主题：12/22/2009 Market View -- 宁子

SUMMARY:

- Stocks stumble around, needing a last hour rally just to make things decent.

- LIBOR continues to improve as the cure continues its slow advance.

- Another business we cannot live without asks for a TARP.

- After testing bottom of the range indices now have to rise.

Stocks find some traction late, recover some losses from the day-long slide lower.

There was definitely no melt higher as we anticipated. The futures were flat to modestly lower to start the week, a perfect set up for a move higher. Didn't happen. Stocks started modestly lower and sold progressively lower throughout the session. Sluggish all morning, and though the losses were not that bad at all, breadth was really weak as was the action. A fog was over the market, smothering it. A midday flat ling looked promising, but it turned into another leg lower. The main sellers were the growth indices, though by early afternoon their outsized demise eventually pulled the large cap NYSE indices lower with them. After NASDAQ lost 60 points into the last hour a rebound started, shaving half the losses on the close.

A miss from Walgreen's shows how slow the economy is. Toyota announced it will sport a loss for 2008, only the second time it has ever posted a yearly loss. Sysco in the food wholesale sector reported flat sales. We have to eat for sure, but it seems we are going onto a literal belt tightening mode nonetheless. South Beach Diet mortgage and credit crisis style. China lowered interest rates. With 5 cuts in 3 months this is just about as non-event as you can get for a central bank. Pretty telling when rate cuts are the normal policy direction.

LIBOR improved again, not on the overnight level as was the case for a few weeks, but on the 'long end,' all three months of it. The 1-month fell to 0.46% from 0.51% to end last week. The key 3-month fell as well, down to 1.47% from 1.50%. That decline put the TED spread, the difference between LIBOR 3-month and the US 3-month Treasury less than 150BP, the lowest it has been since the LEH implosion. TED spiked up over 400 BP after LEH. Still a long way to go to get down near the 36BP average in 2006, but these are serious inroads and a key link in the credit chain. The damage has been done, however, so once the credit chain is un-kinked the economy needs the right kind of stimulus.

Unfortunately, none is on the horizon, but that is subject to change. Obama may lean too much on Keynesian pump priming, but he has shown flexibility in the face of new facts. Also, his primary economic advisor at least says he is in touch with and favors small businesses. The problem is the definition of small business. Obama's guys tend to focus on Mom and Pop shops. They are small business no doubt but small business goes on up to 500 employee shops. Those larger small businesses (reminds you of jumbo shrimp, huh?) produce the bulk of new US jobs. If they are not included in the stimulus then once the 'make work' jobs are over there are no new jobs to take there place we are dead in the water once more.

TECHNICAL. As noted, no melt higher, just a melt lower. Stocks were soft on the open and could not gel. It took the last half hour to generate any upside as some short positions were covered after four days of pullback that took the indices near the bottom of the three week range. Stocks bounced and the indices took back half or more of their losses in the last hour. Impressive bounce and the upside welcomed it as it put the indices and many stocks in palatable positions by the close. It was a return, however, to the more volatile times seen prior to the past three weeks. Even so, DJ30 traveled a mere 230 points; chicken feed compared to its October and November swings.

INTERNALS. Generally bad breadth though not chronically so (-2.2:1 NYSE, -2:1 NASDAQ). The late rebound helped pull it back from the -3:1 levels. Volume declined considerably from high expiration Friday levels. It was more than just a normal decline, however. Trade hit holiday light levels. Makes sense as it is a holiday week. The ultra-light trade shows us that while the sellers were in charge, they were just not that strong. On the flip side, it also shows the buyers were at best asleep at the wheel. You want to ignore the action given the light trade, but we were looking at a market that had grown some backbone, that had established a bit of an upside bias as its primary character. That was nowhere to be seen Monday, and it got our attention. Now it is up to how the indices and the leadership holds.

CHARTS. A reach toward the bottom of the three week lateral ranges on the indices, and then a rebound to put them smack dab in the middle. That is good for the upside as it keeps them in the game to rebound once more. The growth indices (NASDAQ, SP600, SP400, SOX) led the market lower, but in the end their rebounds were stronger and that left their patterns looking the best. 'Best,' however, is relative. The recovery keeps them in the game as noted. They still have something to prove, i.e. get over the next resistance and make a higher high in this leg of the move. Last week they tested back and put themselves in position to do that. Monday they hung on to keep them viable. Not exactly a strength move, especially when you just wanted to see a melt higher with some general upside bias. Now we see if that small spine the market grew over the past month can hold.

LEADERSHIP. Sluggish for the indices, sluggish for all the recent leaders. Metals struggled though gold closed higher. Chips struggled but they managed to come back and keep their respectable patterns respectable. Retail faded but it is just setting up nicely for another move. Agriculture was not really a leader, but it was trying to move up. That died on Monday. Some large cap tech turned jell-o-like. Others held up fine, just pulling back some, e.g. QCOM, RIMM, NOK. As with the indices, we now see how many guts they have.

Financials, mortgage makers, automakers, and now commercial real estate. As The Who asked, who's next?

Treasury has used up the first half of the TARP money. It likely wanted to slide into January and the next administration without having to go to Congress and ask for the other half. Or maybe it wants to earmark it before the next administration. If so, it will have the chance.

A new face started making inquiries, asking directions on how to get to DC to ask for some of that TARP money. Commercial real estate is making its case now, another 'too big to fail' segment of the economy. As one of the spokesmen for the industry stated Monday, the US economy cannot recover until commercial real estate recovers.

Add it to the list of critical, can't make it without it industries. Let's face it, all businesses and indeed many US citizens need help. Where do you draw the line? You don't, at least with respect to helping them. The question is, how do you help? We have opened the box of handouts and everyone is lining up for theirs. We have forgotten how we got to where we are.

Some said Monday that it is not socialism to help out businesses and citizens with massive government spending in times of economic crisis. They point out to a history of massive spending in stressful times. Their point is true in that there is targeted spending as well as the general approach through reduced marginal tax rates and the like. The difference this time is the Feds are taking equity in private companies and mandating how they operate.

That is not simply injecting capital and backing off. It is the same as Mr. Potter in 'It's a Wonderful Life' offering to 'help out' for a major stake in the business. It is done under the guise of protecting the taxpayer, but there is no exit plan, no guarantee that once the Feds recover our money that they will get out of the business. Indeed you wonder if they will hamstring the entities and never recover the investment for us, but keep an equity interest to control the most influential industries in our economy.

Very scary. What is the difference from other socialist countries when only the good will of those in office stands between government control of private industry and our free enterprise heritage? We have a Constitution that sets out specific powers to the federal government, reserving all others to the states. Nowhere in that document does it allow taking money from citizens for taking equity stakes in companies.

Yet here we are and more are heading to Washington to get their share of the community pie. Next it will be the hotel industry, then the gaming industry will be there, institutions of higher learning, etc. Basically any group with significant lobbying power. Ironically, those with in theory the greatest lobbying power, the individual voters in the US, will be the least represented. Why? Because we have the money to pay the bills all of the 'vitally important' interest groups are waving in the face of Congress.

That is why we have been adamant that we have to call our Senators and House reps and just say 'no.' It is not that we don't want to help out, it is simply that this is not the way to do it. A free meal ticking program is no way to heal a sick economy. The government should not pick winners and losers but facilitate the markets in allocating resources by making investment capital readily available. How is that accomplished? By creating an environment conducive for PRIVATE investment in US businesses, not government takeovers. Sure money needs to be printed and put into circulation, but let you and me figure out where to invest it. That doesn't take any TARP; just cut taxes for businesses and individuals and then the money will go where it will have the best impact and we don't need any federal decisions about where to put it, who gets it, etc. It is a time proven method, creating the strongest economy the world has ever seen. The other method is time proven as well. There are failed communist and socialist countries littering the path of history.

MARKET SENTIMENT

VIX: 44.56; -0.37

VXN: 41.91; -1.59

VXO: 45.96; +0.02

Put/Call Ratio (CBOE): 0.75; -0.07

NASDAQ

Stats: -31.97 points (-2.04%) to close at 1532.35

Volume: 1.654B (-39.58%). Extremely low trade.

Up Volume: 360.134M (-1.163B)

Down Volume: 1.269B (+210.391M)

A/D and Hi/Lo: Decliners led 2 to 1

Previous Session: Decliners led 1.04 to 1

New Highs: 5 (-2)

New Lows: 115 (+7)

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

A struggle all session, tapping down to the late October low, then rebounding in the last half hour to close right at the 18 day EMA. Very low trade so not a lot of selling, but no holiday cheer to the upside. The rebound kept it in the game for a run at the 50 day EMA (1627).

SOX (-2.45%) sold then bounced as well, coming right off the late October intraday low. Pretty orderly pullback for the semiconductors and they too are in position to continue higher. Need the chips to lead.

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

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

SP500/NYSE

Stats: -16.25 points (-1.83%) to close at 871.63

NYSE Volume: 1.22B (-49.61%). Weak volume at the low end of the range for the past three weeks. Again, not many sellers but they were in control as buyers were out buying holiday gifts and not stocks.

Up Volume: 266.442M (-1.122B)

Down Volume: 943.084M (-62.362M)

A/D and Hi/Lo: Decliners led 2.24 to 1

Previous Session: Advancers led 1.78 to 1

New Highs: 27 (0)

New Lows: 94 (+5)

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

SP500 reached lower toward the bottom of the range and rebounded, but it closed below the 10 and 18 day EMA (884, 882). In the range but has to come off the bottom and take on the early December high again (918.57) and the every descending 50 day EMA (926). Financials need to help out; weren't doing it Monday.

The small cap SP600 (-2.05%) was a downside leader all session, but the small caps recovered smartly to close just over the 10 day EMA and actually look quite good. Said it before, but it is important for the small caps to put in a higher low here and break through the 50 day EMA, 12 points higher.

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

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

DJ30

The blue chips tested lower toward the bottom of the three week range and then rallied back once more just as they did two weeks back the last time they tested this low. Holding at 8500 support, the closing price bottom of the range. Bouncing between 8500 and 9000 on the closes. Not bad, but looking for a break over that 50 day EMA (8936) to get thing interesting for the upside. Yep, looking for that break. The Dow will once again have to show it is the first mover of the group as it is at a critical stage right now. It made a higher high in early December and then failed to take it out last week. Needs a quick turnaround from here. Getting interesting.

Stats: -59.34 points (-0.69%) to close at 8519.77

VOLUME: 211M shares Monday versus 550M shares Friday. Lightest trade of the past month outside of the last day in November.

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

After hours GM had its rating cut to C something from C something. Okay, business stinks and the company is in jeopardy. I think we get it. The toilet-hugging price pattern pretty much indicates investors understand the situation, TARP funds or no TARP funds. TXT (everything industrial) lowered its guidance and announced 2200 job cuts after the bell as well. And the beat goes on.

Economic news starts back up with the final negative Q3 GDP reading. Non-existing home sales and no new home sales are out, along with poor Michigan sentiment. As you note from my descriptions, I am not expecting any major changes in the path of the economic data. It is simply too early for any change in the data. The market is just now trying to move higher, and it has yet to really show it means business.

Yes there are some great moves in progress and we have made some solid money off the bounces, but there has to be another major breakthrough to the upside soon. DJ30 and DJ30 have put in a couple of attempts at the next resistance and both times faded. The first was a higher high; great. Now it is time to make the next break higher and take out that resistance.

Tough to do it during a stretch of two back to back holiday shortened weeks, at least a move with the kind of volume that means anything. At this juncture, however, I think most investors would happily take a light volume melt higher through resistance if some of the leadership stocks put on a decent volume display as they broke higher.

Many stocks tested Monday and recovered some lost ground. There were quite a few, however, that could not get up with the rest of the market. This is an important test for the nascent rally as you want to see the upside bias prevail in the absence of any serious volume in the market. If it cannot return and stocks start to break near support once more we are not going to wait around too long to see the final scene. If we get out and have to get back in on a rebound, okay. There are still enough solid patterns to hold and continue the move, but there are also several that are getting borderline. If they cannot hold we close them and go holiday shopping. If they do hold we move in on a rebound and make some more scratch to . . . spend on holiday shopping. Hey, have to get the old economy going again, right?

Support and Resistance

NASDAQ: Closed at 1532.35

Resistance:

The 18 day EMA at 1536

1536 is the late November 2008 peak

1542 is the early October 2008 low

The 10 day EMA is 1543

1565 is the second low in October 2008

1579 is the 50 day SMA that stalled NASDAQ last week

1603 is the December peak

1620 from the early 2001 low

The 50 day EMA at 1627

1644 from August 2003

1752 from 2004

1782 from August 2004

1786 is the November 2008 high

1846 is the 90 day SMA

Support:

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

1253 is the March 2003 low on the test of the rally off the 2002 bear market low

1108 is the 2002 low

S&P 500: Closed at 871.63

Resistance:

The 18 day EMA at 882

The 10 day EMA at 884

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

The 50 day EMA at 926

965 is the 2003 consolidation low

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:

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

650 on the top and 625 on the bottom of a 7 month range in 1996

475 from 1994 where the market moved laterally for the entire year.

Dow: Closed at 8519.69

Resistance:

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

8626 from December 2002

The 18 day EMA at 8633

The 10 day EMA at 8626

The 50 day SMA at 8702 stopped the Dow on the prior bounce

8829 is the late November 2008 peak

8934 is the December closing high

The 50 day EMA at 8936

8985 is the closing low in the mid-2003 consolidation

9200 is the July peak in the 2003 consolidation

9323 From June 2003 peak

9575 from September 2003, May 2001

9654 is the November 2008 peak

Support:

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.

December 23 - Tuesday

Q3 Chain Deflator-Final (8:30): 4.2% expected, 4.2% prior

GDP-Final, Q3 (8:30): -0.5% expected, -0.5% prior

Existing Home Sales, November (10:00): 4.93 expected, 4.98 prior

Mich Sentiment-Rev. , December (10:00): 58.6 expected, NA prior

New Home Sales, November (10:00): 420K expected, 433K prior

December 24 - Wednesday

Initial Jobless claims (8:30): 575K

November Durable Orders (8:30): -3.1% expected, -6.2% prior

Person Income, November (8:30): 0.0% expected, 0.3% prior

Personal Spending, November (8:30): -0.8% expected, -1.0% prior

Crude oil inventories (10:30): 525K prior

Upside:

Play Date: 12/22/2008

BBY (Best Buy--$27.31; -0.79; optionable): Electronics stores

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

EARNINGS: 3-26-08

STATUS: Double bottom w/handle. BBY gapped higher last Tuesday, clearing the 50 day EMA (25.87) and something of a first handle in its 11 week base. Strong volume on that surge took BBY near 30, and then it started to the tests as the market made the test late last week. It is holding over the 10 day EMA (26.20) and the 50 day EMA on low, low volume. Looking for BBY to test the 10 day and then rebound. We want to catch it on the rebound on some better upside volume. It may not go all the way back, and if it does not we can must move in as it starts back up. Have a hunch it will come on back, however. Either way BBY is giving us a nice test to a nice pattern and in a market where retail is despised almost as much as the semiconductors. Yet the continue to perform.

Volume: 6.652M Avg Volume: 10.522M

BUY POINT: $26.77 Volume=14M Target=$33.92 Stop=$25.88

POSITION: BBY CE - Mar. $25c (69 delta) &/or Stock

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

Play Date: 12/22/2008

BRLI (Bio-Reference Labs--$26.90; -0.36; optionable): Medical labs

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

EARNINGS: Announced 12-18-08

STATUS: Test breakout. BRLI announced its earnings and surged through the 200 day SMA (24.96) on Thursday, moving on strong volume. The move took it out of a 15 week double bottom with handle base, and clearing the 200 day SMA was a nice bonus. It is testing somewhat, tapping toward the 200 day on the Monday low (25.72) and then rebounding to close basically flat. May come back to test some more before it starts back up, but want to be ready if it starts up right here. If it does test back some more that is fine as we will let it come back and then grab it as it rebounds once more.

Volume: 119.879K Avg Volume: 126.188K

BUY POINT: $27.48 Volume=225K Target=$33.39 Stop=$25.56

POSITION: BJQ BE - Feb. $25c (67 delta, 77 OI) &/or Stock

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

Play Date: 12/22/2008

HMSY (HMS Holdings--$29.00; -0.24; optionable): Cost containment, payment accuracy services for govt. health care programs

http://biz.yahoo.com/p/h/hmsy.html

EARNINGS: 2-20-08

STATUS: Double bottom w/handle. HMSY made is some nice coin on its November to early December run and has come back to test, bouncing off the 50 day EMA (26.55) and coming back up to test the December high. It is now making a new test, tapping the 10 day EMA on the Monday low (29.55). Looks to be making a higher low here in its 12 month base. Showing some really high upside volume to end last week, and looking for a good volume jump as HMSY makes a new upside surge.

Volume: 294.072K Avg Volume: 338.992K

BUY POINT: $29.68 Volume=500K Target=$35.91 Stop=$27.89

POSITION: QHT CE - Mar. $25c (75 delta, low OI) &/or Stock

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

Play Date: 12/22/2008

LRCX (Lam Research--$21.43; -0.63; optionable): Semiconductor equipment

http://biz.yahoo.com/p/l/lrcx.html

EARNINGS: Third week of January

STATUS: Trend reversal. Calling this a trend reversal as LRCX formed something of a double bottom in October and November though the November low was a pretty good undercut of October. It has rebounded with a rally up to the 50 day EMA (22.02), trading on both sides of that key level the past week and one-half. Looking for a higher low to come out of this consolidation and send LRCX higher to follow the nice bump in the money flow that shot higher this month.

Volume: 2.323M Avg Volume: 3.654M

BUY POINT: $22.31 Volume=4.5M Target=$26.50 Stop=$20.75

POSITION: LMQ CD - Mar. $20c (66 delta) &/or Stock

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