主题：03/25/2009 Market View -- 宁子

SUMMARY:

- Sellers trash an early rally but the buyers use that to rush back in.

- UK can't sell its bonds, US has to pay more interest to move its debt as the price of wanton spending starts to show itself.

- Durable goods orders turn positive, January revised up.

- February new home sales rise 4.7% after January's record low pace.

- Still showing buyers ahead of quarter end.

Buyers still ready to move in.

Durable goods orders were much better than expected at 3.4%, the biggest gain in over a year. Futures were so-so until the solid report and they moved higher. Not surging, just solidly higher. Stocks started stronger, a good response to the Tuesday hangover. New home sales rose 4.7% and that spurred the move further. SP500 started at 806 and by midmorning the large caps rose to 826. Then an old habit came back, i.e. the midmorning slump. Stocks tested back and worked sideways for 2 hours. Made a short double top, a lower high just after lunch, showing its weakness. The UK had already held its bond auction and it failed to raise the money it wanted. Failed to raise the money. That is like holding an auction to sell the family jewels and no one shows up, showing you your jewels are fools gold. In early afternoon the US announced the results of its bond auction, and while it sold its bonds the required yield was pushed up to get the necessary demand.

On that news the lateral move turned into a hard fall, taking the indices to session lows and negative. SP500 fell to 791, a 36 point swing from high to low. Big move. Sellers were pushing hard. As fast as the selling pressure jumped the buyers stepped in. A knifepoint turn and stocks sprinted higher into the close, pushing SP500 to 814 and NASDAQ, after undercutting the important 1500 level (1487 on the low), rallied back to 1528. Not session highs, but recoveries as sharp as the selling.

And what is the grand meaning of it all? Sellers had the reason (weak debt interest for the UK and US) and the opportunity to sell, and for awhile they were doing it. They drove SP500 and NASDAQ down through key levels, but they popped right back up and on some solid volume as well. This shows buyers were at that level, ready to come in. It shows there are still buyers at this higher level ahead of quarter end.

TECHNICAL. Intraday a rollercoaster with early gains, a selloff to wipe it all off the board, then a surge back up. Not the usual session of late and it shows the sellers were probing a bit, seeing if the buyers had any resolve. Not the straight up move higher seen the prior two weeks and you can expect more as the earnings season approaches.

INTERNALS. Modest upside breadth in the 2:1 range. Not bad for a reversal off negative. Volume jumped nicely on the reversal though it was up a bit as the market sold off in the afternoon so it was not a clear cut surge of buyers piling in. Good action but not a blowout.

CHARTS. SP500 and NASDAQ made their way well into resistance after clearing it Monday. Could not hold it, however, but they were able to rebound nicely and take it back. As noted above, that shows buyers at that support, ready to jump in and drive them back up. Many feel they are missing this rally so there is still ready money ahead of quarter end. The candlestick chart showed dojis on all major indices, but that is okay as they tested support intraday and rebounded. NASDAQ 100 is setting up a cup with handle pattern, a bullish base. SOX is trying a new breakout from a lateral handle of its own. Even DJ30 is trying to become a leader, setting up a good base as well. There is still nothing but resistance overhead and it will be fight all the way up. There are buyers coming in ahead of quarter end and the move is thus finding support. The attempt at selling this afternoon, however, does show sellers are thinking about it, starting to mass a bit.

LEADERSHIP. Some China stocks showed some strength while others set up again. Some key financials were up as were some chips and tech. There was not a lot of power outside of a few movers such as SNDA, and many stocks were up and down with the market. Still, the leaders of late (tech, chips, China, key financials, energy, commodities) continued to set up nicely and more are setting up to step up.

February durable goods orders (products lasting 3 or more years) jumped 3.4% versus the -5.2% expected and upwardly revised -5.3% in January. Ex-transportation orders posted a solid 3.9% advance (-2% expected). The overall number was the first advance in 7 months and the largest in a year. Ex-transportation showed the strongest gain since August 2005.

The components were solid with business investment up 6.6%. Of course it was down 6.6% in January so the rebound is still looking at a mountain to climb in recovery, but that is how things start. Computers rose 10.5% and general machinery gained 13.6%.

Respectable, but as noted, it has been a long slide. When you piece it together with the other data, however, it takes its place in the lineup of improving results. Retail sales, same store sales, factory orders, regional and national manufacturing, and existing home sales all show improvement off the harsh declines. As one of the traders says, they don't stink as bad as they did. Again, the bottom has to start somewhere and we are seeing a firming of the data even as the market has put in almost a month of stabilization and upside itself.

New home sales up 4.7%.

New sales topped expectations as well, another piece of data supporting the notion of a turn or bottoming in the economic data. Then again, it was also 41% lower year/year. If durable goods have a mountain of prior highs above it, new home sales cannot even see the peak. And even with the gain the level is 9% below December levels. Maybe a turn, but it is small and very recent.

Inventory is also an issue. The supply of new homes stands at over a year (12.2 months), meaning at the current consumption rate it would take that long to sell them all with no new homes built. That beat January's 12.9 months but December was lower than both at 11.6.

Low mortgage rates will help, but there is a lot of inventory to hack through. As with everything it is always the worst before it starts to improve. This is about as bad as we have ever seen the market, but as always, it is still a regional phenomenon. Sales fell 3.3% in the Northeast and 9% in the Midwest, but they rose 9.7% in the South and 6.6% in the West. The South shall rise again they say, and in terms of home sales it never really fell during this bust though it did slow.

MARKET SENTIMENT

After spiking into the eighties during the selloff in Q4 2008 the VIX has settled back down, trading in a range from 40 to 55ish the past four months. That is still a high level for what is considered normal, i.e. 20 to 30.

Now some are saying that because VIX has settled in this range that it is anticipating more big moves, implying but not saying that the moves will be downside. 'Watch out' and 'be careful' are a couple of phrases often associated with VIX comments.

In 2002 VIX never got this high, reaching only into the fifties. Gloom was still high and things were quite dicey then as well. It fell to thirtyish on the initial rally, rebounded to 40 or so on the test, and then started a steady decline as the market rallied in a new bull run.

The point is that yes the VIX remains elevated, but just because it is holding higher does not mean a violent move to the downside is coming. It does tell you that because of the continuing uncertainty with respect to government intervention and attacks on contract law and capitalism prices are going to remain higher. It has a hard time pricing in government action because that action is often whimsical, sudden, and damaging. So, the market is pricing that in with the higher VIX. Thus to us this is not saying 'watch out', at least not with respect necessarily to a massive market decline. It is saying 'watch out' with respect to the unknowns and that many different scenarios can play out.

So, what do you do? You watch leading stocks and how the market handles the hurdles it faces. VIX is a secondary indicator and, as are all indicators right now, it is telling you to be cautious. The market still has massive amounts of overhead and resistance to deal with so you are damn right you still need to be cautious, VIX or no.

VIX: 42.25; -0.68

VXN: 41.35; -0.82

VXO: 43.11; -0.33

Put/Call Ratio (CBOE): 0.86; +0.1

NASDAQ

Stats: +12.43 points (+0.82%) to close at 1528.95

Volume: 2.404B (+21.33%)

Up Volume: 1.545B (+1.014B)

Down Volume: 918.333M (-561.259M)

A/D and Hi/Lo: Advancers led 2.3 to 1

Previous Session: Decliners led 2.28 to 1

New Highs: 16 (+1)

New Lows: 22 (+4)

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

Quite the trading range, running up and down 66 points before settling just above the halfway mark in the range. That kept it over 1500 support and still smack in the middle of its December to early February range. A doji on the candlestick chart is not bad action as NASDAQ stretches out laterally and forms something of a handle consolidation here.

NASDAQ 100 (+0.19%) is showing the same action and is setting up an even better pattern than NASDAQ.

SOX (+2.67%) surged to a new post-November high (240) but then fell back to basically flat, unable to hold the move. Still very solid, still in position to make the break, but thus far it has not made the breakout from the range. That move is going to be one of the seminal moves for the market as SOX was and is the leader off of the lows.

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

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

SP500/NYSE

Stats: +7.63 points (+0.95%) to close at 813.88

NYSE Volume: 1.774B (+7.81%)

Up Volume: 1.172B (+894.497M)

Down Volume: 587.892M (-770.195M)

A/D and Hi/Lo: Advancers led 1.95 to 1

Previous Session: Decliners led 2.01 to 1

New Highs: 16 (-1)

New Lows: 91 (-3)

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

Rallied up past the Monday high but hit the 90 day SMA (830) on the high and faded back to the 50 day EMA on the low and then rebounded to close in the middle. Still in the lower quadrant of the January/February range. Still hanging over the key 800 to 805 level it broke Monday. Still many layers of resistance on up to 900ish. SP500's break over 805 was a bullish move. It was not the move that changed SP500's character. It is still on a rally off the bear market low and it is still trying to handle resistance in its face. It is showing some good character, but each session is a new character builder.

SP600 (+2.12%) showed similar action, recovering some of the Tuesday loss and holding above resistance it broke through the past week while bumping the next resistance overhead. If it holds this test of the prior resistance that then becomes more solid support. Having a fight here as well.

DJ30

Noted this earlier, but quietly the Dow has gone from downside leader in the selloff to laggard in the recovery, to potential leader in the rebound. It surged through the 50 day EMA Monday and is testing in a narrow range the past two sessions, testing over the November low on the Wednesday intraday low then recovering. It is setting up for a run to 8000 and there is a lot of resistance starting at that point. What it does at that level will be very key to the rebound rally for the market as a whole. That is how important DJ30 is becoming here.

Stats: +89.84 points (+1.17%) to close at 7749.81

Volume: 454M shares Wednesday versus 379M shares Tuesday. Low volume on the Tuesday selling, a nice surge in above average volume on the Friday upside.

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

The final Q4 GDP reading is out Thursday followed by weekly jobless claims. Kind of a slow data day comparatively speaking. Old news and not so old news, none of it really leading, however.

What is leading is the market. It is the indicator and right now key indices are trying to put some mileage on key resistance levels broken earlier in the week. Another, SOX, is trying to make a breakout to a new post-November high. The rally off the lows is significant, but it is also getting a bit older. Thus you see more of a struggle, natural at key resistance, but also the bear raid on Wednesday afternoon as the sellers tested the water a bit to see if it was time to dive back in. The buyers swarmed like piranha when they did so they backed off for now.

That may give the indices some breathing room to move higher with this break through resistance, putting SP500 at 875ish to maybe 900, NASDAQ at 1600, and DJ30 at 8000. The interesting thing is that those levels are next serious and visible resistance points and they are 'doable' ahead of quarter end and the window dressing that is helping drive this rally farther into resistance ranges despite the solid move already logged to this point.

A key example of the buyers' desire to buy stocks ahead of quarter end and thus push them on up to that next key level was the Wednesday afternoon sharp and sudden reversal from the selloff to new session lows. Sellers even got SP500 below 800 and buyers still came back in with the wallets and checkbooks open and ready.

Thus we look for some further upside moving toward those resistance levels. After that you are looking at a market that has put in a substantial run off the lows, is at next significant resistance, and a questionable earnings season at hand. Typically a strong run into earnings and you have to be careful.

We will be taking gain on the way higher with existing positions, but a move up to resistance is also good enough to give us an opportunity on new plays as well. We will be looking at new buy points on leaders we already have positions in as they are showing good action and a lot of support. If we see a newcomer, however, we won't turn it away.

At the same time we are also starting to look toward some downside plays. If the market rams into resistance and rolls over we want to be ready to move in on the downside as that move could come rather quickly if the primary impetus behind any rally to the end of March turns out to be end of quarter portfolio sprucing.

Support and Resistance

NASDAQ: Closed at 1528.95

Resistance:

1536 is the late November 2008 peak

1542 is the early October 2008 low

1569 is the late January 2009 peak

1598 is the February 2009 peak, the last peak NASDAQ made

1603 is the December peak

1620 from the early 2001 low

1644 from August 2003

1666 is the January 2009 peak

Support:

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

1505 is the late October 2008 closing low.

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

The 50 day EMA at 1469

The 50 day SMA at 1462

The 18 day EMA at 1444

1440 is the January 2009 closing low

1434 is the January intraday low

1428 is the mid-November 2008 low

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 813.88

Resistance:

815 is the early December 2008 low

818 is the early November 2008 low

The 90 day SMA at 830

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

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:

805 is the low on the January 2009 selloff. KEY Level

800 is the March 2003 post bottom low

The 50 day EMA at 795 held on the Wednesday low

The 50 day SMA at 794

The 18 day EMA at 773

768 is the 2002 bear market low

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

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 7749.81

Resistance:

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.

The 90 day SMA at 8040

8141 is the early December low

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:

7702 is the July 2002 low

7694 is the February intraday low

The 50 day EMA at 7621

7552 is the November closing low. KEY Level.

7524 is the March 2002 low to test the move off the October 2002 low

7449 is the November 2008 intraday low

The 18 day EMA at 7364

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

7197 is the intraday low from October 2002 bear market

7115 is the February 2009 closing low

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 23 - Monday

February Existing Home Sales (10:00): 4.72M actual versus 4.45M expected, 4.49M prior

March 25 - Wednesday

February Durable Goods Orders (8:30): 3.4 actual versus -5.2 prior (revised from -7.3)

Durables, Ex-Transportation, February (8:30): 3.9% actual versus -2.0% expected, -5.9% prior (revised from -2.5%)

New Home Sales, February (10:00): 337K actual versus 300K expected, 322K prior (revised from 309K)

Crude Oil Inventories, 3/20 (10:30): +3.3M actual versus +1.942M prior

March 26 - Thursday

03/21 Initial Jobless Claims (8:30): 650K expected, 647K prior

Q4 GDP - Final, Q4 (8:30): -6.6% expected, -6.2% prior

GDP Price Index, Q4 (8:30): 0.5% expected, 0.5% prior

March 27 - Friday

February Personal Income (8:30): -0.1% expected, 0.4% prior

Personal Spending, February (8:30): 0.3% expected, 0.6% prior

Michigan Sentiment - Rev, March (9:55): 56.0 expected

Upside:

Play Date: 03/25/2009

DBC (DB Commodity Index ETF--$20.69; -0.32; optionable)

After Hours: $20.52

STATUS: Cup w/handle. Nice pullback in commodities the past couple of days is forming the handle to its 12 week base. Commodities were one of the leaders in the last rally and now it is retrenching a bit, setting up for a new move. Holding support a the 90 day SMA (20.50) as well as the February peak. Gapped down showing a doji and ready to move in as DBC continues back to the upside.

Volume: 1.586M Avg Volume: 1.208M

BUY POINT: $20.82 Volume=1.8M Target=$23.95 Stop=$20.12

POSITION: DOB GT - July $20c (58 delta) &/or Stock

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

Play Date: 03/25/2009

DO (Diamond Offshore--$68.87; -1.38; optionable): Offshore drilling services

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

After Hours: $68.60

EARNINGS: 02/05/2009

STATUS: Test breakout. DO broke out of the top of its 4 month trading range and has been fighting to hold it the past week. Strong volume on the break higher and lower trade on the lateral move. Nice tap at the 10 day EMA on the Wednesday low (66.07) and then a nice recovery to recoup most of the loss. Set up nicely to make the break higher; may take another session or so but we will just give it the time it needs and then pick it up on the breakout.

Volume: 2.411M Avg Volume: 3.57M

BUY POINT: $70.57 Volume=5M Target=$81.95 Stop=$67.48

POSITION: DO FN - June $70c (52 delta) &/or Stock

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

Play Date: 03/25/2009

SFLY (Shutterfly, Inc.--$8.90; +0.67; optionable): Internet-based photography cite where people can share pictures and the like.

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

After Hours: $8.81

EARNINGS: 02/04/2009

STATUS: Cup w/handle. Forming something of a second handle to its 6 month base. Bottomed from October to February, not making that dive lower as most stocks, then rallied and formed a handle from early February to early March. Broke higher again, but stalled at the February peak and has moved laterally since. Wednesday volume exploded higher as SFLY broke higher and through the 200 day SMA (8.76) for the first time on this move. It closed, however, just below the recent peaks as well as the February peak. Surging money flow. Looks ready to make the break higher.

Volume: 634.53K Avg Volume: 187.152K

BUY POINT: $9.04 Volume=285K Target=$10.48 Stop=$8.41

POSITION: QFY FU - June $7.50c (75 delta, low OI) &/or Stock

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

New buy point on current position:

Play Date: 03/25/2009

HES (Hess Corp.--$64.35; -0.67; optionable): Oil and gas refining

http://biz.yahoo.com/p/h/hes.html

After Hours: $64.35

EARNINGS: 01/28/2009

STATUS: Breakout test. Nice run the past two weeks took HES, finally, over its January and February peaks. Coming back to test the past two sessions, tapping the 10 day EMA on the Wednesday low (64.99) and rebounding to recoup most of the loss. Showing a nice doji on the candlestick chart after a short pullback and ready to move in as HES blasts higher off this test and on toward the 200 day SMA (73.90).

Volume: 5.265M Avg Volume: 5.091M

BUY POINT: $65.31 Volume=6.5M Target=$72.95 Stop=$62.77

POSITION: IGG EM - May $65c (52 delta) &/or Stock

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

Downside: In case the market stalls and turns.

Play Date: 03/25/2009

CAT (Caterpillar--$28.91; -0.49; optionable): Heavy machinery

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

After Hours: $29.45

EARNINGS: 01/26/2009

STATUS: Put. Just in case. CAT has rallied up to the February bottom that is coincident with the 50 day EMA (30.14). Turned back from that resistance Wednesday on the strongest volume in three weeks and easily above average. If the market breaks lower CAT is in position to lead it lower. A move to the target lands a 50%ish gain.

Volume: 20.702M Avg Volume: 15.862M

BUY POINT: $27.37 Volume=20M Target=$23.26 Stop=$29.85

POSITION: CXJ QD - May $30p (-48 delta)

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