主题：03/04/2009 Market View -- 宁子
家园 03/04/2009 Market View SUMMARY:
- Market rallies from the open, gives back some late but still posts solid advance.
- ISM Services not following manufacturing's mini trend.
- Bond yields improving to the upside but LIBOR still moves higher.
- Same store sales hit the tape Thursday as bounce tries to extend.
Market surges, kindles hope, but this initial lacks some fundamentals and will need help.
Again we were looking for a best case scenario, i.e. a washout before the open. Last night's gloom turned to relative giddiness in the morning, however, as China was reportedly ready to announce a new stimulus plan on top of its third month of increasing PMI readings. China is still not back to expansion, but that didn't stop anything Wednesday.
Neither did a weak ADP monthly jobs survey (-697K versus -630K expected and -522K prior). Futures were up, stocks gapped higher, and they continued to ride higher until the last half hour of the session. The sellers were not dead yet and some traders took some rare upside gains made during the session, giving back roughly a third of the move. The indices still managed to close with gains ranging from 2.2% to 3% with SOX posted a 4.59% rally. In that last half hour a story circulated about an Administration meeting next week to discuss some sort of suspension of the mark to market accounting rules. Even that possibility could not fend off the late decline. Some financials sparked to the news but even with that they closed lower on the session. Up nicely, but the same old issues showed up.
Crude oil inventories fell (-757K versus 1M to 2M expected) and oil prices surged (45.13, +3.48). ISM Services could not follow the manufacturing side with its two months improvement; it was better than expected but dropped from January. The Fed Beige Book was more like a Grey Book of doom with the Fed saying the economy was worse since January and maybe, maybe, things get better late this year. Obama's housing plan was fleshed out a bit, but it was as expected with help only to certain people and it may or may not work in supporting prices.
None of this phased the market. The market had its own agenda. It was oversold, down 11 of the prior 12 sessions, just looking for a trigger. China gave it. Fitting as China is more free market oriented now than the US. Why did it put forth another stimulus package? In order to calm the new masses of capitalists in the country who have tasted success derived from free markets, and there are enough of them to throw the country into revolt. In any event, the market was way oversold, sentiment was extremely negative, and China gave the reason to bounce. So, the market bounced.
TECHNICAL. Intraday the move was high to higher. A gap up at the open, a rally into the last hour, but then a fade with a half hour left, a fade that cut a third or more off of the session highs. Not a pure upside blowout; faded off the high late, volume did not surge.
INTERNALS. Breadth was a solid 4:1 on NYSE and 2.3:1 on NASDAQ. Solid. New lows held nicely on the test this week. Volume was strong though lower. Not significantly lower than the recent selling sessions, but it was lower. Look at it this way: the market shot higher on a rally after a downside thrashing, but volume did not surge and show an overwhelming sanction by the buyers.
CHARTS. NASDAQ did what it had to do this week, i.e. hold the November low and start a bounce. All the indices gapped up some at the open, rant toward next resistance at the 10 day EMA and the November low/December low as the case may be. An upside day after a 'government dozen' to the downside (that is, 11 versus 12). In itself it was not that impressive with the late fade and lower volume, but a start on a market bounce that could lead to something more if it shows a follow through, breaks some resistance, and gets some leadership formed up.
LEADERSHIP. Ah leadership. The China trade stocks were up, e.g. metals, materials, commodities in general, energy, engineering, but then again so were all other sectors as the move was broad. There certainly were stocks surging back up, but many off of breakneck drops, i.e. just snapback rallies. There were individual leaders moving higher out of good consolidations, bases, or breakout tests, but as noted last night, there are not sectors in great shape that are breaking out en masse or are even setting up for that matter. Leadership will have to redevelop as this rally, if it can, continues higher, consolidates, and otherwise holds its low. The market has to establish some leadership for a sustained move. Without it a rally will fail unless it develops some patterns after a follow through and on a consolidation. It can be done, it has been done, it just has to do it again here. There was plenty of leadership ready to move in December and January, but then the market sold some in January and then tumbled in February. That did in the bases and now there is work to be done.
SUMMARY. We always let the market show us what it is made of. That said the day itself was not that convincing of a new rally. It can get there as noted, but the day was not an explosion upside. The intraday action was not that great as the indices gave back a third or more of the gains. Volume did not surge. Leadership is fragmented as far as strong patterns are concerned. As one commentator said, the market had its worst January, its worst February, and March started off bad, and all we got was this sorry 149 point rally that closed 100+ points off the high. It has to form up better as it bounces higher in terms of leadership and buying strength.
家园 THE ECONOMY ISM Services lower for the month again.
Services topped expectations with a 41.6 reading versus 41.0 anticipated, but that was lower than January's 42.9. Lower, but still higher than December (40.1) and November (37.4). October was 44.6. So, despite the lower than January reading, it is still over the November and December lows.
A stretch? Partly. But improvement is relative in this economy and it is always relative at prior economic bottoms. The manufacturing side is showing a couple of upside gains nationally and in some key regions. Service was down February but it is on an improving trend since November. Modest but turns are modest. They were modest back in late 2002 as well.
Bond yields improving, LIBOR not.
Bond yields were up ahead of the initial Geithner bank bailout conference. Then that and the stimulus package teamed up and drove yields from 1.03% on the 2 year and 3.03% on the 10 year back to the 0.8% and 2.7% levels respectively. That decline shows a lack of confidence in those programs accomplishing the intended goals. Well, that is not entirely true. With those programs it is not totally clear what the intended goals are. The stimulus package is a social re-engineering montage of all programs some have wanted to pass for thirty years but couldn't do it without a crisis when their party was in control. The slump was as much about that as the actual impact of the stimulus as the impact of the social engineering. Investors ran to the safety of US treasuries and yields fell.
Over the past week yields are returning to those prior levels. There are some positives with low gasoline prices, improving manufacturing reports, extremely high gloom, stories China was recovering, and now the new China stimulus. Indeed the 10 year moved back over 3% this morning though it closed at 2.99%. The 90 day Treasury yields 0.25%. That is a positively sloped bond curve.
Recall when the market was starting to buck back in 2007 the bond yield curve was inverted. It was inverted before that as well, but at that time we also had an oil surge. Those two combined are historically a sure lead in to recession. Recall people saying the economy was okay with $100/bbl oil? The inverted curve said no, despite Greenspan saying the inversion was caused simply by foreign treasury buying. He was chasing down a rabbit trail. The economy balked and then the other issues killed it.
Now the curve is positive and with some other indicators hinting at change the positives are adding up though you need to be good at fractions to do the math.
The reason you need to know math is that LIBOR is still moving higher, and until the credit issues are solved the economic issues, despite some improvement as discussed above, cannot really make a strong recovery. LIBOR 3-month was up again (1.28%) as was the 1-month (0.52%). They are just ticking higher, but that is how they came down, i.e. tick by tick. Thus these ticks higher are choking off credit bit by bit before they got to levels that would free up credit.
Thus all of the talk of stimulus and economic improvements have to be overlaid with the credit market. It is improved but it is not in a position conducive to wide open capitalism. Even with TALF getting officially implemented as of Tuesday, LIBOR continues higher. TALF helped pull LIBOR lower, yet it is not doing the job right now as other factors, e.g. effectiveness of our stimulus, are overshadowing it.
家园 THE MARKET MARKET SENTIMENT
VIX: 47.56; -3.37
VXN: 45.66; -3.7
VXO: 47.88; -4.23
Put/Call Ratio (CBOE): 0.95; 0
NASDAQ
Stats: +32.73 points (+2.48%) to close at 1353.74
Volume: 2.339B (-3.94%). Solid but not a big surge in trade on the start of a rebound attempt. Will have to show better if there is a follow through attempt early next week.
Up Volume: 1.897B (+899.628M)
Down Volume: 414.406M (-945.631M)
A/D and Hi/Lo: Advancers led 2.38 to 1
Previous Session: Decliners led 1.77 to 1
New Highs: 3 (-4)
New Lows: 318 (-257)
NASDAQ CHART: http://investmenthouse.com/ihmedia/NASDAQ.jpeg
Held the November low as it should have and gapped higher. That is what you would expect and what SP500 did originally. Closed 16 points off the high, a third of the session's gain. This is the start and now we see if NASDAQ has the stamina to last longer to the upside than SP500 when it tested its November low. If memory serves, SP500 was up one session after hitting its November low and then tumbled still lower. NASDAQ has the 10 day EMA (1389) and the December low (1398) as immediate resistance.
SOX (+4.59%) bounced of course. It moved back over the January low but hit the 18 day EMA and fell back to close at the 10 day EMA. Maybe it has a little double bottom to work off here. It needs it as there is thick resistance at 210, but this is a start as are all rebound rallies. SOX never broke its December low and of course never came close to its November low. despite its February breakdown from a promising pattern, it has shown relative strength to the other indices.
NASDAQ 100 CHART: http://investmenthouse.com/ihmedia/NASDAQ100.jpeg
SOX CHART: http://investmenthouse.com/ihmedia/SOX.jpeg
SP500/NYSE
Stats: +16.54 points (+2.38%) to close at 712.87
NYSE Volume: 1.797B (-5.51%). Same as with NASDAQ, decent volume on the session, but lower than the prior three selling sessions. The move back up was not a cannon shot.
Up Volume: 1.272B (+396.86M)
Down Volume: 500.175M (-511.28M)
A/D and Hi/Lo: Advancers led 4.56 to 1
Previous Session: Decliners led 2 to 1
New Highs: 4 (-1)
New Lows: 114 (-575)
SP500 CHART: http://investmenthouse.com/ihmedia/SP500.jpeg
Moved higher in the bounce, never testing the lower level from mid-1996, but it did more or less hold some psychological support at 700. As with NASDAQ, the 10 day EMA (741) and the November low (752 closing) as near resistance. Volume will need to come around on the continuing move or those levels are going to try and slam the door in its face.
SP600 (+2.61%) shows the same action, bouncing after undercutting the November low. It tapped toward the November intraday low on the session high and backed off. 207 to 208 is some serious resistance (November low) when and if it makes it there. That will be when you re-evaluate the move.
DJ30
The Dow is so far below the November lows that the initial objectives are the late February closing low and the 10 day EMA that are coincident at the moment (7114). Those are the prelims. Then it is on toward the November lows at 7500ish. A serious rally takes it there but it will need help from NASDAQ and SP500.
Stats: +149.82 points (+2.23%) to close at 6875.84
Volume: 464M shares Wednesday versus 445M shares Tuesday. Unlike the other indices Dow volume rose, but you look at the massive trade on GE and its loss on the session (one of the few) and you understand why DJ30 volume surged. Take away that downside volume and you have the same picture as NASDAQ and NYSE.
DJ30 CHART: http://www.investmenthouse.com/ihmedia/DJ30.jpeg
家园 THURSDAY Same store sales hit fast on Thursday morning in preparation for the Friday jobs report. The rally attempt finally started, and if the jobs report is just a bit better than expected that should provide a bit more fuel to the upside. But that is Friday. What happens Thursday?
Factory orders are out as well, and they were pathetic last month. Initial claims are out again and the wagers are whether it can hit 700K near future.
The market is on a technical move right now after a couple of weeks of selling. It is trying to take back some of the losses but the move, as noted, lacked a complete set of solid credentials. They can show up next week with a follow through and all will be forgotten . . . except the leadership. It has to come to the fore once more, and by that we mean quality stocks in good patterns. For the most part those fell apart over the past month.
Wednesday we entered some of the solid stocks and will continue to look for some opportunity in more as they bounce if we can get decent entry points. If there is a pullback early and a bounce back up, all the better.
Any bear market rally can be fast and furious but last a week or two. It can flare out in a day or two or three. Or it can lead to a follow through and then build into a longer term move, even the end of a bear market. If this one is going to do the latter it will need time to build up more leadership that will support the rally and then take it higher. That is a must at this point; many rally attempts from 2000 through 2002 failed because too few solid stocks in accumulation patterns.
We will add positions as good opportunities present, and at the same time keep an eye on where the indices find resistance or struggle. We want to be ready to take upside off the table if it starts to stumble and also be ready to take some more downside if things fall apart. The start of the rally was less than a barn burner, so we will be watching as the indices run up to first resistance. The 10 day EMA is resistance in well-entrenched downtrends. If it turns the indices back NASDAQ will have a struggle to hold the November low and we will play that downside. The point: we will play a much needed bounce but respect the current trend because until broken it is in charge.
Support and Resistance
NASDAQ: Closed at 1353.74
Resistance:
1387 is the 2001 low
The 10 day EMA at 1389
1398 is the early December 2008 low
1428 is the mid-November 2008 low
1434 is the January low (1440.86 closing)
1460 is the February low
1493 is the October 2008 low & late December 2008 consolidation low.
The 50 day EMA at 1495
The 50 day SMA at 1506
1521 is the late 2002 peak following the bounce off the bear market low
The 90 day SMA at 1525
1536 is the late November 2008 peak
1542 is the early October 2008 low
1565 is the second low in October 2008
1569 is the late January 2009 peak
1603 is the December peak
1620 from the early 2001 low
1644 from August 2003
1666 is the January 2009 peak
Support:
1316 is the November 2008 closing low
1295 is the November 2008 low
S&P 500: Closed at 712.87
Resistance:
722 is a December 1996 low
741 is the November 2008 intraday low
The 10 day EMA at 742
752 is the November 2008 closing low
The 18 day EMA at 767
768 is the 2002 bear market low
800 is the March 2003 post bottom low
804 is the low on the January 2009 selloff
812 is the February low
815 is the early December 2008 low
818 is the early November 2008 low
The 50 day EMA at 823
839 is the early October 2008 low
848 is the October 2008 closing low
853 is the July 2002 low
857 is the December consolidation low
The 90 day SMA at 858
866 is the second October 2008 low
878 is the late January 2009 peak
889 is an interim 2002 peak
896 is the late November 2008 peak
899 is the early October closing low
919 is the early December peak
944 is the January 2009 high
Support:
673 is a June 1996 peak
Dow: Closed at 6875.84
Resistance:
7008 from February 1997 closing peak
The 10 day EMA at 7115
7197 is the intraday low from October 2002 bear market
7282 is the October 2002 closing low in the prior bear market.
The 18 day EMA at 7358
7449 is the November 2008 low
7524 is the March 2002 low to test the move off the October 2002 low
7694 is the February intraday low
7702 is the July 2002 low
7867 is the early February low
7882 is the early October 2008 intraday low. Key level to watch.
7909 is the early January low
The 50 day EMA at 7917
7965 is the mid-November 2008 interim intraday low.
8141 is the early December low
8175 is the October 2008 closing low. Key level to watch.
8197 was the second October 2008 low
The 90 day SMA at 8322
8419 is the late December closing low in that consolidation
8451 is the early October closing low
8521 is an interim high in March 2003 after the March 2003 low
8626 from December 2002
8829 is the late November 2008 peak
8934 is the December closing high
8985 is the closing low in the mid-2003 consolidation
9088 is the January 2009 peak
Support:
6489 from December 1996 closing peak
Economic Calendar
These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.
March 2 - Monday
January Personal Income (8:30): +0.4% actual versus -0.2% expected, -0.2% prior
Personal Spending, January (8:30): 0.6% actual versus 0.4% expected, -1.0% prior
Core PCE, January (8:30): 0.1% actual versus 0.1% expected, 0.0% prior
Construction Spending, January (10:00): -3.3% actual versus -1.5% expected, -2.4% prior (revised from -1.4%)
ISM Index, February (10:00): 35.8 actual versus 33.8 expected, 35.6 prior
March 3 - Tuesday
January Pending Home Sales (10:00): -7.7% actual versus -3.5% expected, 4.8% prior (revised from 6.3%)
March 4 - Wednesday
February ADP Employment Change (8:15): -697K actual versus -630K expected, -522K prior
ISM Services, February (10:00): 41.6 actual versus 41.0 expected, 42.0 prior
Crude Oil Inventories, 2/27 (10:30): -757K actual versus 717K prior
March 5 - Thursday
Initial jobless claims (8:30): 650K expected, 667K prior
Q4 Productivity-Rev. (8:30): 1.1% expected, 3.2% prior
Unit Labor Costs, Q4 (8:30): 3.8% expected, 1.8% prior
Factor Orders, January (10:00): -3.5% expected, -3.9% prior
March 6 - Friday
February Average Workweek (8:30): 33.3 expected, 33.3 prior
Hourly Earnings, February (8:30): 0.2% expected, 0.3% prior
Nonfarm Payrolls, February (8:30): -650K expected, -598K prior
Unemployment Rate, February (8:30): 7.9% expected, 7.6% prior
Consumer Credit, January (14:00): -$5.0B expected, -6.6B prior
- 复 THURSDAY
家园 THE PLAYS Still looking for upside in the event the bounce continues with some stronger technicals
Upside:
Play Date: 03/04/2009
GLD (Gold ETF--$88.99; -1.05; optionable)
After Hours: $89.35
STATUS: Test 50 day EMA. We were waiting for GLD to make its pullback after gold hit 1000/ounce. Had to get there then had to sell off. With GLD testing the 50 day EMA (88.58), this is a good time for us to start watching it and looking for a break higher on rising trade. Key support level and if we get the move we will be ready to start some positions.
Volume: 19.875M Avg Volume: 17.956M
BUY POINT: $91.44 Volume=25M Target=$97.45 Stop=$88.31
POSITION: GLD DL - Apr. $90c (51 delta)
http://www.investmenthouse.com/ci/gld.html
Play Date: 03/04/2009
RIO (Companhia Vale Do Rio Doce--$13.78; +1.51; optionable): Steel and iron
http://biz.yahoo.com/p/r/rio.html
After Hours: $14.25
EARNINGS: 05/06/2009
STATUS: Double bottom. This is something of an intricate pattern, but there is a sequence of bottoms that often lead to further upside. In November and December RIO put in a pair of bottoms, forming a short double bottom. It rallied off that and then made a higher low in late December. Moved up over the next 6 weeks, though the action was up and down, then came back to test. Over the pat tow weeks RIO has formed another short double bottom, this one on top of the December low. Wednesday RIO gapped on the China news, but with this pattern we like RIO attempting to test its February high up at 17.50.
Volume: 65.076M Avg Volume: 39.754M
BUY POINT: $14.11 Volume=40M Target=$16.95 Stop=$13.12
POSITION: RXO FF - June $13c (65 delta) &/or Stock
http://www.investmenthouse.com/ci/rio.html
Play Date: 03/04/2009
RRC (Range Resources--$37.34; +2.10; optionable): Oil and gas
http://biz.yahoo.com/p/r/rrc.html
After Hours: $37.34
EARNINGS: 02/24/2009
STATUS: Trading range. RRC made a higher low in its 3.5 month trading range this week and is moving higher, clearing the 50 day EMA (35.83) Wednesday on a third day of solid trade. Good money flow working for it. Looking to move into RIO as it continues the move. A higher low typically precedes the breakout from a trading range.
Volume: 3.632M Avg Volume: 3.08M
BUY POINT: $37.82 Volume=3.5M Target=$43.95 Stop=$35.28
POSITION: RRC DU - Apr. $37.50c (48 delta) &/or Stock
http://www.investmenthouse.com/ci/rrc.html
Play Date: 03/04/2009
SWHC (Smith & Wesson--$3.70; +0.30; optionable): Firearms
http://biz.yahoo.com/p/s/swhc.html
After Hours: $3.55
EARNINGS: Announced 12/15/2008. Should announce mid-March but not confirmed
STATUS: Cup w/handle. Surged higher the last week and one-half of February, building the right side of its 6 month base. Made it up to the 200 day SMA (3.69) and stalled. Did not tank, instead working laterally over the 10 day EMA (3.37), forming the handle and setting up for a breakout move. Strong volume the past two weeks. Just waiting for the breakout move to enter the play.
Volume: 1.182M Avg Volume: 660.07K
BUY POINT: $3.91 Volume=1.2M Target=$5.35 Stop=$3.55
POSITION: UWJ FZ - June $2.50c (82 delta) &/or Stock
http://www.investmenthouse.com/cd/swhc.html
Watching these continuing plays for Thursday:
AMZN
BR
MOS
SIGM