主题：03/19/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 43.68; +3.62

VXN: 42.46; +2.66

VXO: 45.29; +4.22

Put/Call Ratio (CBOE): 0.77; +0.12

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: 28.4%. Nothing like a rally to bring around the bulls, but not a very big run from 26.4% last week and not even hitting the 29.7% from the week prior. Not a lot of confidence just yet and that is fine. Still 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: 44.3%. Bigger drop for the bears, falling from 47.2%. Very solid 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: -7.74 points (-0.52%) to close at 1483.48

Volume: 2.354B (-16.72%)

Up Volume: 885.393M (-1.627B)

Down Volume: 1.449B (+1.178B)

A/D and Hi/Lo: Decliners led 1.21 to 1

Previous Session: Advancers led 2.49 to 1

New Highs: 12 (-4)

New Lows: 31 (-7)

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

A gap higher right up to the Wednesday high and then a retreat all session. Modest losses and lower volume so the action was orderly and well contained. Always like that on tests but that was just the first day. A few more sessions back to 1400 and the December low would be an excellent pullback and put some of the nice leaders in nice position to rally as well as likely bring around some more leadership quality patterns from other stocks. So far nice and orderly, but it was just the first day.

SOX (-0.88%) faded back from the February peak but a very modest decline. It is at the top of the range, however, and if the sellers are going to come in, as with the other indices, this is where it would happen. Not expecting these leaders to get gutted and will use a pullback to look for new opportunities in them.

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

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

SP500/NYSE

Stats: -10.31 points (-1.3%) to close at 784.04

NYSE Volume: 1.952B (-6.03%)

Up Volume: 766.529M (-1.089B)

Down Volume: 1.172B (+959.297M)

A/D and Hi/Lo: Advancers led 1.04 to 1. NYSE indices were down but the breadth was not. More strength than the numbers showed.

Previous Session: Advancers led 4.11 to 1

New Highs: 5 (-5)

New Lows: 30 (-42)

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

Rallied to 803 and then turned back down. The tap at the 50 day EMA on the high again and then some selling. Volume was still quite strong even if it was lower. The sellers were taking a shot at the financials. Couldn't do any significant damage on the session but even with the positive breadth we have to watch how the downside volume grows or not. There was some churn Thursday and one day means little in itself.

SP600 (-1.17%) didn't quite make it to the 50 day EMA before it turned down. Pretty modest losses and a hold at the November close at 208 (about 9 points lower) would be a good point to rally back form.

DJ30

The Dow bumped the November low once more (7752, 7548 on the Thursday high) and turned back. Volume was still very high. Definitely some churn by the Dow at its November closing low but not enough to get us in on the downside play on Thursday. Still ready to move in given this high volume churn but it still may be just a move down to the late February low (7100ish) before it finds support. Can still make money off of that but will have to be a bit more nimble.

Stats: -85.78 points (-1.15%) to close at 7400.8

Volume: 559M shares Thursday versus 584M shares Wednesday. Strong volume still. The sellers were at work Thursday but could not put a big stamp on the day.

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