主题：04/02/2009 Market View -- 宁子

SUMMARY:

- Strength builds as stocks gap higher, run to next resistance.

- Factory orders jump past expectations, but downside revisions overwhelm the gains.

- Stocks rally into the jobs report and earnings: a pullback on the jobs report or a further bounce on RIMM?

- Be patient, wait for the entry points to come to us.

Solid surge continues as the indices rumble up to next resistance.

The jobless claims, the second warm-up for Fridays jobs report hit a 27 year high. That was the very bad recession that concluded the 1970's malaise and set the stage for the huge recovery in the 1980's and on into 2000. It was the recession where Reagan and Volcker teamed up to break inflation. Does that mean we are at the cusp of such a tremendous economic explosion? No. Reagan threw off the yoke of big government by empowering individuals and businesses with their own money, giving them a reason to work hard as the would reap the rewards. We are currently doing the opposite. Instead of empowering individuals, the 'stimulus', budget, and massive bailout mentality is empowering and growing the central government. As discussed Wednesday night, history shows countries cannot spend their way out of economic recession or depression. Thus we are not on the verge of an economic expansion, but more of a 1970's malaise of slow growth, high inflation, and high unemployment thanks to a debased currency and a debt so massive that the entire debt of the nation through President Bush II is surpassed by what has been spent or pledged in the past 2.5 months.

Pleasant picture, but the market was not going to be bothered by the long term issues. It sees a short term recovery coming just as there was in the 1970's, and as seen at that time the market can rally even in a crappy economic environment, and that makes us money. Of course it will gyrate in a range the entire time, but that is not the worry for the day, particularly Thursday.

There was too much other good news near term. China says its economy is on the rebound after 5 months of recession. Commodities and infrastructure stocks took off to the upside after struggling the past three weeks. FASB did what many expected, i.e. recommended relaxation of the Mark to Market accounting rules. It was no complete fix to the damage the rules caused, but it was a change, and the market wanted change. Hmmm. So did those voting for the new Administration. The old adage 'be careful what you wish for' is coming back home with some big teeth to bite us all in the privates. That dog with the big teeth is still a bit down the road so that was not a problem Thursday. Stocks gapped higher and continued the Wednesday solid move.

They never really looked back after that open, working higher through lunch. SP500 ran into next resistance at 850, NASDAQ rallied to its next resistance at 1600ish. Gave back some mid-afternoon but rebounded as the buyers used the dip to move in. They still could not punch through and then wandered laterally and lower into the close. Not a bad finish, just a solid move on volume up to next resistance and then a pause ahead of Fridays jobs report.

In sum it was a great session. Loved it. Sure the gap up made it hard to buy new positions, but that was not really our intent. No, the mad rush by others to buy stocks pushed our positions higher and higher. We LOVE IT when we buy in when the technical indicators say 'buy me' and then others rush in afterwards and rally our positions higher and higher. We enjoyed the ride higher, using the rush to bank more gain, mindful of the Friday jobs report that might be a slap of harsh reality, a bit of a struggle at next resistance, and earnings. Of course RIMM announced after hours and surged; earnings can be good when expectations are so darn low. We didn't buy a lot of new positions. We dabbled a bit, but after the gap higher we are waiting for a better opportunity versus chasing stocks that gapped away as they tend to pull a Wily Coyote on you and run out of road over the canyon. Test are great entry points as they are the start of a new leg of road that you can travel along quite a way before it ends. We will get a pullback and have some better entry points, and on some stocks that may be as soon as Friday morning after the jobs report.

TECHNICAL. Intraday the action was solid all the way home. Yes the indices faded late but that was after ramming into next resistance, and after that run they are not going to blast on through.

INTERNALS. Solid across the board as well with 6:1 NYSE breadth and 3.7:1 on NASDAQ. Volume exploded higher at 2.7B on NASDAQ and 1.8B NYSE. That was the strongest NASDAQ volume in over 4 months. NYSE volume moved above average for the first time in a week but it was nowhere near the levels from March. Financials are helping lead the NYSE indices higher, but the volume is tepid and that is a concern.

CHARTS. Gaps higher, rallies to next resistance, and then as you would expect, it ran into some resistance. This is pretty key resistance for both NASDAQ and SP500. NASDAQ is at the top of its trading range but also at the October lows where the index tried to bottom for three weeks before it rolled over again. That is very tough resistance. SP500 faces the same resistance as it has reached the October bottoms as well. SOX is showing incredible strength but it too is at a key point, its November peak, the peak off of the initial bounce from the harsh selloff. Techs, even with the October resistance, and chips are in solid shape. SP500 is improving. All, however, are at resistance and will test and then move up to try it again just as they have done on this entire rally off the bottom. The indices are knocking down the barriers one at a time, but the NYSE indices still have a hard road ahead.

LEADERSHIP. We said that the market would rock when chips and techs re-engaged in the rally. That they did Thursday, leading the market higher with percentage and volume gains, surging to the tops of their ranges. Materials, commodities, construction - - the infrastructure plays - - rallied on the China 'thumbs up' to its economic recovery. Financials were up but showed some weariness in their price moves as well as the volume they failed to attract. Retail surged again and this time across the board from apparel stores to restaurants. China was up as you would expect. Lots of strength from many areas, but a lot of it gapped away. A test gives us some potentially good entry points on some more leaders.

Factory orders top expectations but the key revisions are killers.

A nice 1.8% gain in March topped the 1.5% expected and blew out Februarys -1.9% showing. Now that -1.9% made a stir when released because it was so much better than the -4.9% in December and the -6.5% in November. A 1.8% gain on top of that was huge.

Ah but the revisions. They are always the key because revisions tell the true story while the original number is more a combination of some data and a lot of 'expert' guesstimates. Upside revisions are excellent predictors of gaining strength. Downside revisions are, of course, just the opposite.

You surely have figured out why I went into such detail. January was revised down to -3.5%, an 84% haircut from the number originally reported. Thus the downside is still stronger than the experts think. Bummer. Still an improvement over December, but more of a statistical blip at the new level.

Non-defense capital goods orders rose 0.9%, up from -1.9% in January. Quite a turn from the -6.3% in December. Business investment is key to any recovery that tries to gel, and the business investment numbers help take some of the sting off the overall number and its sharp downside revisions for February.

MARKET SENTIMENT

VIX: 42.04; -0.24

VXN: 42.29; -0.19

VXO: 44.47; +1.47

Put/Call Ratio (CBOE): 0.69; -0.22

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: 28.9%. A fraction more bulls (28.4% last week) but not really commensurate with the market gains. Not a lot of belief in it just yet. 29.7% three weeks back, down from that 'optimism' 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: 43.3% versus 44.3% the prior week. Slowing the decline from 47.2% as here as well there were not many believers in the run higher. Still showing plenty of worry. 47.2% 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: +51.03 points (+3.29%) to close at 1602.63

Volume: 2.71B (+23.2%)

Up Volume: 2.427B (+792.66M)

Down Volume: 379.058M (-162.085M)

A/D and Hi/Lo: Advancers led 3.68 to 1

Previous Session: Advancers led 1.9 to 1

New Highs: 29 (+16)

New Lows: 10 (-10)

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

Gapped higher and rallied over the February high at 1598, taking a look at the January high at 1666 on the session high at 1623. If faded to close just over 1600, not yet ready to take on that January peak. Great volume on the move so there is buying in the techs that is propelling them higher. NASDAQ may not be ready to take out that resistance just yet, but NASDAQ is in great position to test and then rally on back through. Indeed, given the move just started anew it could just blast on up from here.

SOX (+4.28%) gapped higher and surpassed the late March peak, but could not hold the move into the close. On the high it challenged the November peak, but it was not ready to take that out Thursday. Still solid and still looks ready for a break over the November peak and challenge the 200 day SMA.

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

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

SP500/NYSE

Stats: +23.3 points (+2.87%) to close at 834.38

NYSE Volume: 1.875B (+24.74%)

Down Volume: 160.381M (-94.104M)

A/D and Hi/Lo: Advancers led 5.95 to 1

Previous Session: Advancers led 2.96 to 1

New Highs: 15 (+7)

New Lows: 68 (+14)

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

Nice action, continuing to knock down the resistance levels, moving through the late March peak (833) on the close. That still leaves SP500 in the middle of its November to early February range. On the high it tapped toward the October low (849) and backed off some. That is basically the middle of that trading range. SP500, similar to NASDAQ, just made a higher low this week so you would expect there would be more gas in the tank to push the large caps through this level and on up to 875, the February peak. Then a test. The jobs report may have something to say about whether it makes a continued move from the close, but even if it knocks it back some we still anticipate a recovery to continue the move.

DJ30

Nice gains on a return to above average volume, and the Dow cleared 8000 on the high (8076) and hit the bottom of the range from mid-January to early February. That is resistance on up to 8175, the October closing low. Lots of heavy resistance near at hand so the Dow is about to give us a look at just how strong this move is.

Stats: +216.48 points (+2.79%) to close at 7978.08

Volume: 442M shares Thursday versus 361M shares Wednesday.

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

FRIDAY

It's that time of the month, the first Friday and the jobs report. Always anticipated, always ballyhooed, but always lagging despite attempts each month to try and turn it into something it is not. Consumers turn despondent when they fear they are going to lose their job. That sends us into recession long before the actual job losses. The economy starts to recover long before jobs recover. How can that be say some in Congress? They think that the economy cannot recover until jobs recover because consumers won't spend if they don't have a job and thus the economy cannot work its way out of the hole. That is why they believe in paying people to dig and fill holes as some sort of economic stimulus. You get a wage, you spend the wage, the economy recovers.

Putting aside the historical, empirical evidence to the contrary, the hypothesis fails even the common sense test. If the economy does not recover until those without jobs start getting jobs, what is the impetus for the new jobs in the first place? In other words, how are the unemployed going to get jobs UNTIL the economy starts recovering and subsequently CREATES new jobs? That is why the stimulus that history proves works is the stimulus that provides incentives for businesses to invest in their businesses and individuals to create new businesses and thus create new products and services that require new workers. Jobs are created and the unemployed are employed. THEN they have jobs with futures that will grow versus bogus make work such as building Frisbee parks and otherwise creating public 'things' that don't create jobs themselves. How something so simple gets so twisted in the halls of Congress only goes to show how Congress is motivated by personal agendas and power versus what really works for the country.

So, the jobs report will garner interest for those with backward economic understanding (or lack thereof), those seeking to gain political advantage, and basically morons. What is more important to us is that the market has rallied off the lows, held the initial move, and is breaking higher again. That suggests the market anticipates some sort of economic recovery. We don't think it can be that strong given the policies out of Washington, but if the credit issues are getting resolved that at least allows the bleeding to stop and some recovery. Just as in the 1970's, the market can have nice rallies even in the midst of the malaise, running up then selling back down, trading in a range for a long time.

What we are looking for is a negative enough number to knock back some of those stocks that gapped away from us on Thursday as the market gapped up. A nice quick test will give us an entry point, but we also need to be patient and wait for them to come to us and the test to complete and then move in.

There will be items at odds with one another, however, as RIMM reported earnings after hours that jumped it up another 10 points in post-bell trade. We will see how that excitement holds over, and if stocks open higher again it still won't be something you want to chase. Again, we will be patient and let plays come back to us. Now there are always stocks in position to buy, but we have to factor in as well the run and the resistance the indices are at (yet again), as well as the earnings season. The latter can break either way; as seen with RIMM, expectations for this earnings season are so low that if a company can post some pretty solid numbers it can be rewarded. Still, we have a good run to this point, have taken quite a bit of gain, and with that run you wonder just how much more upside stocks can squeeze out on some more good news.

In sum, we will take what the market gives when it arises. If we get leaders that surged pulling back we can move into them. If there are stocks that have set up but have not broken out, i.e. a new wave of leaders setting up, we can buy into them when they move higher as well. Again, we will take what the market gives.

Support and Resistance

NASDAQ: Closed at 1602.63

Resistance:

1603 is the December peak

1620 from the early 2001 low

1644 from August 2003

The January closing low at 1653

1666 is the intraday January 2009 peak

1780 is the November 2008 peak

Support:

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

1587 is the March 2009 high

1569 is the late January 2009 peak

1542 is the early October 2008 low

1536 is the late November 2008 peak

The 10 day EMA at 1533

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 1487

The 50 day SMA at 1468

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 834.38

Resistance:

833 is the March 2009 peak

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:

The 90 day SMA at 828

818 is the early November 2008 low

815 is the early December 2008 low

The 10 day EMA at 805

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

800 is the March 2003 post bottom low

The 50 day EMA at 799

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 7978.08

Resistance:

The 90 day SMA at 8006

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:

7965 is the mid-November 2008 interim intraday low.

7932 is the March 2009 peak

7909 is the early January low

7882 is the early October 2008 intraday low. Key level to watch.

7867 is the early February low

7702 is the July 2002 low

7694 is the February intraday low

The 10 day EMA at 7677

The 50 day EMA at 7651

7552 is the November closing low. KEY Level.

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

The 18 day EMA at 7511

7449 is the November 2008 intraday low

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