Wall Street: Ripe for a rally? - 期貨

Wall Street: Ripe for a rally?
With little on the economic docket and the Dow and S&P 500 at 12-year lows,
stocks may be gearing up to surge but it may not last.

By Alexandra Twin, CNNMoney.com senior writer
Last Updated: March 8, 2009: 12:15 AM ET

NEW YORK (CNNMoney.com) -- With little in the way of earnings or
market-moving economic news on tap this week, stocks will continue to take a
cue from the financial sector as investors try to see if the latest levels
can hold.

There's been such a tremendous selloff in the financial sector and in some of
the retailers, that at some point even traders who are betting on a weak
market are going to want to get in, said Fred Dickson, chief market
strategist at D.A. Davidson & Co.

And the mild reaction to a dismal jobs report last Friday could suggest that
the time is nearing.

"How much lower can Citigroup go when it's down around a buck?," asked
Dickson, adding, "We're starting to get to the point where the risk of a big
upside in the market is greater than the risk of a bigger downside."

With the Dow and S&P 500 both down more than 50% off their October 2007
highs, a decent bounce is not hard to imagine, said Gary Hager, president of
Integrated Wealth Management.

He said that the pent-up demand is equivalent to shoppers pressing against
the door of a store that is about to open for a sale, but the shoppers wont'
budge until the first few jump in. Once they start moving, the rest will
follow.

0:00 /3:46Stocks for price of light bulb
Ripe for a bear market rally. In both October and November of 2008, the stock
market stabilized at levels that many market pros were betting could be the
bottom, before ultimately declining further. That could be the case now as
well, Dickson said. But he also said that some of what he has been seeing
lately is reminiscent of the way Wall Street ultimately stabilized during the
last bear market, bottoming between October 2002 and March 2003.

Dickson noted that the number of New York Stock Exchange stocks making new
lows has dropped dramatically with each so-called "bottom," in October,
November and now. As such, that could indicate a stabilization.

Also, from a contrarian perspective, stocks are ripe for a bounce. The
American Association of Individual Investors (AAII) said 70.3% of investors
surveyed were bearish, as of Wednesday. That's the highest level since the
index was created in 1987.

The bearish sentiment index has been hovering between 39 and 55 over the past
two months, but then last week suddenly jumped to 70.3, said Cara Scatizzi,
associate financial analyst at AAII.

In tune with the bearish tone, investors pulled billions out of equity mutual
funds last week. According to the latest report from Trim Tabs, investors
pulled $29.9 billion out of stocks in the week ended March 4, versus an
outflow of $18 billion in the previous week.

The question is what might help soothe the market and even trigger a
bear-market rally. So far, most of the government initiatives announced have
failed to provide the spark, including the $787 billion stimulus plan,
Treasury's "stress tests" for banks and President Obama's $3.6 trillion 2010
budget.

Dickson said that indications over the next month that Congress is going to
chip away at some of the spending in the budget could help, while Hager said
the suspension of the mark-to-market accounting rule would help.

On the docket
Tuesday: The January wholesale inventories report is due shortly after the
market opens. Inventories are expected to have fallen 1% after dropping 1.4%
in December.

In Washington, the Senate Energy Committee holds a hearing on offshore
drilling. On Thursday, the same committee discusses transmission lines.

Wednesday: The government's weekly crude inventories report is due out at
10:30 a.m. ET, as well as the February Treasury budget at 2 p.m. ET.

In Washington, the congressional oversight panel is due to release a report
on the oversight of the Troubled Asset Relief Program (TARP), a.k.a. the bank
bailout plan.

Thursday: February retail sales are due before the start of trade from the
Commerce Dept. Sales are expected to have fallen 0.4% after rising 1% in the
previous month. Sales excluding volatile autos are expected to have fallen
0.2% after rising 0.9% in January.

The government's weekly jobless claims report is also due in the morning.
640,000 Americans are expected to have filed new claims for unemployment
versus 639,000 in the previous week. Weekly claims hit a 26-year high of
667,000 in February. The number of Americans continuing to stay on
unemployment is expected to remain near record levels of 5,112,000.

The January business inventories report is due for release after the start of
trading. Inventories are expected to have fallen 1.1% after dropping 1.3% in
the previous month.

In Washington, a House Financial Services sub-committee debates
mark-to-market (MTM) accounting, a rule that critics say has exacerbated the
credit crisis. MTM requires banks to report the value of their investments if
they sold them now, even though some of those assets - like mortgage-backed
securities - have tumbled dramatically.

Friday: The January trade balance, due before the start of trading, is
expected to have widened to $38.2 billion from $39.9 billion in December.

Also due are reports on February import and export prices and the initial
March consumer sentiment index from the University of Michigan.

First Published: March 7, 2009: 10:10 PM ET

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