Market outlook for week of March 30th, 2009

This past week both the Dow and S&P 500 climbed over and stayed above the 50 day Moving average. It was the first time in over a year when we had positive gains for 2 consecutive weeks. It sure felt good after weathering the drops of the past year. The chart above shows the Put to Call ratio since January of 2008 to close of the market yesterday. You can readily see we are moving to a lower range on this index. (If you click on the chart it will get larger.) We have not been over 1.00 on this ratio recently, March 5th to be exact. Yesterday's close was 0.92, replicating Thursday's close. The VIX Index closed at $41.04 and while I don't have a chart on this for your viewing, this Index has also come off its highs as well. This Index was as high as the $70's and $80's back last fall and we are now near the lows since early January of $38-$39.

So what's ahead for the week of March 30th? I am overall still optimistic on the market. Many see this as a Bear Market rally and can't see the Dow and S&P 500 going much higher. While I agree that this is still a Bear Market rally, I do believe we can go as high as 9,000 on the Dow before we pull way back again. This means a Buy and Hold strategy is not your best strategy. Trading is the only way to take advantage of the big market swings, which are inevitable. Hopefully when we look back after next week's close we will be above 8,000 and less than 8,500. The quarter ends on March 31st and we will shortly be reviewing earnings reports for a clue on how business is really doing. Stay tuned!

Let's take a look at several trades recently to summarize most of my trades. Starting with the loss, I sold TZA the ETF Ultra Short for a 17% loss. This was painful but remember I had TNA to offset some of this loss, but a loss is a loss. I sold Ford for a 45% profit. I sold Apple for a 16% gain. Apple gained far more since I sold it at $97/share and is now at $106.85/share. I sold some TNA shares for a 17% profit. I am still holding on to many more shares of TNA, some of which are under water. I still have my shares of Citigroup, which I purchased at $1.70/share and additionally at $2.41/share. Current price of Citi is $2.62/share.

I am hopeful this coming week of staying above the 50 day Moving average, but as I have cautioned before, if you are trading, pay attention as this market can go in either direction very quickly. One indicator next week will be the Unemployment rate and we already know it won't be good. But it is a look backwards and any moderation which shows the rate slowing may spur the market up. If the trend looks like it is accelerating, watch for a selloff. Good luck!