Well, 2009's first quarter certainly hasn't turned out like we would have liked it to for the equity markets. The market started straight down out of the gate, and not until March and new lows on most of the major indexes have we seen buyers step in.

This reiterates my view that 2009 will be a great trader’s market and tactical moves will be of the utmost importance. While I was obviously wrong that the market would rally to start off the year, I still believe the S&P 500 should retrace at least 38-50% of the decline from the 2007 highs, which would mean a rally into the 1000-1100 level.

Continue to monitor the market’s reaction to these Fibonacci retracement levels, as this will ultimately be a bear market rally. I would focus on equities that have not made new lows in 2009 as stronger buy candidates due to the positive relative strength.


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The PHO would qualify as a buy candidate, in my opinion. As you can see in the below chart, the PHO barely made a new low and quickly reversed back higher when the market improved. I would be adding PHO here with an ultimate stop if it breaks $10 as I think the PHO could trade into the high teens later in 2009. As I’ve said before, this vehicle has a great longer term macro theme.


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