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MV Weather Report: Is the Market Beginning to Thaw?


Rain or shine, we review the day's biggest stock stories.

The first day of the second quarter of 2009 is now history, and victory goes to the bulls. The market opened down on account of bad ADP jobs numbers. However, Hoofy and crew fought back when a better-than-expected ISM Manufacturing Index report came in at 36.3 for March.

Today's winners were the agriculture stocks: Potash (POT) and Mosaic (MOS). Technology was also strong: Apple (AAPL) and Research in Motion (RIMM) had big up days. But be careful with Research In Motion, as the company reports earnings tomorrow evening post-bell.

Those stocks, plus the financials, were enough to lift the S&P to an 811 close, right near the highs of the day. Here's Professor Jeff Cooper's short-term roadmap for the benchmark index:

"The S&P failed to turn its monthly up in March on trade above the Feb high of 875. However, the Monthly Swing Chart would be relatively easy to turn up now on trade above the March high of 833. Many turn ups and turn downs cluster around the beginning and ends of months so it will be interesting if the monthly turns up in the first week of April especially if it should occur on a FASB Thursday for example.

"If so will traders be inclined to hold in front of Friday mornings jobs data. Will a monthly turn up illicit a test failure of the 833 swing high leading to a corrective move off the thrust up from the March 6/9th low?"

The "FASB" Coop is talking about is tomorrow's meeting, which will center on whether the board decides to modify the current mark-to-market accounting rules. Here's what Professor Sean Udall had to say on today's Buzz & Banter.

"The financials seem pretty quiet ahead of FASB D-Day. Could FASB really not deliver the goods? They have to know the damage that FAS 157 has caused and they also have to know that all this TARP money needs a springboard to be let loose into the system. I've said it many times – FAS 157 resolution is the key to increasing monetary velocity which is much more important to money supply growth. Praying for a lynch-pin to snap into place here."

A lot of investors believe the market will take off if the mark-to-market rules are modified, or removed altogether. But this has been a "buy the rumor, sell the news" type of market. If mark-to-market is modified tomorrow, will the market sell off?

I think it's possible. The S&P 500 has had a stalled feeling of late, but this is interpreted by some as bullish after the large move we just saw. Also bullish: The S&P closing above 805, the gapfill level, a fact pointed out by Coop.

It's very hard to be bearish, especially if the bulls get what they want tomorrow from FASB. If they do, an extension could play out. If not, all bets are off.

Have a great night, Minyans!
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