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.

BMB has shown you this chart before — the percentage of S&P 500 stocks trading above their 50-day moving average. We also told you that the readings above 80-90 percent probably wouldn’t last real long, and frankly, they’ve lasted a little longer than we thought they would. Well, the last two days has changed things quite a bit, and in a big hurry.

Chart courtesy of StockCharts.com

A few days ago, BMB talked about the lack of fear in the market. Well, things have changed a wee bit over the past week, as the VIX has moved from near 11 to near 14. A continued rise in the VIX will almost certainly mean more selling, pushing the markets lower.

Chart courtesy of StockCharts.com

Yuk. Today we found out that Ugly Monday had a twin sibling, Ugly Tuesday.

The markets didn’t start off on very good footing, and it just got worse. The Dow lost another 98 points (-0.9%) to finish at 10631, and the S&P 500 dropped 14 points (-1.2%) to 1188. Once again, the Nasdaq got the worst of it, falling 44 points (-2.1%) to close at 2108. The Russell 2000 fell 12 points (-1.9%), and the bond market sold off as well, sending the 10-year Treasury yield up to 4.28%. Volume was heavy, with more than 2.6 billion shares trading on the Nasdaq.

Market internals were once again heavily negative, with advancers trailing decliners 1 to 3. Down volume led up volume by more than 7 to 1 on the NYSE, and by 4 to 1 on the Nasdaq. There were only 117 new highs to 25 new lows.

Lots of big red numbers in the industry groups today - and no green. Airlines were the hardest hit, falling 6.8%, followed by networking (-3.5%), internets (-3.3%), semiconductors (-3.3%), defense stocks (-3.1%), housing stocks (-2.8%), computer hardware (-2.8%), disk drives (-2.6%), chemicals (-2.5%), transports (-2.4%), paper (-2.3%), gold stocks (-2.2%) and biotechs (-2.1%).

Crude oil prices spiked higher by $1.79 to $43.91/barrel. The dollar enjoyed a rally, moving higher by 1.5%, but that didn’t seem to help the markets much at all. The dollar’s rally sent gold prices even lower, to $427/ounce.

If you own stocks, time to open up your eyes and start watching them. These last couple of days of selling probably won’t be the last ones. At least not for a while.

LSI raises Q4 guidance. A little good news in the semiconductor/tech arena after a couple of pretty lousy days of trading.

The minutes of the December FOMC meeting were released today, and investors didn’t like very much what was revealed.

A summary of the Federal Open Market Committee’s December 14 meeting on interest rates showed a number of its members were worried that a weaker dollar, higher energy prices and a slowdown in productivity growth may lead to higher prices.

BMB thinks this shouldn’t come as a huge surprise — anyone who thinks that a weak dollar and higher energy prices aren’t inflationary isn’t thinking straight.

A spike of more than $1.75 in crude oil prices haven’t helped the markets either. There’s been another selloff party today, with the Dow now down 116 points and the Nasdaq down 50. Ouch.

The market is struggling again today, with the Dow down slightly and the Nasdaq down almost 1% again. Market internals are decidedly negative so far.

Crude oil prices are up $0.50 to $42.70. Metals prices are down again today, with copper down, aluminum down, gold prices have dipped to just above $426/ounce. Airlines are down 4%, semiconductors down 2.3%. Not real pretty.