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.

Foreign governments hold much of their currency reserves in U.S. Dollars, and the weak dollar is costing them money.

Probably the biggest fear the Fed has is that foreign holders of the dollar will begin selling it off in large amounts putting even further downward pressure on its value. The Fed would then be forced to raise short-term interest rates to try to support the dollar, and if the cycle were to move quickly enough it would cause trouble in the bond markets, pushing longer term rates higher. That causes problems with consumer debt, the housing market, the economy, the stock market and — well, you get the picture.

Starbucks closed below its 20-day moving average last Thursday for the first time since October. Today, it bounced down to its 50-day MA.

Chart courtesy of StockCharts.com

What started out looking to be a bit of a recovery for the major indices turned out to be not much more than a temporary bounce, as the indices gave up healthy gains in the last hour of trading to finish just slightly positive on the day.

The Dow managed a gain of 17 points (+0.2%) to 10621 , the S&P 500 added 4 points (+0.3%) to 1190, and the Nasdaq moved up by 8 points (+0.4%) to 2097. The small-caps did slightly better with the Russell 2000 adding 4.5 points to 618, and the bond market stayed relatively unchanged with the 10-year Treasury at 4.28%.

Market internals were mostly positive with advances/declines 5 to 3 on the NYSE and 8 to 7 on the Nasdaq. Up volume led down volume on the NYSE by 8 to 5, but down volume led down volume on the Nasdaq by 11 to 7. There were 147 new highs to 41 new lows.

Both the gains and losses were light in the industry groups today. Housing stocks led the winners, gaining 2.0% , followed up by natural gas stocks (1.2%) and transportation stocks (+1.2%). The down side was led by airlines yet again (-1.0%) followed by telecoms (-0.6%).

Crude oil prices also gave up big gains on the day, and ended up slipping slightly to $45.33/barrel. The dollar fell slightly against other major currencies, and gold prices hovered around $420/ounce.

Any of you options players out there probably know that, before today, you could trade options on the QQQQ (Nasdaq 100 ETF) and the DIA (Dow Industrials ETF), but options were not available on the SPY (S&P 500 ETF).

That is no longer the case. Options on SPY began trading today.

As always, the Monday morning look at technicals and sentiment from Schaeffer’s.