadth and 3.7:1 on NASDAQ. Volume exploded higher at 2.7B on NASDAQ and 1.8B NYSE. That was the strongest NASDAQ volume in over 4 months. NYSE volume moved above average for the first time in a week but it was nowhere near the levels from March. Financials are helping lead the NYSE indices higher, but the volume is tepid and that is a concern.

CHARTS. Gaps higher, rallies to next resistance, and then as you would expect, it ran into some resistance. This is pretty key resistance for both NASDAQ and SP500. NASDAQ is at the top of its trading range but also at the October lows where the index tried to bottom for three weeks before it rolled over again. That is very tough resistance. SP500 faces the same resistance as it has reached the October bottoms as well. SOX is showing incredible strength but it too is at a key point, its November peak, the peak off of the initial bounce from the harsh selloff. Techs, even with the October resistance, and chips are in solid shape. SP500 is improving. All, however, are at resistance and will test and then move up to try it again just as they have done on this entire rally off the bottom. The indices are knocking down the barriers one at a time, but the NYSE indices still have a hard road ahead.

LEADERSHIP. We said that the market would rock when chips and techs re-engaged in the rally. That they did Thursday, leading the market higher with percentage and volume gains, surging to the tops of their ranges. Materials, commodities, construction - - the infrastructure plays - - rallied on the China 'thumbs up' to its economic recovery. Financials were up but showed some weariness in their price moves as well as the volume they failed to attract. Retail surged again and this time across the board from apparel stores to restaurants. China was up as you would expect. Lots of strength from many areas, but a lot of it gapped away. A test gives us some potentially good entry points on some more leaders.