主题：03/12/2009 Market View -- 宁子

SUMMARY:

- Classic upside action as market starts weaker, powers higher.

- Mark to Market hearings more of the same: will get back with you in a few weeks.

- Retail sales follow recent trend, beating expectations and showing nice revisions.

- White House backtracks further on its job creation, er, job salvation, prognosis.

- Economic signals continue to show improvement.

- Three upside sessions head into Friday and key resistance.

Soft start, strong finish as rally finds new buyers.

Futures started lower but you could tell it was just some softness after a good move, something you see when a rally starts coming into its own a bit. Jobless claims were worse than expected at 654K, putting in the sixth straight week above 600K. That did the futures no favors but it did not sink them. Why? Because retail sales fell less than expected (-0.1%) and January was revised up to 1.8% from 1.0%. Once more the data, while not blazing higher, is better than expected.

There was other news. GE had its credit rating cut to AA, but that was better than what most feared. GM said it 'didn't need no more stinking money.' We hear GM dealerships are overrun with customers right now thanks to promotions. Talked to three dealerships today and one had 32 appointments for today alone. LIBOR held the same levels since Tuesday. No turn down, but this is what happens before turns, i.e. the trend flattens. BAC, a la Citi, came out and said it was making money again as well.

Stocks started lower but then shortly after the open turned upside, and by midmorning they were positive. There was a boost along the way by the Market to Market hearings where congressmen took turns beating on the SEC to get some changes made to the accounting rules. The end result was another one of those 'we will get back to you in three weeks with some changes' letdowns that seem to surround any banking plan the past couple of months, but the momentum is clear: there will be some changes made. Nonetheless stocks continued higher with a remarkable, arrow straight 45 degree climb into the close. Good powerful bear market rally. It was not a follow through session. It had the strength with the 4% gains, strong above average volume, great breadth, and strong leadership moves, but it was too early to really show that the longer term buyers were in the market. Does being early matter? No. Back in March 2003 when the rally took off again there were several follow through caliber sessions in a row that started early and continued on through the fourth, fifth, seventh, and eight sessions. It needed a breather after that, but that is normal. In any event, on Thursday the bears certainly were not willing to step in front of this buying so early after gutting the market the prior 4 weeks.

TECHNICAL. Intraday action, as noted, was classically bullish: soft start, recovery to positive, then a steady, very straight beeline to the close with some 4% gains. The intraday action was even more bullish than on Tuesday.

INTERNALS. Solid 7.7:1 breadth on NYSE, 3.4:1 on NASDAQ. Volume jumped back up to match Tuesday levels on NASDAQ and rallied on NYSE to last week's levels. With the 4% gains on the indices this was follow through type data though it was a day early. Still needs to show something Friday to Wednesday, and given Friday is the fourth day of the move it likely will see some profit taking. Thus we look for next week for another follow through move to show that the longer term buyers have indeed taken up the torch at least for a bit. A follow through is not the end all confirmation of a new bull run but it is something that has to happen. You have to see the buyers step in and announce their presence with authority (from 'Bull Durham,' again; use that one often) after that initial surge from short covering.

CHARTS. All the indices, even SP600, cleared the 18 day EMA. After pausing Wednesday and showing those doji just below the 18 day EMA, they brushed by that resistance with relative ease. SP500 cleared the November intraday low then ran right into the November close at 751. After three upside days that was all it could do and that is the first key test of the move, and with Friday ahead it could be a place where the market takes a breather. Nothing unusual about that, but as we have seen, once the market decides to move in one direction it can surpass what we all thing is logical. It is a key level to test and SP500 is there. NASDAQ broke over its December low and it moving to its January bottom. Lots of resistance from here on up to 1500, and then at 1600 as well. It is a process of working back up, and there is no shortcut. SOX is solid, but it too has a lot of key points ahead. The key with SOX is that it never made a new low as we have been discussing, holding and bouncing to lead the market. Remember that it was leading in December and early January before the selling started. It was at a higher level than it is now. Thus while it is out in front it also has to clear that overhead supply as well.

LEADERSHIP. Techs and chips were breaking higher out of good patterns. Financials were up again on the bounce and the mark to market information. Segments of the financials are in good patterns, e.g. MS while most are just rebounding in their downtrends. Metals and commodities are trying to make breakouts, but the solid patterns are in a narrower group here as well. For now it is pretty much the same story: some good sectors with stocks breaking higher from good patterns while most stocks and sectors have to work on building foundations to move higher. That is all part of this rebounding upside then testing, rebounding and testing process.

Economic indications trying to show change.

Back in late 2002 we were writing about the improvement in the regional manufacturing data and improving metals prices even as the market sold down toward the October low, the second low in a big double bottom. Not all of the indices held the double bottom just as in this case, but SP500 came close and SOX was a relative outperformer as well. A little shades of bear markets gone by.

We are doing the same thing this time around, i.e. taking inventory of what is improving and what signals there are that the recession could be at least bottoming. As we have discussed, the regional and even national manufacturing reports, while still in contraction, are starting to post rising numbers. Not just one number but over the past three months all have put in two rising, better than expected results. Manufacturing is always a good leading indicator as orders are put in to make 'stuff' that wholesalers and retailers need to fill orders or demand they are seeing. On top of that, China reported its third straight month of gains in its own PMI number. Seems its direct stimulus plan is working.

What is that 'stuff' made out of? Typically some metals go into it. Copper looks as if it has put in a bottom and indeed the copper stocks (FCX) are rising off of their bottoms. Oil is also used in manufacturing, either in the machines, materials used, power generation, or fueling and lubricating the vehicles getting the materials and products in and out of the shop. Oil is up and down, but it is up and down in a range that now looks to have a bottom at 41. What would keep it up in a global recession? Some growing and anticipated strengthening demand.

Housing markets are actually clearing in some markets. We have mentioned California, Florida, and even Las Vegas, all hit hard by the housing bust, getting inventories cleared out and foreclosures down, characteristics of the housing market righting itself.

There is also a bonus thrown in. Consumers seem to be recovering from shell shock as a result of $4/gallon gasoline and all of the gloom and fear surrounding housing and the banking system. Same store sales the past two months, while still falling, are coming in much better than expected. Retail sales for February fell 0.1%, nicely above the -0.5% expected. January was revised up to +1.8% from +1%. Core retail sales were positive for the second straight month. Lower oil prices and a healing psyche are helping. They need to feel more comfortable about their jobs in order to make any lasting recovery, but given how bad things were the fact they have shown any kind of bottom at all is fairly amazing.

What about the financial markets?

So there are signs of maybe not a turn back up, but a cessation of the nosedive toward the bottom. You have to look at what some would consider meaningless blips in one number in the entirety of all the rest, and that shows some positives. Of course the real leading indicator is the stock market and the bond market.

Stocks start to rally before the data is convincing enough for even a sizeable minority to believe it is changing. The bond market shows a positive yield curve. Stocks have started to move, but there is no breakout yet that is definitive. There needs to be more leadership to show the move is driven by anticipation of future economic recovery. You want a broad move and one that is led by economically sensitive stocks. Techs and chips are moving well. They are tied to economic growth. Metals are perking up. Ditto for them. Small caps need help. They really need to get it together to really show something.

The bond curve is positive once more, and when it is, banks can make money. Banks can borrow from the Fed at basically zero and loan for 2%. Most people can make money in those situations and thus we see Citi and BAC saying things are looking profitable this quarter.

The incredible shrinking number of jobs the stimulus is to produce.

Last week the President was in an Ohio law enforcement station talking about the jobs the stimulus money had already saved in that precinct. The way the White House is dropping its guestimates of jobs saved, it may be those are the only jobs benefitted.

You know the storyline. Originally there were to be 4M jobs created to help overcome the recession the Administration inherited. Then it went to 4M jobs created or 'saved.' Then it fell to 3.5M to 4M. Then 3M saved, not created. The recession, which was inherited, was apparently worse than even expected.

Thursday the White House talked of 2.5M jobs saved even with the terrible recession, that was, as you know, inherited. Maybe this is part of the pump priming for Stimulus Part 2 where Congress will try to put in all other programs it was unable to enact over the past 25 years. Things are so bad from the recession (that was, of course, inherited) that more 'stimulus' in the form of government growth is necessary. Be careful.

MARKET SENTIMENT

VIX: 41.18; -2.43

VXN: 40.77; -2.04

VXO: 42.76; -2.79

Put/Call Ratio (CBOE): 0.71; -0.04

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: 26.4%. Down from 29.7% and at the lowest level since December 2008. Well down from 43.0%, the current top of the recovery as the market rallied off the November low. A rise from 25.3% in December and quickly starting to fall once the market encountered the January selling. Bullishness bottomed on this leg lower at 21.3% in November 2008. 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: 47.2%. Bounced back up after slipping last week. this is the peak for the run this year but is still below the December and October peaks. Hit the 34's on the lows, falling from 38.5% and 46.2% in mid-December. Still above the 35% level considered bullish for stocks, but as with bulls, still well below the level considered bearish for stocks. Bearishness hit a 5 year high at 54.4% the last week of October. 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. As with the bulls the jump in bears did its job after hitting 44.7% in the third week of March. 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). This is a huge turn, unlike any seen in recent history.

NASDAQ

Stats: +54.46 points (+3.97%) to close at 1426.1

Volume: 2.472B (+11%)

Up Volume: 2.16B (+600.91M)

Down Volume: 282.146M (-354.387M)

A/D and Hi/Lo: Advancers led 3.42 to 1

Previous Session: Advancers led 1.02 to 1

New Highs: 8 (+4)

New Lows: 101 (-6)

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

Another good surge after starting lower and testing the 10 day EMA on the opening low. Moved through the December low and is now approaching the January low (1434, 1440 closing). The 50 day EMA (1462) is right there as well. While you are at it, 1500 is some resistance as well. Lots of overhead supply and this is its first run since coming back to the November levels. It can make it up near the 50 day EMA, but then it is going to have to retrench some and set up for the next move. That is fine and indeed quite normal. Just have to watch how it tests, looking at volume and wanting the price losses to remain reasonable. In other words it needs to hold a lot of its gains.

NASDAQ 100 (+3.44%) started NASDAQ moving back up along with the chip stocks. Thus NASDAQ 100 is already past the January low and is moving in on the 50 day EMA (1173) and some price resistance at 1200. A move up to that point is a logical place to take a breather.

SOX (3.52%) has cleared the October low and is moving in on the key 225 level that stalled it in late February and then the 231 February peak and the January peak at 236. Looking for a run up to 225 and then a pause or consolidation.

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

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

SP500/NYSE

Stats: -29.38 points (-4.07%) to close at 750.74

NYSE Volume: 1.805B (+3.41%)

Up Volume: 1.695B (+648.582M)

Down Volume: 87.71M (-589.515M)

A/D and Hi/Lo: Advancers led 7.72 to 1

Previous Session: Advancers led 1.51 to 1

New Highs: 7 (+2)

New Lows: 112 (-13)

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

Through the November intraday low at 741 and closed at the November closing low. That is also the late February consolidation range (the bottom). This is the lick log for the financials. They have recovered the prior low and it should act as some resistance. The sellers to this point have not shown up to get in the way. May see a few of them out on Friday testing the waters.

SP600 (+5.71%) cleared the November intraday low as well and even the 18 day EMA as it also is ready for a rendezvous with the closing low and the late February consolidation where it will get its first test of the rebound. How the small caps respond will have our attention given their economic sensitivity.

DJ30

Broke through the 18 day EMA and to the February lateral consolidation. Has good momentum and the 7500 level where the November low resides (7552) is a good target for it on this rebound.

Stats: +239.66 points (+3.46%) to close at 7170.06

Volume: 488M shares Thursday versus 524M shares Wednesday. Lower volume but still well above average on the session.

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

Good momentum to the upside as the buyers are nosing around unmolested as the sellers have stepped back. After hours futures were lower as some profits were taken in the S&P futures trade. That could be a precursor of sorts to Friday. Three strong upside days taking SP500 and NASDAQ to some important resistance. Plenty of folks will be nervous about gains in hand and be more than willing to lock some down. We did a bit of that on Thursday. On a run higher early in the day we will look to take some more off the table.

If the market does come back some Friday before the close it likely won't tell us much about whether this is key resistance that will bring the sellers swarming in. The beauty for the bulls is that the bears will won't be too wild about rushing in either. Thus any downside will likely be just the buyers taking some gain, not the sellers piling back in.

The real test will be early in the week as SP500 takes on the November lows yet again. We thus won't be buying a lot tomorrow but there are some stocks we see still in very good position to move higher as stocks break higher in waves, a sign of strength for a rally. Friday is not our favorite day to buy anyway, and with three upside days we are even less inclined.

What we are going to be watching for are some good movers to pullback and test the run higher. We have some great positions that we will add to on a bit of a normal test. There are others that we are looking at on tests as well, e.g. BRCM, GS, some options on SOX. If they come back to support Friday we can dabble a few positions ahead of the new week but as Friday won't tell the whole story the risk level is up a bit.

So we are going look for opportunity to take some gain on further upside and if an opportunity presents itself we just cannot refuse, we can pick up a few positions in anticipation of next week.

Support and Resistance

NASDAQ: Closed at 1426.10

Resistance:

1428 is the mid-November 2008 low

1434 is the January low (1440.86 closing)

1460 is the February low

The 50 day EMA at 1462

The 50 day SMA at 1483

1493 is the October 2008 low & late December 2008 consolidation low.

The 90 day SMA at 1507

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

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:

1398 is the early December 2008 low

The 18 day EMA at 1386

1387 is the 2001 low

1316 is the November 2008 closing low

1295 is the November 2008 low

1271 from is the March 2003 low, 1253 intraday

1262 from July 2002

1192 is the July 2002 intraday low

1114 is the October 2002 low, the bear market low

S&P 500: Closed at 750.74

Resistance:

752 is the November 2008 closing low

768 is the 2002 bear market low

The 50 day EMA at 798

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

839 is the early October 2008 low

The 90 day SMA at 845

848 is the October 2008 closing low

853 is the July 2002 low

857 is the December consolidation low

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:

741 is the November 2008 intraday low

The 18 day EMA at 740

722 is a December 1996 low

681 is the June 1996 intraday peak, 673-71 closing

665 from August 1996

656-654 from January, April 1996

607-05 from November 1995

Dow: Closed at 7170.06

Resistance:

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

The 50 day EMA at 7681

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

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.

The 90 day SMA at 8192

8197 was the second October 2008 low

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:

7115 is the February 2009 closing low

The 18 day EMA at 7105

7008 from February 1997 closing peak

6528 is the November 1996 peak

6489 from December 1996 closing peak

6356 is the April 1997 intraday low

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

March 10 - Tuesday

January Wholesale Inventories (10:00): -0.7% actual versus -1.0% expected, -1.4% prior

March 11- Wednesday

03/06 Crude Oil Inventories (10:30): +749K actual, -757K prior

Treasury Budget, February (14:00): -$192.8B actual -$200B expected, -$175.6B prior

March 12 - Thursday

Initial Jobless Claims (8:30): 654K actual versus 644K expected, 645K prior (revised from 639K)

Retail Sales, February (8:30): -0.1% actual versus -0.5% expected, 1.8% prior (revised from 1.0 prior)

Retail Sales ex-auto, February (8:30): 0.7% actual versus -0.1% expected, 1.6% prior (revised from 0.9%)

Business Inventories, January (10:00): -1.1% actual versus -1.0% expected, -1.3% prior

March 13 - Friday

February Export Prices ex-ag. (8:30): -0.0% prior

Import Prices ex-oil, February (8:30): -0.8% prior

Trade Balance, January (8:30): -$38.2B expected, -$39.9B prior

Michigan Sentiment-Preliminary, March (10:00): 56.3 expected, 56.3 prior

Upside:

Play Date: 03/12/2009

CHU (China Unicom--$10.22; +0.67; optionable): Chinese wireless telecom

http://biz.yahoo.com/p/c/chu.html

After Hours: $10.14

EARNINGS: April 2009

STATUS: Cup. Strong volume Thursday, surging well above average as CHU broke over the 50 day EMA (10.05) that stalled it earlier in the month. It also cleared the early February high as well. Very nice 5 week cup formed off the January low and with the strong volume we are looking for CHU to continue the breakout move that started today. Coming to life in a big way as are many of the China stocks.

Volume: 2.936M Avg Volume: 1.837M

BUY POINT: $10.32 Volume=2.5M Target=$12.55 Stop=$9.59

POSITION: CHU GB - July $10c (52 delta) &/or Stock

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

Play Date: 03/12/2009

EEM (Emerging Markets ETF--$23.23; +0.86; optionable)

After Hours: $23.21

STATUS: Double bottom. Coming off the second bottom in a 10 week base, moving through the 50 day EMA (22.79) Thursday. EEM made us a lot of money on the downside in its plunge from last summer, and now it has set up to move higher as China shows improving growth and will try and drag the emerging markets with it. Looking for some more trade as it makes it continued move.

Volume: 77.711M Avg Volume: 78.124M

BUY POINT: $23.32 Volume=85M Target=$26.95 Stop=$21.88

POSITION: MBY FV - June $22c (66 delta) &/or Stock

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

Play Date: 03/12/2009

NVLS (Novellus Systems--$13.30; +0.79; optionable): Chip equipment

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

After Hours: $13.30

EARNINGS: 02/04/2009

STATUS: Double bottom. Flipping this play over as it continued higher and did not stall out. NVLS has formed a 5 week double bottom at the late December low. Thursday it jumped up through the 50 day EMA (13.13) and right up to the 'hump' in the middle of the base. On a continued move we pick up some positions, then see how it tests and pick up more if it gives us another good entry point.

Volume: 3.791M Avg Volume: 2.774M

BUY POINT: $13.57 Volume=3.8M Target=$15.85 Stop=$12.62

POSITION: NLQ FV - June $12.50c (65 delta) &/or Stock

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

Play Date: 03/12/2009

PZZA (Papa Johns Intl.--$23.28; +1.14; optionable): Pizza delivery

http://biz.yahoo.com/p/p/pzza.html

After Hours: $23.28

EARNINGS: 02/24/2009

STATUS: Cup w/handle. Another larger cup with handle, this one a 6 month one that looks to be starting the breakout move with Thursdays run higher. Solid break over the 200 day SMA (23) pushed PZZA to a new post-November closing high. The pizza is almost done, in the sense it is ready to deliver and eat.

Volume: 503.645K Avg Volume: 319.667K

BUY POINT: $23.49 Volume=480K Target=$27.84 Stop=$21.85

POSITION: ZZQ GX - July $22.50c (63 delta) &/or Stock

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

New Buy Point on Current Position:

Play Date: 03/12/2009

SOHU (Sohu.com--$48.08; -0.98; optionable): China internet services

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

After Hours: $48.08

EARNINGS: 02/09/2009

STATUS: Double bottom forming a handle. SOHU is in a 10 week ascending base, the last 3 weeks forming a short double bottom with handle, the handle starting Thursday. Good volume on the move up Wednesday, and with the Thursday move it may take another session or two of lateral movement before it breaks higher once more. Aggressive buy when it moves up over the Wednesday high. Breakout is over 50.

Volume: 1.584M Avg Volume: 1.252M

BUY POINT: $49.18 Volume=1.6M Target=$57.95 Stop=$47.08

POSITION: UZK FJ - June $50c (53 delta) &/or Stock

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