主题：04/20/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 39.18; +5.24

VXN: 39.71; +4.42

VXO: 39.71; +4.74

Put/Call Ratio (CBOE): 0.92; +0.2

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: -64.86 points (-3.88%) to close at 1608.21

Volume: 2.811B (+19.06%). Volume was up but as noted, some 750M shares were 'extra' JAVA shares on the ORCL takeover bid. Stripping that out it was down from Friday trade levels.

Up Volume: 1.107B (-480.176M)

Down Volume: 2.133B (+1.322B)

A/D and Hi/Lo: Decliners led 5.02 to 1. Pretty hefty downside breadth as the leaders in the rally were obvious targets for some selling.

Previous Session: Advancers led 1.59 to 1

New Highs: 6 (-18)

New Lows: 17 (+11)

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

After moving over the January high NASDAQ didn't have enough gas in the tank to push higher or to hold the gains. It gapped lower and sold to close at session lows, holding just over the 1600 support levels and the February and December peaks. A hard thumping on volume that was up overall but only up due to the JAVA takeover deal. NASDAQ is still in the narrow range between the February high and the January high, and that leaves it in good position to do some lateral consolidation and build a new shelf of support to make another run at the January peak and then the November high, the high after the harsh selloff started last September. A harsh start to the selling but not a collapse below key support.

NASDAQ 100 showed similar action as it failed just below the November peak and fell back toward the January and February highs. As with NASDAQ the large cap techs remain above support and can hold here and continue to consolidate for another run. We will see.

SOX (-5.74%) was not surprisingly the market leader; it tends to be more volatile. Gapped lower from the 200 day SMA and after just clearing the November peak, making a new high following the bear market selloff. It broke its March up trendline on the move and looks ready to test the break over the January peak, just 5 points away. The clear leader on the move higher, it is the clear selling target outside of the financials.

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

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

SP500/NYSE

Stats: -37.21 points (-4.28%) to close at 832.39

NYSE Volume: 1.761B (-9.82%). Volume was above average, but overall lower from the Friday expiration trade. No special volume here as trade was lower than three other April sessions excluding expiration Friday.

Up Volume: 61.707M (-1.09B)

Down Volume: 1.695B (+905.105M)

A/D and Hi/Lo: Decliners led 7.22 to 1. Small and mid-caps were down over 5% each and of course breadth was pathetic as a result.

Previous Session: Advancers led 1.91 to 1

New Highs: 5 (-7)

New Lows: 45 (-18)

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

Financials were gutted, some more than others (the broker dealers held up relatively well), but when the big names are hit as they were the large cap index is going lower. Unlike NASDAQ and company the SP500 broke below near support at 850 that marks the October low. It was not a total breakdown as it managed to hold over the 90 day SMA (826) and is back in that general range of slop from 800 to 850 that actually extends on up to 875. Lots of slop. Looks as if a test of 800 is a given and the question is whether it is a straight flop to that level or as discussed above it planes out some and forms the kind of consolidation an index can rally from.

The small cap SP600 (-5.50%), just off of making a higher high over the late January and early February peaks, turned over and fell right through those levels. It did manage to close right on the October closing low and that puts it right in the middle of the range from 230 to 250. As with SP500 that leaves SP600 in position to hold and consolidate and try to set up a shelf to rally from once more.

DJ30

Thanks to the flogging of the financials the Dow was knocked back from its run to the October low, falling back below the January and early February lows. It is still more or less in the range, but it is also in the laggard range. The Dow has lagged on the way up and it is lagging on the selling, losing just 3.56% on the session. DJ30 can't get ahead either way.

Stats: -289.6 points (-3.56%) to close at 7841.73

Volume: 453M shares Monday versus 537M shares Friday on expiration. Still above average.

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