主题：03/19/2009 Market View -- 宁子

SUMMARY:

- Market pensive after Fed's kitchen sink plan, stalls at same resistance as Wednesday.

- Philly Fed is no spring flower but it improves over last month.

- LIBOR making some serious pullbacks.

- Dollar slaughter continues, propelling oil, gold, and crimping Tour de France plans.

- So far an orderly pullback, but it's early.

SP500, NASDAQ cannot punch through resistance but a decent day all things considered.

Jobless claims were better than expected (646K versus 655K) but continuing claims hit a new record at 5.47M. Seemed to help futures, however, as they rose after the news Citi announced a planned reverse stock split; that is about the only kind you see right now though they are important indeed.

In the last bear market and recession a lot of stocks split 'the hard way,' i.e. were cut in half or down to a quarter in value just by selling. A lot of stocks that announced splits announced reverse splits just to get their float down and their stock prices up so they would not be delisted from the exchanges. It was a survival move, but it also came pretty much at the bottom of the selling. Thus it is worth watching these reverse splits. The more the better.

There were also the ORCL earnings that pushed up the software stocks and the FDX terrible earnings that actually helped the transportation sector, a play on the 'how much worse than this can it get' factor. Stocks started higher, gapping up even on SP500, looking ready to continue the upside run following the Fed's latest $1.1T gambit despite the somewhat questionable action late Wednesday after the FOMC decision.

SP500 hit the same 803 level hit Wednesday after the Fed announcement. NASDAQ hit the same level as well. That was it. They immediately peeled back as sellers hit the move higher in financials. The LEI came out and was pretty (-0.4% that at least beat expectations of -0.6%) and the first down LEI in four months. The Philly Fed was bad but at -35 it was still an improvement. Kind of like radiation levels falling a bit after a nuclear explosion; good but hardly makes things livable. A mixed back and the market bounced a bit but couldn't hold the move and wandered lower into lunch and then laterally into the bell with modest losses. What excitement.

The cause? There were some issues Thursday. The house passed what most scholars and everyday people call an unconstitutional 90% tax on bonuses for AIG employees. Congress knew about these bonuses last year and early this year when the stimulus was put together. It was covered in that bill that no one had the time to read. Congress knew why the bonuses were there as well, i.e. an inducement to keep the good workers at AIG to help resolve the problems. They were doing their job and helped lower the losses. Now a bunch of red-faced House reps, flinging spittle with every word, demand names and addresses be made public and want a 90% tax passed retroactively. Sounds ex post facto, a constitutional no-no. Of course this whole fiasco is using the Constitution as a liner for the bottom of a bird cage. So much for our sanctity of contract that we hold out to the rest of the world as separating us from the economic riff raff.

Then there was the New Car Deal, part 2 where the feds will guarantee the receivables of auto parts suppliers to the automakers. They cannot sell their receivables as they used to because the private sector views them as too risky given the source of the eventual payment. Thus the government, in for the whole pound now, is basically saying it will buy these questionable accounts. Another one on the public, or more accurately, on the tax paying public.

Those were not pleasant for a market that is based upon a free enterprise model. Just more unpleasant affects of a Congress swinging sharply to the former eastern European model. Still, the market was due for a pullback, a rest. The Fed may have changed the game with the new massive $1.1T TALF facility, but after the 20% run by SP500 it hit resistance and stalled. It stalled Wednesday at 803 and then again Thursday at 803. It is trying to digest the enormity of the Fed's actions and ramifications and is taking a pause while it does. Pretty normal. The question is whether it is just a pullback that will continue higher or a stall in preparation for a more significant run lower as seen before.

TECHNICAL. Intraday the indices moved higher to the same resistance hit late Wednesday and they fell back once more, wandering to the close and closing lower. Not great action but it was not a total junking either.

INTERNALS. Breadth and volume pretty much matched the action, i.e. pretty flat on the day after a follow through. NYSE breadth was interesting, however, as advancing issues edged decliners, showing there was more strength in than the -1+% losses in SP500, DJ30, and SP600 indicated. Volume was lower on both exchanges, but after the Wednesday blowout you would expect that. NYSE volume was still very strong at 1.9B shares. That along with the stall at resistance suggests some churn, the high volume turnover that shows the sellers were selling as fast as the buyers were buying. After a run higher that can indicate the move is tired and ready for a test. To that you almost have to say 'duh.'

CHARTS. As noted, SP500 and NASDAQ hit the same resistance points again at the higher open and once more faded. We were going to have some issues here anyway so a test is normal. The Fed's addition to the game plan, however, added an overlay of questions. With the Fed action and its 'nothing will fail under my watch' attitude you would anticipate just a pullback and not a rollover and drive back to the lows; something more of a test of the November lows on SP500. We will watch how the sellers come in. They took a shot early but could not follow through, but they did take a shot, something they have not done in a couple of weeks.

LEADERSHIP. Commodities were hot with metals strong, gapping higher at the open and not giving up much ground. Agriculture gapped as well. Those are the world recovery plays. Most other leaders were in pullback mode and for now it is just a pullback. Leaders in financials such as GS and WFC, semiconductors, techs (outside of software after ORCL's dividend) all pulled back but just modestly and mostly on lower volume. This rally and the current pullback (all one day's worth) will give current leaders a chance to test and set up again (e.g. AMZN), and it will help emerging leaders form up their bases as well for the next wave of stocks to support a continued upside move. That means the pullback will need to be somewhat orderly but the market always has some surprises to throw at you.