Column:

Bob Pisani

At CNBC
Artikelen

This Week's Count Rally x 4 13 mar 2009

The Rally first half of march

The Rally, Can It Last? 13 mar 2009

Rally Extends Across The Board 12 Mar 2009

The Rally's On - Across The Board 12 Mar 2009

Dimon Sparkles - But Is It Enough? 11 Mar 2009

Can The Rally Drive Another Rally? 11 Mar 2009

What's Working On The Street Mar.06 2009

Why Can't We Rally? Mar.06 2009

Citi Speculation Leads To: Who's In The Dow Next? 5 Mar 2009

Guess What Led To This Rally Feb.03 2009

We're Close To A Bottom Feb.03 2009

This Week's Count Rally x 4 13 mar 2009
This was a very constructive week, the best weekly advance for the Dow and the S&P 500 since
November.

Let's review why the market rallied:

1) Oversold conditions
2) Positive comments from big banks
3) More "together" feel from Geithner, others

After the kind of gains we had this week (S&P up nearly 10 percent in four days, Bank Index up 46
percent!) you would think there would be some serious profit taking by today, at least in the financials.
And they did attempt to do that. Just after 10, in a pattern repeated dozens of times in the past couple
months, they pressed financial stocks.

The shorts failed.

You can see this in the action in the XLF (the Financial Select SPDR Fund—the financial part of the
S&P 500). Typically, they tried to sell this off right after 10 PM, and it succeeded initially. It went
straight down on heavy volume...and then...it stopped! And financials began rising again. It began
rising because the selling was exhausted, not because there was tremendous buying enthusiasm, so
I don't want to make too much of this. But it does indicate that, at least for the moment, the sellers do
not have the momentum they had until very recently.

Another positive sign: defensive stocks rallied today. Early on in the week, traders were buying high
beta stocks like financials. But today, defensive stocks like Pfizer, J&J, P&G, Hershey, Kimberly Clark
are market leaders.

Playing Defense
Kimberly Clark 46.02 1.00 +2.22% 2,680,408
Hershey 33.21 1.01 +3.14% 1,941,425
J&J 50.64 1.64 +3.35% 16,384,093
Pfizer 14.54 0.52 +3.71% 82,732,373
P&G 46.95 1.17 +2.56% 13,014,527

The hope for the bulls next week: consolidation. Moving sideways is good. If that happens, this might
have legs. Geithner and Co. are the key. Expectations are low, so continued articulation of what
Geithner is doing, particularly on how he is going to get banks to sell toxic assets, is key.

One thing's for sure: the easy money has been made, expect a retest. Bears, of course, are quite
confident this is a bear market rally, and we will be testing new lows within weeks. They are the vast
majority, and during the last rally in November-December, they were certainly right. Still, it's not
unreasonable to be cautious, but a bit more hopeful.

Two steps forward, one step back.

We are clearly working off the deeply oversold conditions and slogging our way through a long,
painful recession. For the week: Dow up 9 percent, S&P 500 up 10.6 percent, NASDAQ 10.6 percent.
The Rally, Can It Last? 13 mar 2009
That's the only debate on the Street right now, now that the S&P has rallied 10 percent in a week.
The causes of the current rally are well known:
1) Oversold conditions
2) Positive comments from big banks
3) More "together" feel from Geithner, others
Right now, the skeptics outweigh the optimists. Those who believe this is a bear market rally insist:
-Bank write-downs will continue
-The reality of recession will not disappear soon
But the numbers who believe we have a shot at a bottom has increased notably this week. They point
to:
-Signs that the mark to market rule will be changed, alleviating some of the bank write-down’s
-Uptick rule changes also imminent
-Geithner's public/private partnership bank plan now has more details
Reality check time?
Still, a lot of traders are skeptical of the kind of moves made by a few stocks this week. It's easy for a
$2 bank stock to move up, but others, traders say, seem ripe for some kind of consolidation in the
coming days.

Rally Extends Across The Board 12 Mar 2009

Across-the-board rally in stocks, Treasuries and commodities.
A rally? We've already had one.
From last week's bottom:
--S&P: up 12 percent
--Banks: up 45 percent
--GE: up 68 percent 9.62 0.05 (+0.52%)
There were also strong, double digit gains in REITs, home builders, and healthcare.
And guess what? After 6 straight monthly declines, stocks up for the month:
Major indices in March
Dow Industrials up 1.6 percent
S&P 500 up 2.3 percent
NASDAQ up 3.5 percent
The key question: is there any evidence of sustained Demand and lower Supply of stock for sale?
Yes, some. Demand for stocks is clearly picking up, while the Supply is getting tighter. At the very
least, it appears that the desire of short sellers to Sell Every Rally has been muted.
In addition, the VIX (Volatility Index, a measure of fear) is at a 6-week low.

The Rally's On - Across The Board 12 Mar 2009

An across-the-board rally in stocks, Treasuries and commodities.
This hasn't happened in a while. What does it mean?
1) Flight from risk has temporarily been stalled
2) Traders are moving out on the risk curve
You can even see this in Treasuries. The treasury rally is short covering in the same way. They are
using freed up capital to chase better yield like corporates and preferred stocks of banks.
In stocks, the S&P 500 has rallied 11 percent since the bottom of 666.79 last Friday.

A different tone to today's move up, but unlike yesterday there are a few data points to back up the
move:
1) February retail sales above expectations, with an upward revision in January;
2) The debt downgrade of our parent General Electric 9.62 0.05 (+0.52%) was not as bad as
feared, and S&P went out of their way to lavish praise on the company, noting, "the outlook is
stable." GE has rallied 65 percent since bottoming last Wednesday.
3) GM 2.72 0.54 (+24.77%) said they did not need $2 b in March from the government, not
because sales were great, but because of more successful company-wide cost-cutting efforts
(they're still working to secure $165.6 billion in low-interest loans).
4) A far better tone from bank executives, with Bank of America's 5.76 -0.09 (-1.54%) Ken Lewis
today reiterating they were profitable in the first two months of 2009 and they were eager to give
back the TARP money. Also, there is a widespread belief that mark-to-market rules will be
modified.

Dimon Sparkles - But Is It Enough? 11 Mar 2009

Jamie Dimon's excellent speech helped move indices into positive territory, but it's been a
disappointing day.
Is the forced selling over? We are trying to put together our first two-day rally in about a month, but
it's not easy.
The response on the second day has been feeble so far: volume was lighter than yesterday at the
open, then (stop me if you've seen this movie) volume PICKED UP as financials began to be sold off
mid-morning.
Technicals aside, the most important thing is to stop the bleeding and the forced selling. Here's some
sobering statistics: according to TrimTabs, from February 25th through Monday, March 9th, there was
an estimated $56 billion in outflows from U.S. equity mutual funds.
Is that a lot? Yes. By comparison, last year—a miserable year for mutual funds—there were total
outflows of $245 billion from all U.S. equity funds.
In other words, in two weeks we saw almost one-fourth of the total outflows we saw all of last year.
Gads. We simply can't keep doing that.
By the way, there's $3.4 trillion in assets currently under management in U.S. equity mutual funds
(there's $1.6 trillion in bond funds).

Can The Rally Drive Another Rally? 11 Mar 2009

Could we actually rally two days in a row? That hasn't happened in almost a month, believe it or not.
More clarity on the Obama administration's bank plan definitely is helping stocks. Treasury Secretary
Geithner addressed the Big Question yesterday on a Charlie Rose interview: how to get banks to
actually start selling distressed assets. He said the government would use capital injections as an
incentive.

Huh? A couple weeks ago everyone was selling bank stocks because the anticipated dilution from
capital injections; now it seems not to be an issue.
Banks are leading early morning advance, with all big names up in mid-single digits. Elsewhere :
1) Mortgage rates are coming down—an average 30 year fixed rate mortgage fell to a 2-month low
of 4.96 percent last week, according to the Mortgage Bankers Association. Mortgage applications
to buy a home rose 7.1 percent and refinancings rose 13.3 percent.
2) Speaking of housing, home builder Hovnanian reported a loss of $2.29 per share, much worse
than expected. Once again, the main problem is impairment charges, which in plain English
means the company is writing down the value of assets—homes and land. Management noted
that the sales environment "remained persistently challenging" and said they were disappointed
that the stimulus bill contained no measures to stimulate housing demand.
3) You think we have a stimulus package? The Chinese are spending hundreds of billions on
infrastructure projects, far more than we are, and it's already showing up in the numbers. Urban
fixed-asset investment increased 26.5 percent, more than the 21.5 percent gain that was
 expected. The worries over unrest due to a dramatic drop in factory jobs in the export area also
appear to be justified. Exports in China declined in February more than expected, falling 25.7
year-over-year, far more than the 1.0 percent decrease that was expected.
4) UBS 9.24 -0.05 (-0.54%) posted an $18 billion loss for 2008, more than initially reported and
said it remains "extremely cautious" about the outlook for this year.
5) Teen retailer American Eagle 10.34 0.35 (+3.5%) reported earnings right in line with estimates,
and gave guidance for the first quarter in line with expectations as well. Merchandise margins
declined rather steeply due to higher markdowns.
6) Mike Mayo at Deutsche Bank made a point today that we made yesterday: that loan losses are
the biggest problem for banks, and would get worse this quarter and the rest of this year. While
it's nice to know that Wells Fargo 13.94 -0.01 (-0.07%) and Citi 1.78 0.11 (+6.59%) have
been profitable on an operating basis in the first two months, toxic assets have not had a great
start to the year.

What's Working On The Street Mar.06 2009

major indices were flat today, but the S&P 500 is down over 7 percent this week, the worst week
since November. No one is getting burned by fading rallies.
That's why we can't rally.
Because fading rallies is what is working. Traders are making money by fading rallies. As long as you
know financials will fall, it's easier to stay short than long. "I mean, JP Morgan falls 5 to 10 percent
every day...it's like shooting fish in a barrel,"
one trader said. Traders believe a rally is coming, but few are positioned to take advantage of it.
Why? Because no one can afford to be wrong..."no one can afford another 10% down month,"
as one analyst said. What would a rally look like? We already had one! From the November 20th
bottom to the close on December 31, we went from roughly 750 in the S&P 500 to 900..a 20 percent
rally. And it all faded. So now we are due for another rally.. under this scenario, we are primed to go
from, say, 670 to 800...another 20 percent rally.
Problem is, after seeing what happened during the November-December rally, it's not clear if that
rally will be the bottom. Certainly a lot of traders don't believe it will stick.
As for this week...isn't the selling exhausted? Well...look at the stats. TrimTabs estimates there was
$30 BILLION in mutual fund withdrawals for the week ending the Wednesday. Retail investors are
clearly still selling. Institutional funds (pension funds) are probably standing pat for the moment.

Why Can't We Rally? Mar.06 2009

Simply put, there is still too much negative sentiment - and sideline money is afraid to step in. What's
happened this morning:
1) Shorts attacked along the usual lines: wait until 10 AM ET, then press financials. One important
point about today: the volume is not nearly as strong as the middle of the week, so shorts are
showing signs of exhaustion.
2) Right after 10ET, real estate investment trusts were under pressure as S&P cut credit ratings on
two REITs (Camden Prop & First Industrial), & put 9 others on watch for possible cuts...concerns
over tenant stress for retail properties, impact recession on apartment fundamentals, etc.
3) Techs were also weak this morning, with Google and IBM both downside standouts.
4) The final downside push came as GM began a late-morning slide to move below $1.60.

Despite the inability to rally, some are insisting we are groping for a bottom. They cite:
1) Payrolls: awful, but bottom around 600-650,000 the past four months
2) Commodities showing signs of a bottom
3) Housing starts well below household formations
4) Both the TALF and the stimulus plan will come on in the second quarter
5) Some insiders buying stock, including our parent company GE, Wells Fargo & Bank of America
Citi Speculation Leads To: Who's In The Dow Next? 5 Mar 2009
As Citi trades below $1, speculation again heats up that Citi, Bank of America and GM will almost
certainly be removed from Dow Industrials.
Lists are being circulated for candidates.
Most often mentioned among financials: Mastercard or Visa, as well as some of the trust banks like
Northern Trust or Bank of NY. Goldman Sachs & Morgan Stanley are also possible choices, but
some seem to feel that they may politically unpalatable. Fewer names around among nonfinancials.
Laszlo Biryini has mentioned Schlumberger, Monsanto, General Mills, and Best Buy. Me?
I say bring back Honeywell! The uptick rule: it never goes away. Niederauer, CEO of NYSE Euronext,
has reiterated that he supports bringing back the uptick rule, even if it's mainly for the sake of bucking
up "investor psychology." rule prevents traders from selling short stocks on a downtick.
It was repealed in July 2008. He made comments Tuesday night at the Museum of American
Finance. Traders have made bringing back the rule a major cause.

While most agree that bring back the rule will not prevent stock prices from dropping, the majority feel
it will serve to slow down the price movement, and panic fewer people.

Get 'em! Rep. Barney Frank said he wanted to push for prosecution of people responsible for the
current crisis. In an interview on our air, he did not name specific people (other than Bernie Madoff),
but indicated it could include CEOs.
Guess What Led To This Rally Feb.03 2009
Several events came together midday to help stocks rally:
1) A drop in the dollar about 2 PM ET, which has helped the market several times in the last couple
days.
2) Details of a Republican counter-stimulus plan which emerged a little after 2PM, a $445 billion
proposal that would lower 35% corporate tax rate to 25% & offer home buyers a tax credit worth
$15,000 or 10% of the purchase price, whichever is less.
3) Just before 3 PM ET, Treasury Secretary Tim Geithner said fiscal policy was about to get "very
aggressive."

Financials suffer under Washington rumor mill. I mentioned earlier today that traders are hopeful that
some clarity on the stimulus package, TARP and bad bank will be coming in the next few days. This
will be helpful, but in the meantime financials are experiencing the downside of this rumor mill. It's
pretty simple: financials are down because traders believe that TARP II will be heavily dilutive.

They are concerned that the feds will put more money into the banks, potentially wiping out the equity
shareholders, particularly of companies like Citi [C 3.46 -0.19 (-5.21%)] and Bank of America [BAC
5.30 -0.70 (-11.67%)] . Will this happen?

Bears have argued for months that the common equity of many big banks is worthless. That's been
around for a while. But now, they are worried that the preferreds may also be worth almost nothing (a
la Fannie Mae and Freddie Mac. Also, the hope that bank earnings will stage a big recovery is being
hurt by worries about increased regulation.
We're Close To A Bottom Feb.03 2009
Once again, a midday drop in the dollar has led to a (modest) rally in stocks.

This happened yesterday.

Traders are not stupid (they're just poor). They notice patterns. Something works, they do it again.
They do it until.. it doesn't work.

The bulls game plan for a rally. This is an important few days. The bulls are desperately looking for a
rally, but how to get one with no clarity on TARP, stimulus, or bad banks? That's an awful lot of
unknowns.

The good news is that expectations are fairly low on all government intervention now, and we will
certainly have news on at least two of these fronts, probably by Monday. That will be helpful.

More modestly good news: stocks that have had bad news today (Dow Chemical [DOW 11.35
0.30 (+2.71%) ] , Ford [F 1.96 0.08 (+4.26%) ] , General Motors [GM 2.85 -0.04 (-1.38%)
] , UPS [UPS 45.00 2.58 (+6.08%) ] ) are trading up, or in the case of GM did not drop on the
bad news.

And how about this: notice how everyone thinks the non-farm payroll report (on Friday) is going to be
a disaster? Notice how traders today take whatever the consensus estimate is on economic news
and then add 20 percent to it? So, for example, consensus is expecting 500,000 job losses in
January, but traders are walking around saying, "You watch, we'll have over 600,000 jobs lost."

How do they know this? They don't, they just know that the consensus numbers have been really
wrong, so they are trying to compensate.

What this means is that a fairly sizeable drop is getting priced in, and it would take a pretty large
number to get a sizeable drop in the market. Bottom lines, bulls argue: we are getting more confident
that we are close to a bottom, which leaves a lot of room for a rally that could last more than a week.

How about some out-performance, finally? Stock picking hasn’t mattered much in the past few
months, but bulls are trying to change that.

They note that there has been some out-performance from healthcare (up 20 percent from the
November lows), while financials have lagged, down 3 percent. True, there has been little if any out-
performance among individual stocks within sectors. Expect that to change when traders become
more confident about the outlook. Fundamentals will matter again!