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1. Ford Moving Higher

David Sterman
4/3/2009 12:47 PM EDT

Interesting to see Ford ( F) heading higher on heavy volume -- on a flattish day for the Dow. Shares are back to levels briefly touched in early December. You'd have to go back to early October for a time when they were sustainably higher than current levels.

I stopped by two Ford dealerships in my area yesterday. Neither salesman I spoke to thought he was seeing a noticeable increase in traffic, and if April sales levels don't show sequential gains from March, then the stock looks ripe for a pullback. Conversely, signs of improvement could lead to short-covering (shares are still heavily shorted).

One dealer mentioned that they are not getting many hybrid allotments. Ford is probably losing money on every hybrid it makes, and probably sees the technology as a halo. Indeed the upcoming slate of new models will have "eco-boost" engines that use turbochargers and direct injection and are said to have equivalent horsepower as bigger engines, but with good fuel economy.

2. This Reminds Me of 2001

Tom Au
4/3/2009 12:02 PM EDT

One thing that strikes me about this market is the narrowness of recent strength. Of the 10 S&P economic sectors, only two are ahead for this year, technology and basic materials, hence my recent purchases of Microsoft ( MSFT) and Dell ( DELL), and earlier (but premature) purchases of Alcoa ( AA) and Dow Chemical ( DOW).

In this regard, the current market reminds me of that of 2001. The latter got off to a bad start, because of fears for a recession, and then recovered as recession fears diminished. Much could happen the same this year, with the averages down only 5%-10%, thereby approximating current levels at the end.

But the flip side is that next year then figures to be "2002," the worst of the three years from 2000 to 2002. That was a "recovery" year, but one that went was the worst of the three years, because the recovery was less than expected.

I don't see where all the bulls are coming from with their expectations of a strong recovery. I'm looking for a "flat-line" well into the next decade. This is not a classical (industrial) recession, which is why we probably won't have a classical recovery. Instead, it will be held back because the (marginal) consumer has been "mortgaged" for a generation.

Even so, I'm edging up my stock positions for a short term (rest of year) trade, having bought Caterpillar ( CAT) and Zale ( ZLC) this morning, at lower prices than I paid (and sold them for) previously.

3. Technicals Look Bad

Daniel Dicker
4/3/2009 11:42 AM EDT

In addition to my disbelief of the latest rally from a fundamental point of view -- I referred to it as a "sugar high" on Columnist Conversation yesterday -- we can now add some technical indicators upon which I have relied for many years.

S&P 500 Index -- Daily

The Bollinger Bands don't indicate an imminent turn (although they also looked stretched), but the moving average convergence/divergence is way out there, and the stochastics and relative-strength indicators are ready to snap.

Sorry to throw water on the party, but my feeling is, if you're looking for a dip to buy into, you're about to get a doozy. I'm not buying another share of anything until I see a dip of at least 40 to 50 points on the S&P 500.

4. Morning Trade

Bob Byrne
4/3/2009 9:26 AM EDT

With the jobs report out of the way, we can now begin fretting over earnings. Unless companies come out with some very positive results (or at least favorable forecasts), like Research In Motion ( RIMM), we may be setting ourselves up for a sell-the-news situation throughout earnings season.

If the bulls want to continue to torture the bears, they need to push the emini back above strong resistance at 833 and target moderate resistance at 838.50. A sustained trade above 838.50 and only moderate resistance at 845 contains this market from running to 855. A market surge to (strong resistance) 855 would entice shorts to re-enter this market. ... I am not betting on this type of surge, though.

Whether we noodle around between 826 and 838.50 or begin a correction toward 797.75 will depend on how much firepower the bears have and how bad traders want to lock in multi-week gains. A break of strong support at 826, and the bears have a shot a taking control (if only for a day or two). Moderate support will come in near 823, 817 and 812.50, with strong support at 808. With the market's positive tone and the persistent bid, it will take significant firepower by the bears to push us under 808 ... if they do, we should see 797.75 quickly.

5. Homebuilder's Double Bottom: Real or Fantasy?

Alan Farley
4/3/2009 7:57 AM EDT
The SPDR S&P Homebuilders ETF ( XHB) has been moving higher with the broad market since the March turnaround. The bounce started right at the November low, raising speculation that the fund (and sector) is grinding out a double bottom pattern.

But is this pattern real or fantasy? Current technical evidence is mixed at best. For starters, the fund still hasn't posted a single higher low during this recovery effort, despite the 40% bounce. And accumulation is just pathetic, with on-balance volume hardly budging in the last four weeks. On the flip side, Thursday's rally was the first time the fund actually bounced at the 50-day EMA since last September. This positive price action confirms new support at that level. And it will take less than a single point of progress to finally end the four-month string of lower lows.

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This article was written by a staff member of

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