主题：03/30/2009 Market View -- 宁子

MARKET SENTIMENT

VIX: 45.54; +4.5

VXN: 44.87; +3.42

VXO: 45.21; +1.82

Put/Call Ratio (CBOE): 1.14; +0.22. Big jump in the ratio as institutions bought massive amounts of downside protection and a lot of individuals bought some puts as well. Over 1.0 on the close is important, but it takes more than just one close to make a difference.

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: -43.4 points (-2.81%) to close at 1501.8

Volume: 1.963B (-4.67%)

Up Volume: 294.603M (-165.918M)

Down Volume: 1.726B (+92.901M)

A/D and Hi/Lo: Decliners led 3.16 to 1

Previous Session: Decliners led 2.97 to 1

New Highs: 5 (-13)

New Lows: 31 (+18)

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

Gapped lower and sold through 1500ish support. Held above the 50 day EMA (1477) on the low and rebounded to close over 1500. Not bad action, showing that relative strength even though it is down in the range again. This is the general area it needs to find support over the next few sessions. The low volume was a positive as it shows no heavy selling. The price action was not great but it is holding where it needs to for now.

SOX (-4.42%) gapped lower as well, falling back into its trading range, but it did find support at the 10 day EMA on the close. Chips are the market leader and a hold in this 225 range would be a bonus.

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

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

SP500/NYSE

Stats: -28.41 points (-3.48%) to close at 787.53

NYSE Volume: 1.512B (+4.73%)

Up Volume: 73.656M (-118.426M)

Down Volume: 1.435B (+188.681M)

A/D and Hi/Lo: Decliners led 6.39 to 1

Previous Session: Decliners led 3.07 to 1

New Highs: 8 (-4)

New Lows: 66 (-21)

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

Volume was up on NYSE and you could say that means some distribution, but volume was still well, well below average. Thus there really was not distribution outside of the financials and then just some of them. Good to see volume backing off. Better to see it drop off and SP500 hold at this level. Likely? Down to the November low at 752.

SP600 (-3.05%) sold off as well, gapping and then tapping the 18 day EMA on the low before a rebound, albeit modest. Holding above the February consolidation as well, but it is a follower here and needs the other indices to run up for the small caps to run up.

DJ30

Sold off to the November low, undercut it, and rebounded to close right at that level. Volume was up but below average. Key level to hold.

Stats: -254.16 points (-3.27%) to close at 7522.02

Volume: 383M shares Monday versus 323M shares Friday.

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