主题：04/09/2009 Market View -- 宁子

The market finished the shortened week with strength, moving higher on rising volume. Often when the market closes strong ahead of a holiday it is down to start the next week. With the gaps higher Thursday that makes some sense; so many stocks gapped higher and not all were worthy but were just caught in the whoosh higher. Thus we could very easily see some backfilling to start next week despite the strong move to continue the second leg higher off the March low shown on Thursday. That could give us some good entry points on some of those great stocks that jumped higher Thursday such as CMI, SCHN, DE, MR, and quite a few others. Patience; let them come to us. As noted above it could be a day or two or it could be a week or two before they are ready depending upon what the overall market does with the move.

As for what Thursday and the WFC pre-announcement means we need to get past the initial euphoria the shock of 2x expectations placed in investors' minds. The WFC earnings on top of RIMM's earnings have investors starting to consider that things are not as bad as everyone thought. Some are even saying that we could get a positive GDP reading in Q2.

Maybe we will, but we need to put things in perspective. The WFC earnings were very nice to see as they showed mortgages are recovering and that basically banks can make money in this environment. But what is the environment? The Fed has reduced the cost of lendable funds to banks to virtually zero, and banks can turn around and loan the money from 2% on up to 5% and more. With many individuals and companies starved for credit to operate, banks such as WFC are making money hand over fist with this incredible gift from the Fed. Let's face it, a trained monkey could make money in this circumstance. Maybe not even trained monkeys.

Does that translate to other sectors of the economy? No. They don't have the no cost funds to operate with. Indeed, when you are dealing with banks right now there is massive unfairness and indeed a lack of equal protection under the Constitution. The Congress has set up zones of the country where loans are not equal. If you live in Florida, parts of New York or California, a jumbo loan is not limited to $417K to be conforming as it is in all the rest of the country. This involves mostly individuals, but the point is the same: the banks are getting a sweetheart deal, some people by virtue of where they live are getting a sweetheart deal, but none of the rest of us are.

Thus the euphoria spawned by the RIMM/WFC earnings could be setting up disappointment as more earnings come out if the majority view these two reports (and we will throw in BBBY because it too had good earnings) as definitive of the earnings season. Harsh reality could quickly turn the excitement to some consternation.

Hopefully earnings will continue to surprise. That will continue to help the market . . . to a point. At some point, even in good earnings seasons, the market hits its good news saturation level. Despite continuing good tidings there comes a point where each additional positive story has a lower marginal impact until they have no impact. The market cannot ride news higher indefinitely, and when that point is hit then there is a correction. If earnings continue to turn up better the market will rally on this second leg until the saturation point and then it will sputter along with the second leg.

That is of course not the case right now. The earnings are new, fresh, and better than expected. The stock move is strengthening as of Friday. That means we will continue looking for opportunity to invest in this second upside leg and that means some testing by stocks that gapped higher Thursday or were already moving well ahead of the news. It also means we look for newly emerging stocks as well because as we know, stocks in rallies come out in waves. The early leaders take off, run higher, then test. As they were making their moves others were setting up bases and then make their break higher as money moves from the early leaders to the newly emerging. It flows around the market, eventually getting back to the early leaders after they test and come back to near support and we see them rally off that test once more. Have said it before: rotation is not just good for tires.

So we enter this week with a strengthening second upside leg and that means we continue looking for entry points on solid stocks whether it is an early week pullback to test the gaps higher or new stocks emerging from bases. At the same time there is the earnings overlay. Thus far so good but we are not counting on that holding up. And as noted, even if it does, at some point the news is no longer news. The beauty of that is we get a nice run for our positions, take some nice gain, and then are more than ready to see the market test back.

Support and Resistance

NASDAQ: Closed at 1652.54

Resistance:

The January closing peak at 1653

1666 is the intraday January 2009 peak

1780 is the November 2008 peak

1947 is the October gap down point

Support:

1644 from August 2003

1623 is the April peak

1620 from the early 2001 low

1603 is the December peak

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

1587 is the March 2009 high is getting put to bed again

The 10 day EMA at 1581

1569 is the late January 2009 peak

1542 is the early October 2008 low

1536 is the late November 2008 peak

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

The 50 day EMA at 1508

1505 is the late October 2008 closing low.

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

The 50 day SMA at 1478

1440 is the January 2009 closing low

S&P 500: Closed at 856.56

Resistance:

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:

853 is the July 2002 low

848 is the October 2008 closing low

846 is the April peak

839 is the early October 2008 low

833 is the March 2009 peak

The 90 day SMA at 827

The 10 day EMA at 825

818 is the early November 2008 low

815 is the early December 2008 low

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

The 50 day EMA at 805

800 is the March 2003 post bottom low

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

Dow: Closed at 8083.38

Resistance:

8141 is the early December low

8175 is the October 2008 closing low. Key level to watch.

8197 was the second October 2008 low

8375 is the late January 2009 interim peak

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:

The April peak at 8076

The 90 day SMA at 7975

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

The 10 day EMA at 7846

The 50 day EMA at 7703

7702 is the July 2002 low

7694 is the February intraday low

7552 is the November closing low. KEY Level.