主题：04/08/2009 Market View -- 宁子

SUMMARY:

- Not the strong rebound you would like to see.

- Wholesale inventories fall as sales rise: the old chicken or the egg argument.

- Thursday is the last trading session ahead of 3-day holiday and light volume likely. Plenty of stocks set up to move higher.

A bounce. That's all.

Not a lot of schedule news but there was a lot of news. A little M&A activity in the homebuilders (Pulte acquiring Centex) and an 11% gain in purchase loan mortgages stirred the pot of the hopeful, prompting talk of a bottom in the housing industry. Maybe Pulte is more savvy than most businesses; typically when a business dumps certain product lines or prior acquisitions is when you see a bottom as management, as most people, despair and throw in the towel just when things are ready to turn. Again, maybe Pulte is the exception to the rule. Maybe.

The Fed and Treasury teamed up, indicating that they may put insurers under the TARP as well. The terms they use are 'open up' the TARP to those entities, but the code words we have come to know mean that the feds want to force insurers to take TARP funds just as they did to many banks during Paulson's reign of terror where backroom strong arming and threats cowed otherwise healthy banks into submitting to government takeover. Paulson said publicly that most banks had to participate for it to work. At the time we all felt he was just cajoling to get more banks involved. Now we find out he was stating the goal and then going behind closed doors to blackmail financial institutions into taking the funds and giving up significant control to the government. Of course they did not realize how much they were giving up: now the Executive branch has taken on the role of ousting management at its whim. It is no wonder that the TALF funds remain largely unused as companies shy away. There is only supposedly $100B or so left in TARP so maybe there won't be enough to take over the insurance industry, but don't be surprised if the TARP cap is pushed higher with funds likely taken from the unused TALF or just open up the taxpayers' wallets more. Hey, it is only another $1T according to Treasury.

Earnings were also out with Ryder (trucking) slashing guidance and saying no improvement in 2009. On the other side BBBY beat the street handily, increased guidance, and soared. FDO increased its guidance and was rewarded as well. The Fed minutes later in the session indicated the Fed feared a self-fulfilling spiral lower as individuals and businesses slowed spending further, exacerbating the already locked up credit market. All of this was sprinkled out over the session, and without a lot of volume on the day the news managed to push stocks around all session. Thus the volatility.

Early on in the morning futures were down but recovered after the Pulte news and stocks opened stronger, but it was volatile as noted. Rallied, tested, recovered to move over the Tuesday high, gave it back, then recovered again late in the session. Not bad action, but it was not very decisive and volume was holiday light. Leaders were moving up and that was a key, but again, it was all on light volume.

Watching the intraday action we opined in an early afternoon alert that there would be an afternoon test that would give us some entry points ahead of a late rally. That panned out and we got some buy points on NVLS and PCLN though with the light trade we were not loading up. We are looking for a further rally ahead of the earnings flood and then get a bit smaller once more as we did on the last run higher.

TECHNICAL. We said it above: volatility was the word as the indices traded up and down and back up a couple of cycles. The other word is again resilience. Up and down, in and out, but in the end the market, after two downside sessions, rebounding to close positive. No real strength but you see the upside bias reasserting itself after a rather predictable and orderly pullback.

INTERNALS. Solid though unspectacular breadth at 2.7:1 NYSE, 2.6:1 NASDAQ. Volume was mixed, this session rising on NYSE will falling a hair on NASDAQ. Okay, some rising volume on NYSE is a good indication on an upside session, but overall volume is so low that it means . . . nothing. Same with NASDAQ and its fourth straight session of below average trade. Holiday light and not likely to get better Thursday. That is okay. We will take a price only rise for now.

CHARTS. The indices tested for two days and bounced off near support at the 10 day EMA, but they did not make any definitive moves such as retaking the resistance breached last week. A bounce on the third day of a pullback, but that was it: a bounce without any power behind it.

LEADERSHIP. Wednesday started to see those leaders that pulled back three sessions ahead of the market start to bounce, e.g. BRCM, QCOM. Chips were bouncing nicely (e.g. NVLS, MRVL). Retail was back in the black again so to speak as the BBBY earnings showed the consumer is not dead and washed up on the shore. They are not spending a lot of time at Saks, but they are not dead. HOTT heated up again, surging back up off its Tuesday tumble. Consumer related stocks are moving well and indeed all of the leadership held on the test and look solid. Financials were a different story. There are leaders from the financial sector, but they were not participating Wednesday. They sat it out, and the pretty neat thing is that with them pouting the indices still rose as other leaders stepped in and pushed upside.