主题：03/03/2009 Market View -- 宁子

SUMMARY:

- Don't get the washout and thus a quiet session, but NASDAQ holds the lows again.

- Where did the pending home sales go?

- After hours warnings take futures lower, hold out possibility for that morning washout that leads to a rally.

Geithner speaks and the market doesn't crash. Doesn't do much of anything.

Maybe it was a moral victory that Geithner talked to Congress about the proposed budget that raises taxes on the jobs creators, and he didn't look like a rookie as in his prior appearances. He didn't offer anything new substantively, but he didn't sc**w the pooch either (just watched 'The Right Stuff' the other day).

It didn't hurt that Bernanke softened up the crowd with announcements about the TALF (the consumer loan, small business loan aid plan) and that TALF purchases were starting (finally). Recall that was the one facility that actually worked to calm LIBOR. When Paulson decided to change horses and use TARP money for direct giveaways to banks, LIBOR revolted. Bernanke came out the TALF and LIBOR slid lower as easily as a veteran skier on a bunny slope. LIBOR is now bucking again, however, given the stimulus package, the lack of a defined bank plan, and general hostility toward the financial markets and business. Today it was the low end's turn to tick higher with the overnight up to 0.32%, the 1-month up to 0.51% while the 3-month held steady, though elevated again, at 1.27%.

Futures were up despite the Monday dive lower. No washout as we had wanted. AAPL announced some new mini computers and edged higher. XLNX reported guidance that was crappy but not as crappy as originally thought. It rose from the Monday selling. Yes, that is how bad things are. It is like you rewarding your kid who comes home with a 55 on a key test and says he expected a 40. The kid should get a commendation, after a whipping, for creative thinking.

It was enough, however, to get futures up and start the market higher. Then it was up and down and down and up all session that got the market nowhere by the close.

TECHNICAL. Choppy was the word for the session as the indices churned in a narrow range. A good rally in the afternoon session pushed NASDAQ to a new session high, but then the old habits took over and NASDAQ along with the other indices gave it back. A day of constant back and forth between bulls and bears, but note that there was no sustained surge by NASDAQ off the test of the November low.

INTERNALS. Quite benign breadth for a change after massively negative levels Monday. New lows contracted a bit and again we note they never did top or really come close to the November levels even on Monday when the NYSE indices were divining new lows and NASDAQ tested its old low. Volume was a different story. It was mixed, i.e. up on NASDAQ and lower on NYSE, but once again levels were very high on both. So we have the big indices down on rising trade. Without further analysis you say another distribution day on top of Monday. But, NASDAQ held its low again and the range was relatively narrow. Holding that low in a narrow range is a sign of positive churn, i.e. where the buyers are stepping in as fast as sellers are selling. That actually suggests there is accumulation taking place.

CHARTS. The key was NASDAQ as it is the only major index covered on the financial stations that is holding its November low. It held it again. The NYSE indices lost modest ground while SOX and NASDAQ 100 posted modest gains. Right before the last selling to end the session, the indices were showing candlestick chart doji, an indication of a potential momentum change. By the close given that late selloff, however, they were not as prominent on NASDAQ. The NYSE composite, DJ30, and to a lesser extent SP500, showed some loose doji. NASDAQ holding its lows, NYSE showing some doji action, high volume churn at support, five consecutive sessions to the downside on SP500. If the market opens strongly lower Wednesday, the market is primed for a washout reversal and rally back up toward resistance.

LEADERSHIP. Looking for some. China continues to look promising, but it is having issues with some of its stocks. Chips are good and bad. Some metals are okay, most are crappy, at beast looking for an oversold bounce. Seems most every sector has the good in it as well as the bad. No clear cut leadership sectors as in January (chips, metals, agriculture). What that tells us is that if there is a bounce it is likely just a relief bounce inside an overall downtrend. Now any rally attempt can lead to leadership setting up new bases for a more sustained move higher, but this market leadership has some work to do before it gets to that point.

Pending home sales are not really pending.

In January contracts for homes fell 7.7%, more than doubling the -3.5% expected. In December sales jumped 4.8%, quite the surprise. Or really, the originally reported 6.3% was a real surprise. December was written lower and you don't like to see downside revisions. What does it mean? The housing market is still in the pits, and as long as credit remains locked up buyers and sellers will remain locked out.

MARKET SENTIMENT

VIX: 50.93; -1.72

VXN: 49.36; -1.56

VXO: 52.11; -2.4

Put/Call Ratio (CBOE): 0.95; -0.12

NASDAQ

Stats: -1.84 points (-0.14%) to close at 1321.01

Volume: 2.435B (+3.97%). Some churn at the November low, suggesting the buyers stepping up to the plate and preventing further selling for now.

Up Volume: 996.93M (+915.763M)

Down Volume: 1.36B (-889.734M)

A/D and Hi/Lo: Decliners led 1.77 to 1

Previous Session: Decliners led 7.6 to 1

New Highs: 7 (+4)

New Lows: 575 (-13)

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

NASDAQ held the November low again but it did not show much upside pop. Sure futures were up and it opened higher, but it could not push any further as a late session rally came up short and turned over. Now this can be read as a sign of weakness. Even SP500 jumped higher when it tested its November low for the first time. NASDAQ could not put that together. Maybe at this point the market is just too beaten up to care. NASDAQ did hold that low on some churn. It was down after hours. We could actually get the washout a day later than we wanted.

SOX (+1.26%) held its February low and showed a nice doji. That suggests SOX could provide a momentum bounce back up toward the 50 day EMA. Overall its pattern is a broad umbrella top that suggests more downside. Ambiguous and not one that you treat as anything other than a trade on a rebound. Don't love it enough to give up on a downside play, but what SOX does depends upon what NASDAQ does here at the November low.

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

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

SP500/NYSE

Stats: -4.49 points (-0.64%) to close at 696.33

NYSE Volume: 1.902B (-3.91%). Lower but still very strong.

Up Volume: 874.808M (+836.707M)

Down Volume: 1.011B (-903.235M)

A/D and Hi/Lo: Decliners led 2 to 1

Previous Session: Decliners led 22.88 to 1

New Highs: 5 (-4)

New Lows: 689 (-134). The NYSE indices moved lower but new lows shrank. Again, a positive for some kind of bottom trying to form.

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

Tried to rally but gave it up and closed lower yet again. Definite distribution all week but after 5 days down from the weeklong lateral consolidation it is way oversold and due a bounce to test the November low and the coincident 10 day EMA (748). It closed below a psychological level at 700, and that typically leads to a rebound particularly if it comes after a string of downside moves. A washout to the downside here as well would set up a reversal session.

SP600 (-3.52%) is really getting clocked. This index is heading lower faster than the other indices, and with its economically sensitive stocks, it is forecasting no economic recovery. Thus any bounce at this point is just a relief bounce. With such bad leadership, that really suggests just a relief bounce.

DJ30

As with SP500, the Dow tried to bounce but ended up lower. Five sessions downside here as well as the lateral consolidation just over a week back caved in. DJ30 is in a continuing downtrend after breaking lower in early and mid-February, and any bounce takes it back to the 10 day EMA (7168) where it like fails. If it is not going to do that it will have to really show some true strength, a follow through, etc. Long way to go.

Stats: -37.27 points (-0.55%) to close at 6726.02

Volume: 445M shares Tuesday versus 568M shares Monday. Lower but still very heavy volume.

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

Tuesday the market bounced in the morning, releasing the selling pressure and preventing a good sharp washout session. The market bounced but gave it up late. Pretty innocuous session though it was notable NASDAQ could not put any moves on its Monday drop to the November low.

The pressure may be back on Wednesday, however, as after hours PALM projected terrible guidance, half of expectations. Who cares about PALM, right? Well, PALM is kind of the new poster child for a recovering tech. Its pattern was massively improved, showing a nice cup with handle over the past 6 months. There was 'buzz' about its new products. More like a freight train roar coming down the tunnel.

GOOG was also in the after hours news as its CEO 'strikes a somber note, looks ahead to 2010.' In market speak, GOOG is writing off any hopes of recovery or growth in 2009 and is hoping 2010 is better. In football terminology that is dropping back and punting on third and 10.

After hours stocks were down across the board on both NYSE and NASDAQ. They scratched back some late, but still well down from closing levels. As noted above, perhaps Wednesday we get the washout session that rebounds the market on a short term basis. Five sessions down on all large cap indices and a sharp selloff in the morning would likely lead to a rebound.

If that plays out we are going to look at closing out the last downside positions on the early close lower and then looking at some of those upside trade vehicles looked at Monday, e.g. SPY and QLD. This time we might see those test the next support levels (November low on QLD, mid-1996 peak on SPY) hit and send the markets rallying sharply higher. We will look to play that move and then see how the downside sets back up. With SP500, SP600 and DJ30 in continuing downtrends, a rally up to the 10 day EMA is likely all they will muster, perhaps the November lows. Of course if NASDAQ makes a major move it can drag them back up with it. that will remain to be seen, however, and for now we have to treat market moves upside as relief bounces at first and then see how they develop from there.

Support and Resistance

NASDAQ: Closed at 1321.01

Resistance:

1387 is the 2001 low

The 10 day EMA at 1397

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 1501

The 50 day SMA at 1510

1521 is the late 2002 peak following the bounce off the bear market low

The 90 day SMA at 1528

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 696.33

Resistance:

722 is a December 1996 low

741 is the November 2008 intraday low

The 10 day EMA at 748

752 is the November 2008 closing low

768 is the 2002 bear market low

The 18 day EMA at 774

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 827

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 860

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 6726.02

Resistance:

7008 from February 1997 closing peak

The 10 day EMA at 7168

7197 is the intraday low from October 2002 bear market

7282 is the October 2002 closing low in the prior bear market.

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 7959

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 8340

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): -630K expected, -522K prior

ISM Services, February (10:00): 41.0 expected, 42.0 prior

Crude Oil Inventories, 2/27 (10:30): 717K prior

March 5 - Thursday

Q4 Productivity-Rev. (8:30): 1.6% expected, 3.2% prior

Unit Labor Costs, Q4 (8:30): 3.4% expected, 1.8% prior

Factor Orders, January (10:00): -2.1% 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

With 5 days down the indices can give a reversal if they open lower. We will look to play a move with some well-positioned upside (e.g. AMZN), but we won't forget about some downside plays with the QID, DXD, SDS after a bounce higher runs out of gas.

Upside: Looking at some stocks in position to move as they can move quickly with an oversold bounce and give us a quick run to some profits before the next resistance and potential stall.

Play Date: 03/03/2009

BIDU (Baidu.com--$144.59; +7.37; optionable): Chinese internet search

http://biz.yahoo.com/p/b/bidu.html

After Hours: $141.10

EARNINGS: 02/18/2009

STATUS: Ascending base. Making a higher low over the 50 day EMA (135.30) after last week's break above resistance in a 13 week pattern, a move that made us some money, BIDU is back testing, setting up the next move. It bounced up Tuesday off the 50 day and right up to the resistance point on the close. Looking for a bit more volume as BIDU makes the next break higher and gives us a nice entry point. Not all of China is as good as it was but BIDU is.

Volume: 2.12M Avg Volume: 3.02M

BUY POINT: $146.22 Volume=3M Target=$164.95 Stop=$139.32

POSITION: BDQ DI - Apr. $145c (57 delta) &/or Stock

http://www.investmenthouse.com/ci/bidu.html

Play Date: 03/03/2009

NFLX (Netflix--$36.36; +2.01; optionable): Music, video downloads

http://biz.yahoo.com/p/n/nflx.html

After Hours: $36.04

EARNINGS: 01/26/2009

STATUS: Test 50 day EMA. We were looking to play NFLX to the downside and Monday it gapped lower so we held off. Tuesday it reversed on very strong volume, and though it closed well off its high this was quite a reversal session. Still have an eye out for the downside, but the power of the upside move was impressive. If NFLX can continue that move we will move in on the upside once more.

Volume: 7.389M Avg Volume: 1.69M

BUY POINT: $36.88 Volume=2.2M Target=$42.45 Stop=$34.30

POSITION: QNQ DG - Apr. $35c (62 delta) &/or Stock

http://www.investmenthouse.com/ci/nflx.html

Play Date: 03/03/2009

SIGM (Sigma Designs--$14.13; +1.23; optionable): Semiconductors

http://biz.yahoo.com/p/s/sigm.html

After Hours: $13.89

EARNINGS: 03/04/2009 after the close

STATUS: Cup w/handle. SIGM peaked in December 2007 and fell into a long decline that sliced off 85% of its value. It started the current base after the September as it rolled over in September. SIGM has formed a solid 6 month cup with handle base. It broke sharply higher in mid-February then moved laterally since, just below the 200 day SMA (13.70). Tuesday SIGM broke through the 200 day on very strong volume, rising ahead of earnings. It is an aggressive play to move in ahead of earnings, but the aggressive can take a partial ahead of the close and then see how the earnings come out. If SIGM does not gap away on earnings then we will see if it can continue the steady build and give us an entry point.

Volume: 1.398M Avg Volume: 557.284K

BUY POINT: $14.48 Volume=900K Target=$17.88 Stop=$13.22

POSITION: MQN GC - July $15c (44 delta) or MQN DV - Apr. $12.50c (72 delta) &/or Stock

http://www.investmenthouse.com/ci/sigm.html

Play Date: 03/03/2009

XLNX (Xilinx--$17.37; +0.66; optionable): Semiconductors

http://biz.yahoo.com/p/x/xlnx.html

After Hours: $17.39

EARNINGS: 03/03/2009

STATUS: Ascending base. Looking at XLNX again as it rebounded Tuesday, keeping its ascending base working, making a higher low again and holding over the 50 day EMA (17.29) on the close. Earnings were lower but XLNX projected sales that, while rather crappy, were much better than originally expected. It gapped higher but had a hard time hanging onto all of the gain. This action keeps the pattern in good shape and XLNX is in position to run higher on a market rebound. Strong upside volume the past week shows buyers ready to push it higher.

Volume: 13.096M Avg Volume: 8.397M

BUY POINT: $17.89 Volume=10M Target=$20.77 Stop=$16.88

POSITION: XLQ FW - June $17.50c (57 delta) &/or Stock

http://www.investmenthouse.com/cd/xlnx.html