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.

The CNBC/Apple collaboration continues…

In its reporting from the Consumer Electronics Show in Las Vegas, CNBC is telling us that Apple’s IPod is the “star of the show”, and has become “the center of its own economic universe”.

Please.

They’re also touting Apple’s advantage in the marketplace since vendors are producing accessories that connect to the IPod’s proprietary connector, so these devices will work only with IPods. Great for Apple in the short term — in the long run, proprietary equals death in consumer electronics.

Another pretty lame day in the markets, as the morning jobs report did little to bolster either the bull or bear case. The major indices all struggled for direction, and didn’t find many investors willing to buy into stocks before the weekend.

The Dow finished down 19 points (-0.2%) to finish at 10604, the S&P 500 fell 2 points (-0.1%) to 1186 and the Nasdaq dropped 1 point (-0.1%) to 2089. The Russell 2000 fell another 6 points (-1.1%) to 613 and the bond market went back and forth on the jobs data, pushing the 10-year yield slightly higher to 4.28%.

Market internals leaned negative again, with advance/declines running 7 to 9 on the NYSE and 7 to 12 on the Nasdaq. Up volume trailed down volume 2 to 3 on the NYSE, but up volume was slightly higher than down on the Nasdaq.

Much less movement in the industry groups today, with the winners being led by a rebound in semiconductors (+1.4%) and internets (+0.7%). The losers were led by oil services (-1.7%) and transports (-1.1%).

Crude oil fell just slightly to $45.43/barrel. The dollar moved higher again today by 0.6%, and gold prices fell again to $418.50/ounce.

A second China ETF has begun trading under the symbol PGJ. This fund is comprised of Chinese companies trading on US exchanges.

This week marked a turning point in the market, if not in direction, certainly in character. The market is no longer the happy-go-lucky, everything is roses, easy money place it was before the New Year. This week’s downturn was sharp and sudden, and there was considerable damage done to many stocks. Does the market go down from here? Too early to tell, but it’s unlikely to be setting new highs again in the near term.

The percentage of S&P 500 stocks trading above their 50-day moving average fell from about 87% during the week after Christmas to just above 51% after yesterday’s close. Market internals were pretty ugly this week, and efforts at rallies both yesterday and today haven’t amounted to much. Other technical indicators are showing a degree of fear coming back into the market that usually sends prices lower.

Though the markets are somewhat oversold at this point and may get a bit of a bounce, BMB recommends caution on the long side of the market. It will take some work to repair the damage and send the market higher, and it’s impossible to say when that might happen. The investor should be much more defensive here: tightening up stops, considering taking profits and above all, protecting capital. The last couple of months have produced some pretty decent gains. Don’t let the market take it all back should it decide to head lower.

The December jobs report came in just a little shy of expectations, but did show a gain of 157,000 new jobs.