主题：04/17/2009 Market View -- 宁子

SUMMARY:

- Modest gains end an upside week.

- SP600 steps up, joining NASDAQ, NASDAQ 100 as leaders.

- Economy shows more of the same: Some reports worse, some better, none yet returning to positive.

- Banks start returning TARP funds, but will the feds give up the this cash cow?

- Fail or just test? Many convinced 6-week rally will fail and it does have issues, but it also has strength.

- No hurry to chase new positions at this juncture: earnings saturation point likely to give market a test and create another good entry point.

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- Choppy start but techs grab the lead and lead to a new post-November high.

- JPM solid earnings fail to ignite financials.

- Philly Fed better, but not enough.

- Still moving into earnings, leaders still making new post low highs, still looking for stronger volume, but also still riding the move higher.

Upside, choppy week with rotating leadership, some key moves, and still light trade.

The first official week of earnings season is history and the market, despite some setbacks to some big name stocks that announced, managed an upside week. It was choppy, back and forth action with leadership rotating on a daily basis, but it was also an upside week that saw NASDAQ, NASDAQ 100, and SP600 make key breaks higher while SOX added to its previously minted higher high. There were still blemishes, namely volume remaining low overall despite expiration week, and that fueled those calling for an end to the rally. It didn't, but the move is longer in the tooth after 6 consecutive upside weeks so you have to exercise some restraint for a bit on the buy throttle.

TECHNICAL. Intraday the action was again, as was much of the week, more bullish. Fitting given the market was up for the week. After starting lower the indices recovered and rallied positive. They held gains on the close, but they were well off the highs as the last hour saw very choppy trade that almost upset the gains. Again, for most of the week the market was up and so was the bias. That is what you would expect, i.e. the upside bias holding sway for market trending higher.

INTERNALS. Solid upside breadth all week and it was decent Friday even with basically flat prices in the large cap indices (1.9:1 NYSE, 1.6:1 NASDAQ). The problem all week, even with expiration, was the lack of volume. There was downside rising volume Tuesday, stronger upside volume Thursday and Friday. It was not blowout volume in any event and it was expiration. Volume has been low all month outside of the surge higher the second session of April. The move continues but you could say on fumes as the buyers are still pushing it higher, but overall they are fewer in number than the sellers in February and the March buyers. As noted earlier in the week, low volume moves eventually run out of gas unless new buyers come back in. Thursday and Friday were not likely new buyers, just expiration shuffling. After a good test we may then see the buyers come back with some force. For now we have been riding the move higher as the leaders continue upside, but we are very aware of the low volume and how that can turn a market quickly.

CHARTS. Some key technical moves by NASDAQ as it cleared the January peak, by NASDAQ 100 as it tested its break over the January high and rallied, and by SP600 as it too cleared interim peaks in January and February. All made higher recovery highs though the NASDAQ and NASDAQ 100 were more significant. SOX already has the most significant move as it cleared the initial recovery peak, the November high. SOX broke that last week, tested this week, and then rallied further. SP500 did not have a bad week, but it was nothing compared to the above indices. It rallied up tot eh February peak though that does not give it a higher high on this move off the low. It did clear the October low at 850 and it made it to 875 on the Friday high. That is, as you recall, one of the resistance points on the road higher. The main problem is the lack of trade on the move. Hasn't stopped it yet but at some point the pendulum swings and it does so quickly.

LEADERSHIP. The same leaders moved up last week but the action was different. Leadership changed hands daily. It this is Tuesday it must be . . . techs, right? The leadership was still there but it was choppy with not group taking the reins and ride it for more than a session at a time. All groups moved up (techs, chips, financials, retail, metals) but they were not all rowing together on any given day and really driving big gains. That may be a distinction with no difference but with the length of this move, the breach of resistance on NASDAQ and company, and the light volume, it suggests we watch and be careful with respect to a quick test. Leadership remains sound, however, and it doesn't show any reason to suspect a rollover, just more of the stair-step moves, i.e. upside then testing, upside then testing.