Bear Mountain Bull

It’s time again for a little BMB R&R, especially with the market behaving as bizarrely as it’s been. Maybe if we stop watching it start to behave a little better…

Posting will be very light and variable over the course of this week, but we’ll put up an open thread each market day for our readers to comment on the day’s market activity or to post any interesting links they might run across.

Check the space below for whatever the latest might be during this ‘off’ time, and please visit the various sites in the ‘Links’ and ‘Regular Stops’ for up-to-date market news and analysis.

BMB will be back in full swing by next weekend.

When the market is rallying like it has been, and the pundits are telling you it’s because oil prices have dropped, it might be worth taking a step back and getting a little perspective on the price of crude.

Yes, crude oil prices have pulled back from their peak of over $55. That puts the price now down near the August high of $48.70, and still above the 50-day moving average. Is oil cheap at this price? Not exactly. And I’m not sure we can even say that it has started to get cheap yet.

Chart courtesy of StockCharts.com

Sometimes the market just jumps up and surprises the heck out of you, and today was one of those days. Following up on yesterday’s Bush-win excitement, the buying continued today — and a $2.00 drop in crude oil prices didn’t hurt.

The Dow had another triple-digit gain, moving up 177 points (1.75%) to close at 10,314. The S&P 500 followed suit, gaining over 18 points to close at 1161, its highest closing level of 2004 and its first close above 1150 since April 5th. The Nasdaq rode along for 19 points (1.0%), finishing at 2023. Volume was strong again today.

Advances led declines by 3:1 on the NYSE, by 3:2 on the Nasdaq. Up volume / down volume ran 4:1 on the NYSE and 2:1 on the Nasdaq. New highs outnumbered new lows by about 10:1.

Among the Dow stocks, Altria Group (MO) led the way with a huge 8.5% move.

Almost all industry groups were winners today, with retailers, gold stocks and utilities enjoying the best of it. Only oil services and drug stocks finished in the red.

As BMB noted yesterday, the market seems to be getting a little ahead of itself here. Many charts have gone straight up over the past couple of weeks, and many technical indicators have pushed to overbought levels, so some caution is urged for those who might want to chase after this rally.

BMB has talked before about the long-term strength in gold and other precious metals:

• Weak Dollar is Golden
• Heavy Metals
• Sunday Night Contrarian

Today gold prices are again testing their YTD highs in the $430 range (chart).

This article from Schaeffer’s discusses the technical strength of gold and gold stocks, and the continued skepticism in the face of that strength.

Update: Gold futures close at 7-month high.

Funny, for some reason I don’t feel bad for them.

Good advice from IBD. You will not always be right in your investment choices. Cut your losses while they’re still small.