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.

Bear Mountain Bull has added a new section to the site, entitled “More Stuff”.

Ok, I’ll admit that it’s just a section to stick stuff that didn’t seem to fit anywhere else: short reviews of books that didn’t make the Recommended Reading section, the list of books that I hope to read soon, etc. I’ll also add links to other web sites, interesting articles, you name it. It will be whatever it turns out to be - certainly the content will not be restricted by the title…

The section is small right now, but it might be the easiest section to grow!

Well, it wasn’t the most powerful or enthusiastic rally ever seen, but these days, I guess we have to be happy with just up for a change. Volume was a little light, especially with the three-day weekend coming, but up is still up.

The Dow gained 52 points (+0.5%) to close at 10558, the S&P 500 added 7 points (+0.6%) to 1184 and the Nasdaq tacked on 17 points (+0.8%) to finish at 2088. The Russell 2000 also moved up by 7 points (+1.2%) to 617, and the bond market pulled back sending the 10-year yield back up to 4.23% (see our post earlier today on the bond market action).

Market internals were positive (that’s a switch) with advances/declines running 2 to 1 on both the NYSE and the Nasdaq. Up/down volume came in at 8 to 3 on the NYSE and 2 to 1 on the Naz. There were 168 new highs to 47 new lows.

Leading the groups to the up side were airlines (+2.5%), semiconductors (+1.8%), internets (+1.7%), housing stocks (+1.7%), transportation stocks (+1.6%) and biotechs (+1.3%). On the down side, we find gold stocks (-0.9%) and computer hardware (-0.7%).

Crude oil held up above $48/barrel at $48.38. The US dollar posted 0.7% gains on the supposedly benign inflation data in the PPI report, and gold prices slid back to $422/ounce.

Don’t forget, markets are closed on Monday for the Martin Luther King holiday.

The Texas state AG is suing a University of Texas student for sending spam.

Lemme see - a 22-year old UT student who owns a $450K home in Austin. Ok, so he found a way to make money. But if the business is legit, then why this:

Pitylak and Trotter began PayPerAction in 2002 and have operated the business under at least 250 different names, Abbott said.

In BMB’s opinion, no penalty is too harsh for these vermin.

Producer prices surprised to the downside this morning, benefiting from lower energy costs. Don’t expect that to continue if oil prices continue to move higher.

The bond market behaved oddly the last two days, rallying on trade deficit news that should have sent it lower. Today it’s moving lower on inflation data that actually sent the dollar higher. Doesn’t make sense.

On Wednesday, Mike Hartman at Financial Sense Online speculated on the reason:

I very much believe there was active intervention to prop-up the treasury debt market because the U.S. Treasury was scheduled to auction $15 billion in 5-year notes today. I have NEVER seen treasuries take a significant decline on a day when the government is conducting debt auctions; it just doesn’t happen! Bonds should have sold off today, especially with all the new Fed-speak about higher interest rates and the horrible trade numbers we got this morning. One of the analysts interviewed by Bloomberg had this to say. “We’ve got a dollar that is weakening and the Fed saying they are going to keep hiking rates so there is no compelling reason to buy Treasuries,” said Jonathan Lee, a fixed-income analyst in London at Barclays. “You can understand why foreign central banks are looking to diversify their portfolios out of dollars.” By the end of the day Treasuries moved marginally higher. You can expect more of the same tomorrow since the Treasury will be auctioning another $10 billion in 10-year TIPS. At this juncture the U.S. Treasury cannot afford a big problem with the dollar or treasuries since they plan to borrow more than $100 billion via debt auctions between now and the end of February. It should get interesting.

BMB isn’t big on conspiracy theories, but when things behave totally opposite from the way they should, one has to wonder.