主题：04/06/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 40.93; +1.23

VXN: 41.56; +0.96

VXO: 40.3; -1.33

Put/Call Ratio (CBOE): 0.96; +0.13

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: -15.16 points (-0.93%) to close at 1606.71

Volume: 1.948B (-23.55%). Another session of low volume. Only two sessions in the past 7 have put in above average volume. That puts the run higher of late in a bit less dazzling light.

Up Volume: 626.206M (-1.513B)

Down Volume: 1.389B (+981.874M)

A/D and Hi/Lo: Decliners led 2.24 to 1

Previous Session: Advancers led 1.82 to 1

New Highs: 14 (+9)

New Lows: 7 (-118)

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

Gapped lower to 1600, sold through it to the Thursday gap up low, then recovered to hold 1600 though it could not move to positive. Lower, below average volume so no distribution but no massive buying on the rebound. Very livable as it is a very normal pullback session. Normal, but highly unlikely sufficient in itself to set off another upside leg, particularly with the overall low volume and that gap higher last week. Some more testing back to the 10 day EMA (1559) and even better, the gap up point (1551) would be good backfilling to allow a run at the January peak (1665). To do that it needs to put in a more testing work.

SOX (-2.22%) gapped lower, tested near its 10 day EMA on the low, and rebounded nicely to cut its losses. Still a 2% loss, but it was 4% on the low. The move gave up the early November peak, but not sweating that for now as SOX has to test its move higher and this was very solid action.

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

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

SP500/NYSE

Stats: -7.02 points (-0.83%) to close at 835.48

NYSE Volume: 1.296B (-20.4%). Similar to NASDAQ, another below average volume session. Not bad given the selling and want to see it remain low as SP500 and company test back, but want to see it ramp up as any upside resumes.

Up Volume: 393.208M (-781.595M)

Down Volume: 891.833M (+461.386M)

A/D and Hi/Lo: Decliners led 2.25 to 1

Previous Session: Advancers led 1.86 to 1

New Highs: 3 (-27)

New Lows: 50 (-47)

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

SP500 tested lower as well, gapping down (rather unusual) given the downgrades of the banks. It sold off through the 90 day SMA (828) and then rebounded to slice 12 points off its losses. Love to see an index take back more than half its gains from the lows with extended, afternoon rebounds. This keeps SP500 below 850 resistance, but it needs some rest after running to that level, and the fact the banks did not roll over into the septic tank after the famous downgrades is a positive. SP500 likely needs some time here at the October closing low as that is where the selling started to put on the brakes, and we will see how it holds on the testing here as to whether it is going to be a shallow lateral move or a deeper dip.

SP600 (-1.81%) sold to its 90 day SMA as well and then reversed as well to slice its loses. Still below resistance at the October closing low (just as SP500), but still in decent shape after that renewed strong break higher last week.

DJ30

Moving laterally for the second session, holding at 8000 and the bottom of the late January/early February lateral consolidation range. That also has it below the October low that SP500 is bumping. Yes that means DJ30 is by definition a laggard on the NYSE, but it is trying to reform, dry out, etc. It is doing what it has to do, i.e. taking it one day at a time as it works laterally and tries to hold its gains and set up a try at those October lows up at 8175.

Stats: -41.74 points (-0.52%) to close at 7975.85

Volume: 247M shares Monday versus 308M shares Friday. Suffering 'tradus lightus' as are the other indices, but on a test that is okay. Need to see more upside volume when the move resumes to show some staying power.

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