主题：03/16/2009 Market View -- 宁子

SUMMARY:

- Financials lead another rally, until they run out of gas and market slides.

- New York Manufacturing cannot follow the lead from other regions, contracts at record pace.

- Factory output falls for fourth straight month.

- LIBOR 3-month continues its tick lower

- NASDAQ making its test, will need to step up to lead the next bounce.

Financials rush out early but no one else follows and market finishes lower.

The financial stocks were up again, gapping higher as Barclays was the next to say that 2009 was off to a good start. With borrowing rates at zero and loan rates at 2%, they should be making good money. OPEC held production levels steady and oil fell initially, though it did not last (47.18, +0.93). Financials were up and they pulled the rest of the market with them despite a reluctant NASDAQ as techs held back with modest gains, with leaders ready to make a second day of pullback to test the move higher that they led last week.

Nonetheless, despite a record weak New York PMI, record weak production and capacity, and weak Treasury 'TIC' data (foreign buying of US Treasuries), stocks rallied and NASDAQ stocks followed them higher. Even as the NYSE indices hit 2+% gains and the notion of a follow through session seemed to be somewhat reasonable, however, technology started slipping after lunch. It already sold back midmorning but fought back into the game. After lunch, however, stocks stumbled and it was a race to the bottom. NASDAQ started in the downside lead so it made the move to negative rather quickly. By the close the techs were sporting near 2% losses with the NYSE indices giving up their 2% gains and closing flat. A mirror flip from the morning to the afternoon, but in the end all indices were lower.

TECHNICAL. Intraday there was that gap higher by financials and then the rollover to close negative. Obviously not the bullish action seen of late. Question is, after the run by financials is this just a pullback or something more sinister given the pattern shown on the indices? Have to look at the other technical features.

INTERNALS. Very tame as NYSE breadth was modestly positive but it was backpedaling into the close, giving up 4:1 positive breadth. NASDAQ breadth hit 2:1 intraday but it gave it up along with the breadth. Nothing really bad there, however. NASDAQ volume was up but still below average as techs stalled and faded to test their break higher. The low volume makes this look like a leadership test of a break higher, and that is a positive. NYSE volume surged to the highest level since last Tuesday when the oversold rally started. While NASDAQ trade remained tame, the NYSE volume could be an issue for the upside. Financials were pushed higher early on, and higher volume was fine with that move. Problem is the financials reversed and closed lower, and even though just modestly so the volume can signal a reversal and is something watch for.

CHARTS. As noted, NASDAQ sold back on average to below average volume and is still holding near support as well as above the December lows. Modest distribution but with the below average volume that is nothing major. Similar action on SOX as it sold back and held above its 50 day EMA. It is in good position here to form a handle to its kind of double bottom formed from early February to the present. SP500 rallied further but it did not come near the 50 day EMA or the January consolidation lows. Instead it hit the peaks in the late February lateral move and rolled back. Volume was up. The action shows a evening star on the candlestick pattern, and that is a signal of some form of pullback. With the financials gapping higher and then turning over on stronger volume, a pullback is coming. The key is how severe it will be, i.e. just a test as NASDAQ's action would indicate, or something more nefarious. SP500 didn't get as high as it needed to in order to start a good test. It has left itself little room to the downside as it closed at the November closing low. It has some support at the November intraday low and the short term moving averages, but the point is it doesn't have much of a cushion to test and make a higher low. DJ30 shows a similar pattern. It failed to make the November low before showing the same potential reversal indication as SP500. SP600, the small caps, failed at the November closing low, failing to even get past the last wrung of support on the selloff. It may not do much more before rolling downside more (keep the IWM play in mind).

LEADERSHIP. Commodities of all kinds were stronger (copper, sugar, corn, beans, etc.) on the idea of re-inflating China and the emerging markets. They were up, but they still gave up a pretty good chunk of their gains. Techs and semiconductors are in pullbacks after leading higher from good patterns last week, and as noted, they are pretty nice looking pullbacks thus far. Another day or partial day of a test gives them a 1-2-3 pullback of sorts and puts them in position to make the next move higher. The market will really need them to step up and make that leadership move.

SUMMARY. NASDAQ and SOX, leaders in the move higher, were down early, but this was an anticipated pullback. Thus far they look to be doing it right and could give us new buys after a bit more testing. NYSE financials have you somewhat concerned with that higher volume reversal after a gap higher, but if the techs and chips hold and resume leadership as they did before that will help prop up the financials as they take a needed breather themselves.

New York Manufacturing fails to keep pace with other regions as it slides again.

Chicago and the national manufacturing reports, while not showing positive moves the past two months have shown improvement in that they fell at a slower and slower pace. That is what you watch for initially to see a sign of an economic turn.

Well, NYC did not keep the east coast in the game with the rest of the regions (sans Philly). It fell to -38.23, much faster than the 030.8 expected and 34.65 in February. Indeed, it was the fasted contraction pace on record (but that is only since 2001 as this is a new index, so consider it has only 1 recession, and then just part of one, as a guidepost).

What does it mean? It puts a lot of emphasis on the other regions to come and whether the continue to show improvement or slam the modest ticks higher. No one data point is determinative of course, and it is always a series of gains and declines just like a trend higher, so we just have to hang in there and see what the next reports show.

Factory production and utilization continue to languish.

Production from factories and mines fell 1.4%, and while that was not as much as the 1.9% January decline the year over year 11% drop was the largest since 1975. Capacity fell to 70.9%, not a new low on this decline but matching the lowest level on record.

Motor vehicle and parts production rose 10% after a 25% January dive. Computers and machinery orders slumped again, not helping the view of a global economic recovery near at hand.

But commodities are rising even as some reports trend lower.

Yes, yes, but these are not the cutting edge, leading indicators. If you look at commodities across the board they are moving higher. Not necessarily the stocks, but the items themselves and that shows anticipated demand. The stocks will follow such as FCX has done for us. Thus despite the depressing production and utilization data there is a perceived need for the very stuff that countries are built out of and the basics the people need to make the goods they use in everyday life.

LIBOR has a little streak going here, but needs much more.

We have been on the LIBOR path for a long time, watching it fall after the original TARP, interbank loan guaranty facilities, and the many Fed actions. Then we watched it jump back when the Paulson Treasury abandoned buying toxic assets before it started and gave away money to banks. It took the Fed's TALF initiative to support mortgages and small businesses to turn it back down. A nice steady decline down to near 1% on the 3-month dollar LIBOR. That was getting closer to where it needed to be.

Then the Obama Administration came out with spending programs, social reorganization labeled as stimulus, hostility toward business, trillions in spending, and, despite repeated statements it would produce one, no bank plan. From near 1% to 1.33% in a matter of just a few weeks. What was thawing refroze again.

Then the tone softened a week ago. The market was ready to bounce and it did, getting a trigger from a potential change to the mark to market rules and Geithner finally outlining some concrete plans for the bank bailout. After rising to 1.33% the 3-month dollar LIBOR held for three days and then on Friday ticked lower to 1.32%. Monday it ticked lower again to 1.31%. Drip, drip, drip. Some melting from the icicles.

That puts the TED spread (3-month LIBOR minus 3-month US Treasury) at 1.09%. Not much change, however, because the 3-month Treasury dropped in price to 0.22%. We want to get TED down to 0.50% or so to make things flow reasonably smoothly. There is still a long way to go, but if you get 3-month LIBOR back near 1% you are making a solid dent in that. Unfortunately, we lost a lot of ground over adjusting to the Obama administration before it figured out you do have to talk nicely to the markets, particularly when you pass trillions of dollars in spending programs without reading them. It is, alas, a confidence thing.

MARKET SENTIMENT

VIX: 43.74; +1.38

VXN: 43.54; +2.29

VXO: 44.71; -0.37

Put/Call Ratio (CBOE): 0.8; +0.09

NASDAQ

Stats: -27.48 points (-1.92%) to close at 1404.02

Volume: 2.142B (+3.78%)

Up Volume: 603.38M (-612.763M)

Down Volume: 1.54B (+741.675M)

A/D and Hi/Lo: Decliners led 1.23 to 1

Previous Session: Advancers led 1.33 to 1

New Highs: 8 (+1)

New Lows: 37 (+4)

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

Gapped higher as the financials were happy once more with a new bank saying it was making money. Bounced up into the January consolidation a bit, came close to the 50 day EMA (1459) and then giving it up. It was lagging early on as it sold off midmorning while the NYSE indices were putting on 2% moves. It rallied back into early afternoon close to session highs, then it gave it up for good on the rest of the session. It closed just over the December low on rising but below average volume. Slight distribution but more of a pullback after a good run with many solid stocks pulling back as well either for their first day after the run higher or their second day as many early leaders eased back some Friday. With the financials reversing on some volume it will be up to the leadership in NASDAQ to hold the line on the test, do its job, and then try the next leg higher.

SOX (-3.61%) turned over as well, giving up some of its solid gains but holding easily over the 50 day EMA and SMA. It will likely test more Tuesday toward those levels, maybe a bit lower, and then we will look for a renewed break higher. SOX could slide laterally and slightly lower for a couple of sessions, form a handle shakeout to its 6 week base, and then break higher again with a good foundation below it.

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

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

SP500/NYSE

Stats: -2.66 points (-0.35%) to close at 753.89

NYSE Volume: 1.898B (+17.82%)

Up Volume: 1.087B (+91.941M)

Down Volume: 801.308M (+200.029M)

A/D and Hi/Lo: Advancers led 1.38 to 1

Previous Session: Advancers led 1.54 to 1

New Highs: 7 (0)

New Lows: 66 (+4)

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

Covered it earlier. After a jump higher to the top of the late February laterally move it reversed and showed a doji on the candlestick chart, something of an evening star symbol that can indicate the end of a run. Not necessarily the tar and feathering of the move, but a change in momentum and the run has to take a rest. The issue was the volume as it jumped up to a level that matched some of the highest volume in the past month outside a few huge days as it touched a down trendline from the mid-September peak to the early February peak. That volume at that trendline shows a lot of turnover with sellers matching the buyers blow for blow and indeed taking control of the session. That kind of churn can signal some serious selling so you have to be a bit vigilant with respect to the financials because those are the stocks that were making the moves on SP500.

SP600 (-1.47%) gapped to the November low on the open and rallied modestly through that level. Then the small caps reversed and sold down to the 18 day EMA on the close. The small caps could not even get through the November low, a level of resistance bolstered by the late February consolidation that failed. The small caps continue to languish with the worst action in the market and we are watching our downside play here to see if we get another run lower given the small cap weakness.

DJ30

Very similar pattern to SP500 but of course DJ30 did not even make it to the November closing low near 7500. It did reach the top of the late February consolidation attempt but there it rolled over to close flat. Volume surged just as on SP500. Evening star doji with strong volume. More churn as the financials surged and purged. Now we see how it tests the lows in the late February lateral move (7115).

Stats: -7.01 points (-0.1%) to close at 7216.97

Volume: 587M shares Monday versus 479M shares Friday. Volume surged as the financials jumped and then reversed. Not great action.

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

Housing starts, PPI, a market starting to pullback after its first substantial rally in at least a month and more like 2 months. What will win out? Likely the test that is needed. The issue facing the market is whether the SP500 reversal from gains to losses on high volume leads to a sharp higher volume selloff once more or NASDAQ goes about its own business, completes a modest pullback, then resumes its upside move. NASDAQ certainly has some quality stocks with solid patterns to give this some credence. It will have to withstand the financial stocks coming back down in their downtrends after an oversold rally. Strong patterns versus drops within continuing downtrends. We will see.

We are going to be looking at those tech and chip stocks that are fading back for new buy points. Many of the early leaders put in their second day of testing on Monday, and one more day puts them in classic rebound position as long as they can hold their breakouts/near support. These are times to be patient, let them make the test and then show us the rebound. If they can make that rebound stick toward the close of the day, then the move has some substance once more and we move in with new positions.

At the same time you have the financials fading from their recent run with some high initial volume as the move shows signs of stalling. Not all financials moved on higher volume, e.g. GS fell on lower trade as it tests its strong run from last week. Don't want to write off the NYSE indices and the financials as they could make a simply, clean test similar to NASDAQ. We will see how it plays out but have some downside at hand if volume turns ugly to the downside.

The FASB proposed Mark to Market rule changes allowing good judgment or something of that nature may provide a spark to the financials as new details came out after hours. Asian markets jumped out of the gates 1.5% to 4%. We will see what kind of holdover effect that has Tuesday but expect to see things pretty much status quo from the Monday close. If so we look for a continued test to set up new buy points on those leading techs and chips

Support and Resistance

NASDAQ: Closed at 1404.02

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 1459

The 50 day SMA at 1477

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

The 90 day SMA at 1500

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:

The 18 day EMA at 1392

1398 is the early December 2008 low

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 753.89

Resistance:

768 is the 2002 bear market low

The 50 day EMA at 750

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 840

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:

752 is the November 2008 closing low but it is not broken and done away with

The 18 day EMA at 743

741 is the November 2008 intraday low

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 7216.97

Resistance:

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 7646

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

The 90 day SMA at 8146

8175 is the October 2008 closing low. Key level to watch.

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:

7197 is the intraday low from October 2002 bear market

7115 is the February 2009 closing low

The 18 day EMA at 7128

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 16 - Monday

March Empire Manufacturing (8:30): -38.23 actual versusl -32.0 expected, -34.65 prior

Net Long-Term TIC Flows, January (9:00): -43B actual versus $34.8B prior

Capacity Utilization, February (9:15): 70.9% actual versus 71.1% expected, 71.9% prior (revised from 72.0%)

Industrial Production, February (9:15): -1.4% actual versus -1.2% expected, -1.9% prior, revised from -1.8%

March 17 - Tuesday

February Building Permits (8:30): 500K expected, 531K prior

Core PPI, February (8:30): 0.1% expected, 0.4% prior

Housing Starts, February (8:30): 450K expected, 466K prior

PPI, February (8:30): 0.4% expected, 0.8% prior

March 18 - Wednesday

February Core CPI (8:30): 0.1% expected, 0.2% prior

CPI, February (8:30): 0.3% expected, 0.3% prior

Current Account Balance, Q4 (8:30): -$136.7B expected, NA prior

Crude Oil Inventories, 03/13 (10:30): +749K prior

FOMC Rate Decision (14:15): No change expected

March 19 - Thursday

03/14 Initial Jobless Claims (8:30): 654K prior

Leading Indicators, February (10:00): -0.6% expected, 0.4% prior

Philadelphia Fed, March (10:00): -40.0 expected, -41.3 prior

Upside:

Play Date: 03/16/2009

GS (Goldman Sachs--$93.90; -4.90; optionable): Broker Dealer

http://biz.yahoo.com/p/g/gs.html

After Hours: $94.51

EARNINGS: Last announced 12/16/2008. Next date is not confirmed

STATUS: Test 10 day EMA. GS surged the past week and Monday started a test of that surge higher, fading back toward the 10 day EMA (89.97) on the lowest volume in a week. Looking for GS to make a full test of the 10 day and then we see if it is ready to put in a higher low there and bounce on stronger trade, making a run at breaking the February high at 98.

Volume: 28.25M Avg Volume: 23.716M

BUY POINT: $91.65 Volume=32M Target=$109.85 Stop=$88.32

POSITION: GS DR - Apr. $90c (60 delta) or GS GS - July $95c (48 delta) &/or Stock

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

Play Date: 03/16/2009

MOS (Mosaic Company--$41.35; -0.73; optionable): Ag chemicals

http://biz.yahoo.com/p/m/mos.html

After Hours: $41.30

EARNINGS: 04/07/2009

STATUS: Test 50 day EMA. Taking another look at MOS as it rolls down to the bottom of its uptrending channel just over the 50 day EMA (39.82). MOS rallied last week but could not make the run up to the upper channel line over 50. Nice easy low volume test, and set to make the bounce off the trendline. Looking for good volume as it makes the break higher.

Volume: 7.442M Avg Volume: 8.822M

BUY POINT: $42.04 Volume=12M Target=$49.95 Stop=$39.77

POSITION: MOS FH - June $40c (62 delta) &/or Stock

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

New Buy Points on Continuing Plays:

Play Date: 03/16/2009

AMZN (Amazon.com--$66.98; -1.65; optionable)

http://biz.yahoo.com/p/a/amzn.html

After Hours: $67.21

EARNINGS: 01/29/2009

STATUS: Breakout test. Nice surge through the 200 day SMA (64.35) last week as AMZN broke out from a tight 4 week trading range. Hit 70 on the high and is coming back to test on below average volume, holding over the 10 day EMA (66.01) Monday. The early February high is 66.71 and AMZN held that Monday. Nice orderly test and looking for AMZN to hold in this area and then rebound on some better trade. We will add to positions at that point.

Volume: 9.437M Avg Volume: 9.852M

BUY POINT: $67.11 Volume=11M Target=$74.95 Stop=$65.77

POSITION: ZQN GM - July $65c (57 delta) &/or Stock

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

Play Date: 03/16/2009

DRIV (Digital River--$28.55; -0.65; optionable): Internet software services

http://biz.yahoo.com/p/d/driv.html

EARNINGS: 01/29/2009

STATUS: Breakout test. DRIV made the breakout from its 15 week ascending triangle last week, giving us a nice gain and we took some of it Thursday. Now it is making the test on lower volume. Another test back toward 27.50ish will be its third day of pullback. After that we will look for a break higher on rising trade once more and add to some positions as it does.

Volume: 650.897K Avg Volume: 560.39K

BUY POINT: $27.68 Volume=750K Target=$30.95 Stop=$26.88

POSITION: DQI FE - June $25c (71 delta) &/or Stock

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

Downside:

Play Date: 03/16/2009

AOC (Aon Corp.--$37.18; -1.75; optionable): Accident and health insurance

http://biz.yahoo.com/p/a/aoc.html

After Hours: $37.18

EARNINGS: 02/06/2009

STATUS: Downside. AOC is working along the October/February up trendline, trying to hold its ground after coming back to the trendline to start the month. Tried one bounce but that failed immediately and AOC was back at the trendline. Could not make much of a move last week as the market rallied and Monday it turned down and tanked to close on the trendline on stronger, above average volume. When a stock cannot get up off a trendline and indeed fails a couple of bounce attempts it is losing its mojo. Watching to see if AOC breaks below the trendline on continued solid trade and if it does we move in on the downside. A move to the target lands a 40%ish gain.

Volume: 4.141M Avg Volume: 3.797M

BUY POINT: $36.98 Volume=4.4M Target=$34.91 Stop=$38.31

POSITION: AOC PU - Apr. $37.50p (-44 delta)

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

Play Date: 03/16/2009

MCD (McDonalds--$51.69; -0.69; optionable): Hamburger joints

http://biz.yahoo.com/p/m/mcd.html

After Hours: $51.65

EARNINGS: 04/22/2009

STATUS: Head and shoulders. A favorite stock for many but MCD is trying to hold a support line at 51.50ish while the down trendline from January pushes it down from above. If MCD breaks below support on a good shot of volume we are looking to enter the downside play. A move to the target lands a 45%ish gain.

Volume: 9.883M Avg Volume: 10.835M

BUY POINT: $51.48 Volume=12M Target=$49.05 Stop=$52.31

POSITION: MCD PX - Apr. $52.50p (-48 delta)

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