Market Talk / March 18th - 24th

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MARKET COMMENT

March 21, 2007




Smart money? Or just money? It’s an interesting thought but probably just a waste of time to ponder.

I saw this article today here and I thought maybe market insiders are going thru some clinical trial for this new drug that helps you forget painful events from the past. Sort of like the last three weeks. Whatever problems existed recently [subprime mortgage contagion, recession, a Chinese inflation crackdown, etc] have been overwhelmed by a wave of money.

What the Fed said today amounted to little. I read their statement a few times and couldn’t find anything that was significant other than a “clue” that talk of “additional policy firming” [higher interest rates] was replaced by “future policy adjustments”. Investors with cash to spend are a dangerous herd and they believe they found the magic words to start a bullish stampede.


Money talks? You bet. Just a week or so ago all investors had one theme on their minds--avoid risk. Today as far as risk is concerned--game on. And we had a 90% day which means 90% of volume was higher. This is bullish.

We don’t want to spend time on conspiracies we can’t prove. Let’s just point out the money injections and the results.

These past few weeks have been trying for all but the nimblest day-trader. That’s where trading action has been most profitable. For typical trading systems there has been little success. But tomorrow is another day.

Have a pleasant evening.

http://www.etfdigest.com/daveDaily.php
 
Wednesday, March 21, 2007
Options Update

Peter Stolcers

Ever watched a horror movie where the victim knocks out the villain only to see him come back to life? You just want them to strike the fatal blow while they have the upper hand. That’s how I feel right now. The bears had the bulls on the run, but a flesh wound was all they could muster. If there were a good old fashion correction, I have a list of stocks I’d like to buy at lower levels. I believe there are deep seeded issues that need to be resolved and I will not turn bullish until a few things happen.

First, I would like to see the SPY 141 level hold for at least a month. Second, I would like to gauge the impact of so called Liar Loans (aka “Alt-A” loans) as they convert from fixed to ARMs in the next month. Third, I want to see corporate earnings growth rates stabilize. Earnings are growing, but at a slower rate. The market drop that we have seen the last two weeks seems to be nothing more than a warning shot. I have included some arrows in the chart that help to explain my rationale. The big down day is very visible and to the right of it you can see the first arrow. The market made an intraday low and snapped back before the close. The next arrow is actually quite constructive. The market makes a new relative low and it closes near the low of the day. However, if you look at the next trading day (3rd arrow) you will see a snap back rally. The fourth arrow shows a big intraday drop and another snap back rally by the close. My conclusion is that the bears simply can’t destroy the “bid” to the market. Since the last decline, the bulls have regained their confidence and they know that a push above SPY 141 will create buying pressure.

To add fuel to that fire, most of the other markets are on the rebound as well, and the Chinese market is back to all-time highs. If this market decline were the real deal, we would have seen a number of down days in a row, and there would have been lower relative lows and lower relative highs. This head fake has cost me money, but my psyche is intact. I know that a clear perspective will help me identify the next opportunity and I’ll make my money back. As for today, I’m not expecting anything new from the Fed. The market has the momentum it needs to move higher and a non-event will be spun in favor of the bulls. I’m prepared to sell my puts and go to cash for a while if that scenario plays out. It will be “dead till the Fed” and you should take your lead from the SPY 141 level.


Posted by Hamzei Analytics, LLC at 6:10 PM








http://www.hamzeianalytics.net/
 
Investors Turn More Bearish on U.S., Merrill Says (Update2)

By Sarah Jones
March 21 (Bloomberg) -- Investors in March were the most bearish on U.S. equities in seven months on mounting pessimism about the outlook for earnings growth, a Merrill Lynch & Co. survey showed. Cash levels also reached the highest since August.
``Investors have become more averse to U.S. assets,'' said David Bowers, a consultant to Merrill, the third-biggest U.S. securities firm by market value. He spoke at a press briefing in London today. ``There's been a dramatic change in regional preferences.''
The U.S. Standard & Poor's 500 Index has slid 3.3 percent from a six-year high reached on Feb. 20, as growing mortgage delinquencies and surging inflation heightened concern expansion will slow in the world's largest economy.
Merrill's poll of 199 fund managers, who together oversee $668 billion, was conducted between March 9 and March 15.
The S&P 500 has rebounded 2.7 percent from its low for the year on March 5. The Morgan Stanley Capital International World Index, a global stock gauge, has rallied 3.6 percent in the period on speculation mergers and acquisitions will increase.
A net 25 percent of fund managers questioned this month said they were ``underweight'' U.S. equities, up from 18 percent in February.
Thirty-two percent said the outlook for U.S. corporate earnings is the least favorable worldwide, which was double the percentage from last month and the biggest since March 2006.
Cash Jumps
Europe remained the favorite region, followed by Japanese equities and global emerging markets. A net 35 percent of respondents said they were ``overweight'' European stocks, down from February's 47 percent, which was the highest in 18 months.
Cash levels jumped to 4.4 percent from 3.8 percent in February, and 30 percent of investors said they were overweight cash.
``Global money managers have revealed the full extent of their heightened aversion to risk,'' Bowers said. ``The recent turmoil seems to reflect increased U.S. country risk.''
A composite indicator of risk appetite and liquidity conditions dropped 5 points to 37 this month, one of the lowest readings in the past five years, Merrill said. A score above 42, the average since the start of 2002, suggests that risk appetite and liquidity are above normal, and vice versa, Merrill said.
This month's score was still higher than during a market slump in May and June of last year.
`Overweight' Drops
The MSCI World Index dropped 6.1 percent in the five days starting Feb. 27 in a rout that wiped more than $3.3 trillion off the value of markets worldwide. Shares fell as a slump in Chinese equities spooked investors and late payments on subprime mortgages in the U.S. reached a four-year high.
A net 47 percent of fund managers questioned by Merrill this month said they were overweight equities worldwide. That's down from 57 percent in February and matches January's result.
Investors still see equities as more attractive relative to bonds, the results showed. Sixty-five percent said global equity markets were fairly valued, versus 39 percent saying the same about bonds.
Pharmaceutical and so-called consumer-staple stocks were the favorite global industry groups this month, as investors preferred businesses relatively immune to slowing economic growth. ``Consumer-discretionary'' shares were the least favored, followed by utilities.
Bowers, joint managing director at Absolute Strategy Research Ltd. in London, continues to produce the study after leaving Merrill in August. He had been chief global strategist at the brokerage since 2000.
Merrill is a passive, minority investor in Bloomberg LP, the parent of Bloomberg News.

http://www.bloomberg.com/apps/news?pid=20601087&sid=ahMX9JaLfUXs&refer=home#
 
I think Bowers has always worn a bear suit. We need the bears to try to press their case - they were not in control on this last consolidation and now the market is set to achieve new all-time highs - just watch the NYSE A/D line for leadership.
 
Briefing.com-
08:32 am : S&P futures vs fair value: -1.2. Nasdaq futures vs fair value: -2.0. Even though future policy adjustments still depend on the evolution of the outlook for both inflation and economic growth, as implied by "incoming" data, today's initial claims report isn't affecting the Fed's recent shift in tone whatsoever. The Labor Dept. just reported that weekly jobless benefits fell just 4K to 316K (consensus 325K). The futures market has not budged and still languishes below fair value, suggesting stocks will take a breather following yesterday's huge run-up. Bonds have also held steady as the 10-year note is still down 4 ticks to yield 4.55%.
 
Now that we're hitting cuttoff time and markets are a little down - some day trading profit-taking - we'll probably have a rally this afternoon! :D
 
Seems like a lot of folks going to G anf F today. Not much conviction on the rally?
 
Looks likes the wind is up! Starting to see white-caps.......:worried:
 
Actually what you should be saying Spaf is " Folks we expect a little turbulence-so we turned the seat belt sign on-flight attendant can you stow your carts and return to your station. Thank you."
 
Tempest,
OK!.......I think I just spilled my martini!.........Where is the dang call button!......:D
 
The Kingdom of TSP
Daily Edition
March 22, 2007 Closing​

Yak, Le Charts, Doodles, Tea Leaves & The Tally Can

Kingdom Yak:
Pro-Yak....................................A day of consolidation.

Con-Yak...................................Krude is on the rise!

Jester-Yak................................I need a break!

Le Charts
SP032207.gif

Charts courtesy of www.stockcharts.com​

Doodles:
Stops.......................................Alert (-1%)....Trail (-2%)
.....SPX........1434.54 -0.50.........1421.............1407

Dollar........................................83.08 +0.33 for the day.

Lube (NYMEX) Closed at...............61.69 +2.08 for the day.
Oil Markers.................................<60= ok, 60-65= worry, >65= panic.

Tea Leaves:
Yakndoodles...............................Green.

Tally Can
TSP Funds..................................G-fund, F-fund, C-fund, S-fund, I-fund.
Top 10 last 12 mo........................3.8 ......5.3 ......0.3 .....0.5 ......0.3
Today........................................3 made IFT(s), 90% bearish, 10% bullish.
Yesterday...................................2 made IFT(s), 83% bearish, 18% bullish.
 
Thursday, March 22, 2007
Equity Index Update

Brad Sullivan

“Coleman, it was all a dream, a terrible awful dream.” So says Louis Winthorpe III in Trading Places…indeed shorts came across one of the most painful of sessions in a long, long time. Wasn’t it just a scant week ago that the SPX undercut the trading low for our recent move lower and the DJIA broke below 12,000? Ah, what a few words – or in this case, absence of wording can do for a marketplace. In removing the tightening bias from their statement, the FOMC set off the buy stop heard round the world. How aggressive was the pandemonium? In the first 5 minutes after the announcement, the SPmini contract traded over 124,000 contracts with a face value of NEARLY $9BILLION. At the end of the first 30 minutes of trading post – FED, the contract traded a value of over $33 BILLION.

Rumors were abundant that institutional buy stop orders were triggered above 1430, 1437, 1441 and 1445 in the SPM7 contract. By the time the bell rang the indices, as a collection, rested just beneath February 27th levels and have seemingly announced to the world that this correction has run its course. Again…what a difference a week makes. One interesting area of trading has been the performance of the long end of the curve since the announcement. Initially, the bonds surged higher…today they rest -18/32 from yesterday’s close as players have time to reassess some of the initial thoughts. For index buyers this is not the scenario they wish to play out. Keep a close eye on potential trigger points across all markets the next several days as we adjust to this new found optimism.

A quick note on the internals…the NDX cumulative breadth reading (2006 start date) has rallied significantly since last week and now rests just below recent highs. In addition, the SPX (top 100 issues only) cumulative reading reached a new high with yesterday’s close (2006 start date). These readings are used as a thermometer, and right now it appears as though there may be more upside to come.

http://www.hamzeianalytics.net/
 
Sink Or Swim Time For The Stock Market
March 23, 2007

Wednesday's rally was a very bullish accumulation day, and we must say the charts are looking quite positive for both the Nasdaq-100 Trust (NASDAQ: QQQQ) and S&P Deposit Receipts (NYSE: SPY). But before you jump into the water with both feet, a couple more events are needed.

Last week we wrote that there was a possible double bottom on the Qs, a bullish VIX, a possible completed 3 Wave decline in the SPDRs. Multiple other indicators were turning bullish and we were looking for a rally. We have had the rally, but could this entire decline, occurring in only a few violent trading days, be truly over in just three weeks? It seems unlikely. Look for two more clues, a close above $44.80 in the Qs and a close above $144.35 in the SPDRs. These levels mark the Fib 78.6% retracement for the entire sell-off. If the markets can top them, we will be looking for a run at the rally highs and potential new highs.

Posted on March 22, 2007 in Market


http://timing.typepad.com/timer/
 
Thursday, March 22, 2007

Another NQ chart (NDX future) showing the projection from last week's high/low which, surprise, has 100% at 1831, the exact high overnight. Add 1828.25 gap open and it's little wonder we saw some profit taking, but as long as 1815 holds, bulls are in control.

The market is very emotional now, wavering between the dip buyers (who have suddenly found religion) and those that remember the pain and are using this rally to offload some stocks. I find it interesting that so may have switched sides on a dime even though the Fed dovish stance was pretty much a given. I don't trust this rally and I think the macro conditions are still of deep concern. We have gas prices moving up to levels we saw last summer, even though crude is not even close to 70 (the crack spread is inflationary, no doubt). Re-examine your portfolio and shed the losers, just in case. These post-Fed rallies are usually a one or two day affair, then some reality sets in.

http://aheadofthenews.com/
 
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