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.

This chart shows the flattening of the yield curve that has taken place during 2004: short-term bond yields have risen as the Fed has pushed the Fed funds rate higher, but the markets have refused to send longer term rates higher in response, even moving them slightly lower. The red line indicates where Treasury rates were at the end of 2003, and the black line shows the yields as of yesterday’s close.

Chart courtesy of StockCharts.com

The markets rallied modestly at the close today, managing only slight gains on the day on strong volume. The Dow moved 15 points higher (+0.1%) to 10691, the Nasdaq added 3 points (+0.1%) to 2162 and the S&P 500 gained 2 points (+0.2%) to 1205. The Russell 2000 continued its move higher, adding 4 points to 647, and the bond markets continued to move contrary to the Fed’s higher interest rate policies, sending bond prices even higher today while driving the 10-year yield down to 4.08%.

The market internals looked much stronger than did the index gains, with both advance/declines and up volume/down volume running around 2 to 1 on the NYSE, but only slightly positive on the Nasdaq. There were 510 new highs to only 24 new lows.

Housing stocks led the way higher today with a gain of 3.4%, followed by disk drives (+1.8%), natural gas (+1.7%), oil services (+1.6%), chemicals (+1.2%), oil (+1.2%) and commodities (+1.1%). Biotechs took the biggest hit on the day, falling 1.2%.

Crude oil prices got a big boost from the weekly inventory data, and closed up more than 5% at $44.25. The dollar index fell by 0.8%, and gold prices moved higher, pushing back up near $440/ounce.

Oil prices have moved up today after release of the weekly inventory data.

At 11:30 am CT, crude oil is trading at $43.75/barrel, up $1.93.

John Murphy, well-known market technician and author of Intermarket Analysis and Technical Analysis of the Financial Markets, is scheduled to be the guest Market Monitor on PBS’s Nightly Business Report for Friday, December 17th. Check your local listings for the time that the show airs in your local region.

If you miss it, NBR makes the video of each Market Monitor segment available on the web for a week after the show. Go to NBR.com, click on ’streaming video’ and look for the link to ” Weekly Market Monitor Interview”.