主题：04/13/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 37.81; +1.28. Last week VIX broke below 40, a support point over the past four months. There is the January low at 36.88 that it cracked on the Thursday low (36.53) before a modest bounce Monday. A test of 40 and a failure would be bullish for equities near term. Remember, VIX did its job back in October and November. As is almost always the case, the peak came a few months before the market actually found its bottom.

VXN: 39.34; +1.11

VXO: 39.09; +1.68

Put/Call Ratio (CBOE): 0.67; -0.14

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: 36.0%. Sharp jump in the bulls, moving back above 35%. Below 35% is a bullish indication. Above is not so bullish but is not bearish until higher levels. 31.0% the prior week up from 28.9%. Still well below the 43.0%, the prior top of the recovery as the market rallied off the November low. 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: 37.1%. Fewer bulls but not a commensurate fall compared to bulls and their rise (38.0% last week). Big drop from 43.3% and 44.3% before that. 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: +0.77 points (+0.05%) to close at 1653.31

Volume: 1.779B (-15.24%). Low trade again as NASDAQ bumps the January intraday peak. Low volume all month outside the start. Techs are going up but not as many players in these stocks. That can lead to failure if the participants come back in as sellers. Solid volume to start the move then tapering the past few weeks. Some caution is appropriate.

Up Volume: 856.603M (-1.123B)

Down Volume: 906.422M (+715.292M)

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

Previous Session: Advancers led 4.8 to 1

New Highs: 26 (+1)

New Lows: 11 (+4)

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

Gapped lower, sold to the early April peak, then rebounded to close just a fraction over the January closing high. That still leaves NASDAQ below the January intraday peak and that shows a potential double top in the move. NASDAQ just started a new attempt at the second leg of the rally and that makes this a true test of what NASDAQ has in the tank right now. Good support at 1598 gives it a safe harbor as it tests this next resistance level. The light volume is a concern along with the January peak. Techs have been noncommittal of late and perhaps we see them re-engage and send the entire market higher. Keeping the stops reasonable and a bit tighter on the short term positions (options) given these two factors.

SOX (-0.96%) was down all session but it showed solid action. Gapped lower, sold to the 10 day EMA on the low, then rebounded nicely. The rebound shows the buyers coming back in and pushing SOX back up to the April peak and that keeps it over the November peak. SOX still looks solid but it is suffering a bit of sluggishness here as the 200 day SMA is pushing down on it and exerting a little bit of downside force.

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

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

SP500/NYSE

Stats: +2.17 points (+0.25%) to close at 858.73

NYSE Volume: 1.481B (-19.32%). Volume fell back below average after the big Thursday surge. As with NASDAQ, volume-light is the mode of late though the big upside days have come on big volume.

Up Volume: 1.014B (-698.318M)

Down Volume: 460.603M (+345.049M)

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

Previous Session: Advancers led 5.94 to 1

New Highs: 8 (-6)

New Lows: 73 (+9)

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

Rallied a bit higher intraday toward the late January and February peaks at 877 (864 on the high) and could not make further headway. While it could not make that new break it did rally back from negative as the buyers pushed SP500 back up to positive. Good intraday action showing the buyers that are in the market are in control, but lower overall volume shows there are fewer players here at key levels. As with NASDAQ, SP500 is moving nicely but some caution is warranted

SP600 (-0.07%) held steady Monday after the Thursday surge. It made it to the November/January down trendline that is currently coincident with the late January and early February highs. Over the October low and below the 250 resistance. A good point to take a step back then a new run.

DJ30

DJ30 jumped nicely off the 10 day EMA Thursday but went nowhere Monday. Familiar rebound off the intraday low that tested 8000ish and the 90 day SMA. It is bumping the October closing low at 8175. After a couple days of this kind of action it should be in position to make a run at that resistance.

Stats: -25.57 points (-0.32%) to close at 8057.81

Volume: 424M shares Monday versus 462M shares Thursday. Not bad trade at all, particularly compared to the other exchanges.

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