主题：04/17/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 33.94; -1.85. After stubbornly holding 40 on the low of the range for 3.5 months, VIX has finally broken lower, moving below the January lows not seen since September 2008 when all of this s**t hit the fan. The market is finally dealing with it.

VXN: 35.29; -1.51

VXO: 34.97; -1.89

Put/Call Ratio (CBOE): 0.72; -0.03

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: 43.2%. The market rally has revved up the bulls, jumping up from 36.0% the prior week. The sharp jump in the bulls continues. Back over the 35% range considered bullish, but as noted this is not a bearish indication yet. Has to get up to the 60% to 65% level to be bearish. Dramatic rise from 21.3% in November 2008, the bottom on this leg. 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: 34.1%. Continuing their decline, falling from 37.1% the prior week. Well off the high on this run at 47.2%. Hit the 34's on the lows, falling from 38.5% and 46.2% in mid-December. Just slipped below 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. 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). That was a huge turn, unlike any seen in recent history.

NASDAQ

Stats: +2.63 points (+0.16%) to close at 1673.07

Volume: 2.361B (+3.71%)

Up Volume: 1.587B (-436.282M)

Down Volume: 811.385M (+477.394M)

A/D and Hi/Lo: Advancers led 1.59 to 1

Previous Session: Advancers led 2.6 to 1

New Highs: 24 (+2)

New Lows: 6 (-3)

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

NASDAQ edged over the January high Thursday and hung onto the move by its teeth Friday. Ironically the volume jumped both sessions, but it has to be discounted given expiration week. On the week NASDAQ tested the prior week's break over the February peak (after testing the January high) and rebounded to take out that next resistance. It was not a clear take down; as noted, it cracked above it and just managed to hold. It showed a hanging man doji Friday, indicating it was not a clear breakaway (duh). The question is how much of a test. NASDAQ has been rallying 2 to 3 sessions and then testing 2 to 3 sessions. This second leg has now covered 182 points. The first leg covered roughly 300 points so there is more room upside, but that the next resistance is the November peak and the 200 day SMA that are roughly coincident at 1785. Not likely to make that run on this particular bounce higher. Thus it likely tests back some from here or from a bit higher toward 1700.

SOX (0.12%) was flat Friday and indeed did not put much more of a gain in on the week above the strong move the week before. SOX cleared the November peak last week and held it this week, but it is just below the 200 day SMA and the action on the week was, how do you say it, choppy. The INTC earnings threw a monkey in the wrench and kept the gains modest. NONETHELESS, the choppy action that made little headway indicates the move is shifting gears for a test. SOX is the market leader and if it needs to test then the market will likely test as well.

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

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

SP500/NYSE

Stats: +4.3 points (+0.5%) to close at 869.6

NYSE Volume: 1.953B (+21.73%)

Up Volume: 1.152B (-99.861M)

Down Volume: 789.773M (+459.932M)

A/D and Hi/Lo: Advancers led 1.91 to 1

Previous Session: Advancers led 3.44 to 1

New Highs: 12 (-4)

New Lows: 63 (-6)

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

SP500 tested early in the week then rallied Wednesday to Friday. It beat 850 and then moved to next resistance at 875, tapping that on the high. It cleared the October low resistance but made it to the late January and early February peak. Quite a bit of resistance here and the volume is still very iffy. Reaction to the financial earnings was not negative as the financials continued higher, but the response to the earnings was not strong. To us that means the move on the financials needs a test sooner than later, and here at 875 is a possibility. It could ride higher on up to 900 to 920ish on this leg though the latter is getting out there a bit.

SP600 (+1.42%) was a standout on the week rising over 11% in the past seven sessions. It was the first NYSE index to pas the February high as well as the late January peak, making a higher high but not the critical higher high at the January peak up at 277, another 22 points higher. Small caps jumped up first off the November low, but they could not keep up the pace and as the economic details worsened the small caps turned into clear laggards. Now they are on the cusp of turning itself into a leader once more.

DJ30

The blue chips remain laggards. Up on the week but barely, unable to break through even the October low. Still below the February and late January peaks. Maybe it can breakout and rally again; it was an early leader in the rally. It has now given that up and is even having trouble tagging along.

Stats: +5.9 points (+0.07%) to close at 8131.33

Volume: 537M shares Friday versus 359M shares Thursday. Expiration volume jump. No big deal.

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