主题：04/14/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 37.67; -0.14

VXN: 39.43; +0.09

VXO: 39.78; +0.69

Put/Call Ratio (CBOE): 0.76; +0.09

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: -27.59 points (-1.67%) to close at 1625.72

Volume: 2.18B (+22.57%). Monday we discussed the problem of low volume advances and Tuesday the market showed what can happen. Not a gutting but some higher volume (average) the sellers were more pronounced than the recent buyers on the push higher.

Up Volume: 826.137M (-30.466M)

Down Volume: 1.418B (+511.792M)

A/D and Hi/Lo: Decliners led 2.03 to 1

Previous Session: Advancers led 1 to 1

New Highs: 15 (-11)

New Lows: 10 (-1)

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

Gapped lower, rallied back just about to flat, but could not hold the move. Too much to fret over with the economy, more earnings to come, and more talk of federal expansion and control of the private sector. NASDAQ sold back to the prior April peak, but is likely to test the February peak (1598) at a minimum, just another Monday session away. If the distribution continues then it likely goes lower and things get dicey with a potential double top spanning January and April.

SOX (-0.24%) was a warhorse in a weak session, moving solidly higher but unable to withstand the tide of all the other sectors. It did hold above its November peak once more, holding that higher high it just made. It deserves a test and it is likely going to get one after INTC and we see how the chips can hold, particularly the equipment makers given INTC's lowered plans on capital expenditures.

NASDAQ 100 (-1.07%) was also a relative strength leader as it limited the losses to 1% and is holding easily over the January and February peaks. After a pullback to 1300 it will be in position to make the next move higher. It and SOX look very good.

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

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

SP500/NYSE

Stats: -17.23 points (-2.01%) to close at 841.5

NYSE Volume: 1.749B (+18.11%). Volume was up and back above average on the selling. As with NASDAQ, some distribution. The volume was, however, lower than the Friday buying volume; some silver lining.

Up Volume: 518.147M (-496.09M)

Down Volume: 1.211B (+750.329M)

A/D and Hi/Lo: Decliners led 2.14 to 1

Previous Session: Advancers led 1.53 to 1

New Highs: 7 (-1)

New Lows: 55 (-18)

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

SP500 sold back from 850 resistance it cracked but did not obliterate. The October lows are trouble for the large caps. There are potential support points at 815 from the early December low, and then there is the 50 day EMA at 809. Thos are not anywhere near the Tuesday close, meaning the large caps could have some serious downside here if the financials don't step back up soon.

SP600 (-3.03%) touched the November/January down trendline Monday and beat a hasty retreat Tuesday on above average volume.

DJ30

Same story for the blue chips, failing at the October low at 8175 and peeling back on the strongest volume of the month. Holding the 10 day EMA on the close. Not a massive reversal and still in the 'normal' pullback mode. The higher volume, as with the other indices, remains a serious issue and needs to knock it off.

Stats: -137.63 points (-1.71%) to close at 7920.18

Volume: 513M shares Tuesday versus 424M shares Monday.

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