主题：1/8/2009 Market View -- 宁子

SUMMARY:

- Market does some more testing, recovers to hold support ahead of jobs report.

- Jobless claims fall for second week but nobody believes it means anything.

- WMT sales rise less than expected as massive discounting from other retailers poaches discounters' sales.

- Market is set up to absorb an expectedly bad jobs report.

Another lower start, but indices hold, recover ahead of jobs report.

More economic news, but it was not worse than expected as with the Wednesday ADP report. Jobless claims fell to 467K (-555K expected), and unlike last week there were no immediate reasons for the drop other than typical skepticism of government figures. Same store sales were not good in December, but a 1% decline was, as with jobless claims, less than expected. WMT sales grew less than expected, however, and that cast even more worries on the entire retail/consumer/US economy/future of the world drama. Others performed better than expected, but with sales still falling it was a lot like a ship sinking a bit slower. The Bank of England cut rates, and get this, to the lowest level since its inception in 1694. LIBOR fell again, continuing its move lower with a sharp decline in the important 3-month rate (1.35% versus 1.4% Wednesday). That definitely doesn't hurt. Mortgage rates fell to the lowest ever for the fixed 30 year (5.01%). That doesn't hurt either.

A pile of news for the day before the jobs report. Stocks were down pre-market and on the open, but not heavily. Stocks scratched back after the first hour, then tested back through lunch, fading just missing turning positive. Stocks came off the lunchtime test with a rebound, and continued to stair-step higher all afternoon, sprinting higher into the close after fighting off a last hour attempt to push the market back. The afternoon saw a plan from several senators to protect homeowner's heading into bankruptcy, and that may have helped, but the market was on the rebound well before the announcement. Stocks pushed to gains on most indices (sans DJ30, the laggard this move), but not big gains. They did, however, hold key levels and showed some life ahead of the feared jobs report.

TECHNICAL. Intraday action was solid with a lower open giving way to a move higher, overcoming a midday slump, and sprinting into the close. Pretty solid action given the jobs report to come Friday.

INTERNALS. Not a super day, but considering the weakness and caution ahead of the jobs report, internals were fine. Breadth was decent on both NYSE and NASDAQ (1.5:1). Volume fell off a couple of clicks, coming in below average on both exchanges, but not bad. No heavy buying on the early weakness, but no heavy buying on the rebound either.

CHARTS. The indices were weak early, but they held where they needed to. NASDAQ and SP600 recaptured the 50 day EMA. SP500 tapped the 18 day EMA on the low and rebounded to close over the 10 day EMA. Same with DJ30, though it continues to struggle more than the other indices. SOX is in great shape at the 50 day EMA, reaching below that level and then rebounding to show a doji with tail on the candlestick chart. NASDAQ, SOX and the small cap SP600 all held above the December highs and bounced. All in all, very nice technical positioning on the pullback/consolidation after the last leg higher and heading into the Friday jobs report.

LEADERSHIP: Similar to the indices, there were good, orderly pullbacks in recent leadership groups such as metals (PCU, BHP), commodities, energy (APC, XTO, BHI), chips (BRCM, NVLS), techs (HPQ, QCOM). All tested and rebounded nicely. They are well positioned to move higher, and they need to swallow the jobs data and show the move.

Jobless claims fall for second week but no one is impressed.

Jobless claims were much lower two weeks back than expected (491K) and again this past week (467K versus 555K). Two weeks of lower numbers after week after week of ugly rises. The prior week decline was pretty roundly scoffed as seasonal adjustments skewed the numbers as fewer holiday jobs were created and thus the adjustments reduced the figure too much. This week, however, there were no adjustments, just fewer claims. If you put the two weeks together without any asterisks it would be interesting. As it is, most view it as premature, way premature, to get excited or even titillated.

One of the reasons is the continuing claims number. It hit a new high on this run at 4.61M. Have not seen that many since the early 1980's. Now today the work pool is much larger so 4.6M today, similar to the dollar, is not what it was in 1982. Nonetheless, 4.61M is a lot, and it continues to grow. Usually you see CC's decline as an employment slump deepens because those on the lists fall off as their benefits run out. This economic decline has occurred so quickly, however, that the rolls are still expanding as the newly unemployed draw a check.

The two improving weeks could possibly mean the rate of loss is slowing. That seasonal aberration makes that a hard concept to buy into at this point. It is interesting and worth keeping an eye on. When you consider how rapidly the decline occurred and how companies are slow to take action, however, it is hard to imagine improvement yet. Nonetheless, jobless claims are not hires, which don't improve until the economic and business cycle is robustly higher. They slow down long before any hiring starts. Thus the usual progression is the decline in new claims, lower continuing claims, and then well into the expansion, new hires. Again, worth watching how this unfolds over the next month to six weeks.

WMT sales decline: consumers completely hunkered down or a sign of a trend.

You know the drill: after WMT lost its growth status in the late 1990's and became just another slow growing large cap, it has only moved higher when economic times turn down and people become discount conscious. In short, WMT does not perform well unless there is a recession and people reluctantly head there to shop to stretch dollars.

This last WMT run started in December 2007, just after the stock market topped in anticipation of the economic slowdown. Prior to that it languished from early 2002 through late 2007 in a molasses-like flat to down range. It rallied in 2001 on into 2002 after 9-11 when the economy went into standstill. Consumers sought value in that recession and WMT rallied from 40ish to 63. Nice move. Before that as it traded in its post-growth stage, it traded lethargically. After that run and the economic recovery, it slipped into that long malaise as consumers shopped elsewhere during the better economic times, spending their money on better goods. Sure they still buy toilet paper, paper towels, cleaning products and even groceries from WMT, but is not the first choice for other items.

Thus you always take note when WMT sales growth slows as a potential indication that consumer habits are changing and the consumer is looking elsewhere to shop. Is that the case this time? There are some indications that other retailers are performing better than expected. TGT sales were not as atrocious as anticipated (-4.1% versus -9.1%), and Macys was better (-4% versus -5.9%). Interesting, but not signifying a change in the consumer just yet.

What happened over the holidays is that massive discounting lured shoppers to Macy's and other stores with higher quality merchandise. That took customers away from WMT and to those other stores, but due to the discounts their sales dropped even with the higher traffic. It was a desperate move to get rid of inventory at any cost and it did pull customers from WMT.

Thus there is no subtle shift away from discounters that would indicate a shift in their economic outlook. Yes confidence and sentiment rose in December, but they are hardly at levels that suggest consumers are switching to largesse once more. Consumers were looking for bargains, and the 50% to 75% off discounts were a magnet. This month that is going to slow down despite post-holiday sales and WMT's figures will recover.

Look for bargains.

Consumers are more in a savings mode at this point given the uncertain economic future. If you look, however, there are some great bargains out there. If you have some cash you can make the best buys since the last recession. In New York, California, and Florida many are selling some very nice merchandise that you would never see on the market. They are going at very good prices as well. There is a move to get rid of 'toys' such as boats, motorcycles, non-utilitarian autos, paintings/artwork, etc. If you have some extra coin and are diligent there are amazing deals on quality merchandise showing up on the web and other places as consumers look to turn stuff into cash.

THE MARKET

MARKET SENTIMENT

VIX: 42.56; -0.83

VXN: 43.23; -0.29

VXO: 41.96; -1.79

Put/Call Ratio (CBOE): 1.07; -0.07. Two days above 1.0 on the close. As soon as the selling started the put activity jumped. Good indication of overly negative sentiment on this short bout of selling.

NASDAQ

Stats: +17.95 points (+1.12%) to close at 1617.01

Volume: 1.997B (-2.8%). Volume slipped below average on the gap lower and recovery to a gain. Noncommittal, but with this test that is what you want as it sets up for a new bounce.

Up Volume: 1.393B (+919.99M)

Down Volume: 606.613M (-965.852M)

A/D and Hi/Lo: Advancers led 1.49 to 1

Previous Session: Decliners led 2.83 to 1

New Highs: 16 (+7)

New Lows: 13 (-1)

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

NASDAQ recovered the 50 day EMA (1610) though the rebound was on low volume so it was not a decisive move. Nonetheless it was what NASDAQ needed to do, i.e. hold support at the 10 day EMA as well as the December peaks and bounced. Not much of a bounced, but again, it held support and put itself in position for a higher low and a higher high as this steady move off the lows continues.

SOX (-0.59%) showed some great action as well, selling below the 50 day EMA on the low and then rebounding to close over that level and at the December peaks. Nice doji with tail on the candlestick chart, and after a pullback that indicates an index or stock is ready for a change in direction. All it needs is the go ahead after the jobs report.

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

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

SP500/NYSE

Stats: +3.08 points (+0.34%) to close at 909.73

NYSE Volume: 1.196B (-2.98%). Volume remains below average and it was lower as well on this session. At least it is lower as the indices tested even if it never did reach average on the move higher. Some volume on a rebound off of this test would be telling.

Up Volume: 749.387M (+604.232M)

Down Volume: 429.657M (-653.331M)

A/D and Hi/Lo: Advancers led 1.67 to 1

Previous Session: Decliners led 4.6 to 1

New Highs: 30 (+1)

New Lows: 55 (-3)

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

The large caps held steady after testing down to the 18 day EMA (898) on the low. A nice rebound, showing a doji on the candlestick chart just as with the SOX. It has made the test and is in position to put in a higher low and continue the rally. As with the other indices, it just needs a trigger.

SP600 (+0.52%) sold lower, tapped at the December peak, and recovered to close over the 50 day EMA. Another doji with tail on the candlestick chart that shows the index is of the right mind to turn back up. It has the best pattern of all, having held easily over the December peak.

SP600 Chart: http://investmenthouse.com/ihmedia/SP600.JPEG

SP400 CHART: http://investmenthouse.com/ihmedia/SP400.jpeg

DJ30

The blue chips are still below the 50 day EMA (8864) as well as the December highs, but at least it is showing the same kind of action. In short, a rather decent and orderly pullback that ahs it in position to bounce once more. The Dow is more of a follower right now, and as noted Wednesday, that is okay for now.

Stats: -27.24 points (-0.31%) to close at 8742.46

VOLUME: 226M shares Thursday versus 266M shares Wednesday.

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

The past couple of sessions there is a pessimism about the market's ability to hold the current move off of the lows. As discussed Wednesday, the move is not a blast higher that shot all of the ammo in a week, but an orderly, steady progression of gains, tests to higher lows, gains to higher highs, tests, etc. That is the kind of move that has staying power, but such modest moves compared to the violent selloff through November has many believing this move doesn't have any inherent strength since there is no rip back to the upside.

With the nature of the credit issues and resultant economic slowdowns, a rip-roaring recovery is not realistic. But that does not take away from this move's technical underpinnings and the leadership. It is often the case that recovery rallies are dismissed as weak bounces when they are not flashy and have frequent albeit orderly tests. There is a holdover skepticism after the harsh selling as no rally is viewed as a true recovery. Same thing in early 2003 as that test showed perfect price/volume action and growing leadership. We were there in early 2003, and while this shares some of the same characteristics, it is no early 2003. Not yet at least. The market rallied nicely off that October low and then came the test. This move is more of the initial move off the low, and this pause is another orderly pause in what we think will be a continuing move higher. We only hope there will be an early 2003-like test after a further solid run higher on this recovery.

Maybe we are all wet behind the ears and this is a pipsqueak mini rally in an ongoing bear market. With the leadership we see and the technical action, however, we are willing to put money to work in the belief it will continue from this point.

That leaves a lot riding on the action Friday after the jobs report. The market looks as if it has built in an appreciation of how bad the jobs report will be and is in position to continue the move. There are many good stocks still in position to rally higher yet again. We even put more money to work Thursday as stocks tested support and then rebounded, looking like early movers in a rebound to come. That is what the leadership does.

Thus we will continue looking for a return to the upside after the jobs report. Maybe it does not come Friday, maybe it does. We have positions we are in set up to move and we have plays that are ready to show us buys if we get the nod from the market.

Support and Resistance

NASDAQ: Closed at 1617.01

Resistance:

1620 from the early 2001 low

1644 from August 2003

The 90 day SMA at 1746

1752 from 2004

1782 from August 2004

1786 is the November 2008 high. Key level.

1948 is the early October 2008 gap down level

Support:

The 50 day EMA at 1611

1603 is the December peak

The 10 day EMA is 1593

The 18 day EMA at 1574

1565 is the second low in October 2008

1554 is the 50 day SMA

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

1499.21 is the 2008 closing low

1493 is the October 2008 low. Key low.

1428 is the November 2008 low

1398 is the early December 2008 low

1387 is the 2001 low

1295 is the November 2008 low

S&P 500: Closed at 909.73

Resistance:

The 50 day EMA at 917

919 is the early December peak

965 is the 2003 consolidation low

The 90 day SMA at 984

995 from June 2003 consolidation peak

1008 is the November 2008 peak

1065 is the Q4 2003 level that SP500 started the run to 2007 after the first run in the recovery.

Support:

The 10 day EMA at 906

899 is the early October closing low

The 18 day EMA at 898

896 is the late November 2008 peak

889 is an interim 2002 peak

866 is the second October 2008 low

853 is the July 2002 low

848 is the October 2008 closing low

839 is the early October 2008 low

815 is the early December 2008 low

818 is the November 2008 low

800 is the March 2003 post bottom low

768 is the 2002 bear market low

741 is the November 2008 low

Dow: Closed at 8742.46

Resistance:

The 10 day EMA at 8775

8829 is the late November 2008 peak

The 50 day EMA at 8864

8934 is the December closing high

8985 is the closing low in the mid-2003 consolidation

9200 is the July peak in the 2003 consolidation

9323 From June 2003 peak

The 90 day SMA at 9353

9575 from September 2003, May 2001

9654 is the November 2008 peak

Support:

The 18 day EMA at 8723

The 50 day SMA at 8677

8626 from December 2002

8521 is an interim high in March 2003 after the March 2003 low

8451 is the early October closing low. Key level to watch.

8141 is the early December low

8197 was the second October 2008 low

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

7965 is the November 2008 intraday low.

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

7702 is the July 2002 low

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

7449 is the November 2008 low

7282 is the October 2002 low

Economic Calendar

These are consensus expectations. Our expectations will vary and are discussed in the 'Economy' section.

January 5 - Monday

November Construction Spending (10:00): -0.6% actual versus -1.4% expected, -1.2% prior

January 6 - Tuesday

November Factory Orders (10:00): -4.6% actual versus -2.6% expected, -6.0% prior (revised from -5.1%)

ISM Services, December (10:00): 40.6 actual versus 37.0 expected, 37.3 prior

January 8 - Thursday

1/03 Initial Jobless Claims (8:30): 467K actual versus 555K expected, 491K prior (revised from 492K)

Consumer Credit, November (2:00): -$7.9B actual versus $0.0B expected, -$2.8B prior (revised from -$3.5B)

January 9 - Friday

December Average Workweek (8:30): 33.5 expected, 33.5 prior

Hourly Earnings, December (8:30): 0.2% expected, 0.4% prior

Nonfarm Payrolls, December (8:30): -500K expected, -533K prior

Unemployment Rate, December (8:30): 7.0% expected, 6.7%

Wholesale Inventories, November (10:00): -0.9% expected, -1.1% prior

Upside:

Play Date: 01/08/2009

BHI (Baker Hughes--$37.12; +1.20; optionable): Oil and gas service company

http://biz.yahoo.com/p/b/bhi.html

EARNINGS: 1-28-09

STATUS: Cup w/handle. Nice break higher Monday and Tuesday on strong volume, moving through the 50 day EMA (34.83) on that strong surge. Wednesday and Thursday it tested the 50 day on the low and bounced. Nice 12 week base formed at the bottom of the July to December selloff and setting up for a run up toward 48 to fill the gap lower from early October. Very solid and love the price/volume action here in this base.

Volume: 4.425M Avg Volume: 6.774M

BUY POINT: $37.38 Volume=8.5M Target=$43.95 Stop=$34.76

POSITION: BHI DG - Apr. $35c (64 delta) &/or Stock

http://www.investmenthouse.com/ci/bhi.html

Play Date: 01/08/2009

DRYS (Dryships--$15.13; +2.17; optionable): Bulk dry goods shipping

http://biz.yahoo.com/p/d/drys.html

EARNINGS: Early February

STATUS: Ascending base. We played DSX for a modest gain, but DRYS has set up better and one of our subscribers pointed it out. While DRYS has been dismissed on some of the television trading shows, this is an excellent base showing great price/volume action. DRYS was a hot 2006 and 2007 stock, then has a tough 2008 as the commodities trade fell dead. After dumping hard into October, it has formed a 10 week base and is making higher lows along the 10 and 18 day EMA. Volume surged this year as the commodities trade picked up. Nice low volume test Wednesday and then a higher volume jump Thursday. Money flow is scorching. Looking to move in as it continues higher on strong trade.

Volume: 31.785M Avg Volume: 14.818M

BUY POINT: $15.34 Volume=20M Target=$22.31 Stop=$14.27

POSITION: OOC FC - June $15c (52 delta) &/or Stock

http://www.investmenthouse.com/ci/drys.html

Play Date: 01/08/2009

QCOM (Qualcom--$35.28; -0.27; optionable): Telecom equipment

http://biz.yahoo.com/p/q/qcom.html

EARNINGS: Early February

STATUS: Test breakout. QCOM surged for us through Tuesday, letting us some bank some solid gain. Then it faded and we set our sights on picking it up as it rebounds. Showed a nice doji with tail Thursday and looking for a strong move through the 50 day EMA (35.53) to give us the buy.

Volume: 16.353M Avg Volume: 24.097M

BUY POINT: $35.68 Volume=26M Target=$39.95 Stop=$34.35

POSITION: AAO DG - Apr. $35c (54 delta) &/or Stock

http://www.investmenthouse.com/ci/qcom.html

Play Date: 01/08/2009

SOX (Philly Semiconductor Index--$222.53; -0.59; optionable)

STATUS: Test 50 day EMA. Nice break higher this week, clearing the December high and the 50 day EMA (220). Wednesday and Thursday it came back to test, undercutting the 50 day but then rebounding to close over it. That shows a doji on the candlestick chart, and that indicates the index is in position to bounce, showing some momentum change. Looking to pick off SOX as it rebounds and moves toward the November high at 247.76. A move to the target lands a 55%ish gain.

BUY POINT: $223.38 Target=$245.00 Stop=$219.91

POSITION: BJH CW - Mar. $220c (58 delta)

http://www.investmenthouse.com/cd/sox.html

New buy point on current position:

Play Date: 01/08/2009

PCU (Southern Copper--$17.54; -0.20; optionable): Cooper

http://biz.yahoo.com/p/p/pcu.html

EARNINGS: Late January

STATUS: Cup w/handle. Looking to buy some more of PCU as it forms the handle to a 14 week base. It broke higher Monday, clearing the November and December peaks. It faded back and Thursday showed a nice tight doji on the candlestick chart just over support at the 10 day EMA. Excellent upside volume strength this year. Nice volume jump Thursday on the doji. Looking for the break higher on some trade to give us the buy. Very nice.

Volume: 5.815M Avg Volume: 6.762M

BUY POINT: $18.08 Volume=7.2M Target=$24.95 Stop=$16.81

POSITION: PCU CW - Mar. $17.50c (58 delta) &/or Stock

http://www.investmenthouse.com/ci/pcu.html

Switch to SSO this morning.

I waited too long. Well, in this market, you've gotta be more conservative...

mins ? I sold my SSO at the end of this session.No loss or profit on it. Just don't want to hold it during this weekend. Waiting for your market review :)

to hit 960 for getting into SDS, but it changed direction around 940. Many people thinks it is time to go long since it held well facing very bad news. I think we should be careful, since there are may be more really bad news and market may cave in at the end.

BTW, are we going to market review for Friday?

Thanks