主题：04/03/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 39.7; -2.34

VXN: 40.6; -1.69

VXO: 41.63; -2.84

Put/Call Ratio (CBOE): 0.83; +0.14. The ratio means most when it closes over 1.0 or is down at the 0.4 range. Those are the extremes, the former indicating high anxiety about the market while the latter indicates apathy and thus a potential fall in the works. It is interesting how the ratio jumped Friday even as the market posted gains. This shows that the funds are nervous at this level and are buying protection (not condoms but puts) in the event the market falls. That is actually a good contrary indicator, i.e. the big funds getting nervous about the upside prospects.

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: 31.0%. A little rally and a climb in the bulls, up from 28.9% and jumping over the highs a month back at 29.7%. Still well below the 43.0%, the prior 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: 38.0%. Quite the drop from 43.3% and 44.3% the prior week. The decline was slowing its fall from 47.2%, the peak for the run this year but no more. 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. Bearishness hit a 5 year high at 54.4% the last week of October 2008. 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: +19.24 points (+1.2%) to close at 1621.87

Volume: 2.086B (-23.03%)

Up Volume: 1.512B (-914.846M)

Down Volume: 594.908M (+215.85M)

A/D and Hi/Lo: Advancers led 1.53 to 1

Previous Session: Advancers led 3.68 to 1

New Highs: 15 (-14)

New Lows: 15 (+5)

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

NASDAQ kept on pushing upside, finding renewed strength as the techs and chips rejoined the fray Wednesday and particularly Thursday. That ignited the upside move. Cleared the February and December peaks near 1600 and closing in on the January peak at 1666. Strong move off the early march low, the bear market low, a short rest to end March, then a renewed upside move to start the new quarter. New money definitely made its way in, but the leaders were moving on good volume so it was not a fluke. Still, when the new money is spent NASDAQ will have to find still more buyers. Good start to a new leg, we will see how many more buyers come back to the buy side this week.

NASDAQ 100 (+1.69%) gapped higher again and definitively cleared the January and February peaks and is looking at the November peak though that is still a good throw upside. Nice move and another upside push sets up a test of the prior peaks it just broke through. Nice action.

SOX (+2.94%) continues its surge as it moved PAST its November peak, making a new high for the recovery. Seriously solid movement and of course we have banked a lot of gain from the chips on this run. A further push toward the 200 day SMA at 265 gives it a good point to shoot for and then test the breakout. Letting our SMH positions run higher for now but ready to take some gain after another move higher early in the week.

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

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

SP500/NYSE

Stats: +8.12 points (+0.97%) to close at 842.5

NYSE Volume: 1.484B (-20.82%)

Up Volume: 1.159B (-550.923M)

Down Volume: 300.19M (+139.809M)

A/D and Hi/Lo: Advancers led 2.08 to 1

Previous Session: Advancers led 5.95 to 1

New Highs: 5 (-10)

New Lows: 54 (-14)

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

A further push higher but on below average volume and unable to take out the next resistance at 850ish. Similar to NASDAQ, SP500 tested its March move late that month and has resumed the move, aided by that big Thursday surge on big volume. This week we see if that was a Lone Ranger move or the start of a new leg higher. Still resistance at 875 from the February peak and then up at 920. Now this 850 level is also the series of October lows where the index tried to hold after the straight dive to the bottom. That means some extra resistance at this point and SP500 might have some trouble moving through. So, watching SP500 closely and its financials as a barometer of the strength of this new attempted move.

SP600 (+1.62%) moved through the Thursday peak and right up to the October low. Basically in the same position as SP500, but showing a nice reverse head and shoulders formation setting up. Would be sweet if SP600 could go ahead and breakout and become a leader once more. That would be huge and sweet.

DJ30

Leader on the week but not Friday, meekly rising to close at the 90 day SMA on light trade. New high on the move off the March low but still stacks of resistance ahead and DJ30 is moving right into the teeth of it at the January and February consolidation lows.

Stats: +39.51 points (+0.5%) to close at 8017.59

Volume: 308M shares Friday versus 442M shares Thursday.

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