Bear Mountain Bull

A poll finds that many Americans are nervous about retirement. Why?? Because they’re not saving any money!!

Almost half of Americans who haven’t retired say they don’t think they’re doing a good job of getting ready for that time in their lives, according to the AP poll. Many say they’re not confident they’ll have enough money to live comfortably after they quit working.

Well, duh. I guess if I weren’t saving for retirement I’d be pretty worried about it too.

< Rant On >

Hey America, how ’bout putting down your cell phone for a minute or two and stashing a buck or two in the bank now and then? Or how ’bout driving your SUV for just a few months after it’s paid off (gasp!!) and sticking the car payment money away for a rainy day (or maybe, retirement!!) - instead of blowing it on a new large-screen TV?? Or maybe you don’t really need a bigger house…maybe you could just get by staying in the one you have, and pay it off? (Blasphemy…!)

< Rant Off >

I just might be able to stir up a little sympathy for these folks if I thought they were trying — but I know most of them aren’t.

The market wandered around in negative territory all day, but did manage to finish up off of its worst levels. The Dow fell 75 points (0.7%) to 10766, the S&P 500 dropped 8 points (-0.6%) to 1204 and the Nasdaq lost 14 points (-0.7%) to 2052. The Russell 2000 also lost 4 points (-0.6%) to 634, and the bond market suffered, pushing the yield on the 5-year Treasury up above 4%, and the 10-year up to 4.37%. For now at least, interest rates appear to be moving higher.

Market internals were decidely negative, and volume finally picked up today - not a good sign. Advances trailed declines 13 to 20 on the NYSE and 12 to 19 on the Nasdaq. Up/down volume came in at worse than 1 to 2 on the NYSE and a little better than 2 to 3 on the Nasdaq. There were 463 new highs to 96 new lows.

The view across the industry groups wasn’t very pretty, with the biotechs taking a huge hit to the tune of 5.5% on the Biogen/Elan news from this morning. Following them down were health care products (-2.3%), paper stocks (-1.7%), health care (-1.6%), housing (-1.6%), airlines (-1.6%) and semiconductors (-1.5%). The only group showing any hope was computer hardware up 1.4%, but even that was due only to one stock - a 7% gain by PalmOne.

Crude oil prices rose slightly to $51.75/barrel, the US dollar index fell slightly and gold prices held around $436/ounce.

In case you haven’t noticed, prices for many commodities — crude oil, natural gas, coal, gold, silver, zinc and copper, just to name a few — have made big moves higher over the past few years.

Why?? Because there’s a new bull market in town, and it’s not in the S&P or the Dow. It’s in commodities.

BMB recommends, for your reading and investment pleasure, Hot Commodities by Jim Rogers.

As I said in my review: “There’s more to investing than just stocks and bonds. As an investor, you owe it to yourself to read the book, learn about commodities, and decide which method of investment in this asset class might be best for you. Don’t ignore the bull market that no one is talking about…”

Schaeffers’ weekly look at the market from a technical and sentiment perspective.

Some economic data out this morning:

• Consumer spending slows, more hints of inflation. No surprise on my face.
• New home sales decline. Again no surprise here. Note that new home inventories are now at highest level in 4 1/2 years.
• A bit of good news. Chicago PMI index up.

Biogen and Elan have voluntarily withdrawn Tysabri, a drug used to treat multiple sclerosis.

Both stocks are getting hammered in pre-market, Biogen (BIIB) is down 40%. Ouch.

Federated Department Stores buying May Department Stores. Who cares?

When was the last time we saw this much merger activity? If I remember correctly, it was back around 1999-2000 — just before the market top.

Bill Fleckenstein says the events of last Tuesday - and more importantly, the market reactions to those events - were just a preview of things to come.

Items of note on the latest industry moves:

• Like a broken record: energy, commodities, housing and semiconductors.
• Semiconductors still sneaking higher without any of the other tech groups. Is this move for real or some sort of a trap? Of course, the semis got beaten up pretty badly last year. Maybe they deserve a little more respect.
• Airlines, in addition to their other troubles, now have to fight higher oil prices again.
• Some financials showing weakness on higher interest rate worries - but not the housing stocks. Curious.

Analysts just can’t seem to come to grips with $50/barrel oil prices. They’d better start soon, if they want their forecasts to be anywhere near correct.

Oil prices probably won’t be heading lower anytime real soon. There will be fluctuations, of course, but the fundamental picture is that world oil supplies are going to have a hard time keeping up with demand. Years of lower oil prices reduced efforts to seek out new supplies, and the current supplies are being exploited to near their full potential. When was the last time you heard of a major oil field discovery?? And if they find one tomorrow, how long will it take to actually get oil flowing from it into the tankers?? Years, at least a few.

Not to mention, oil is priced in dollars. The dollar today is worth approximately two-thirds of what it was just three years ago on world currency markets. Let’s see: $51 x (2/3) = $34. So, in dollar terms from a few short years ago, we’re still at $34/barrel! Do you think the Saudis want to see that price come down to $34 again in today’s dollars?? Not a chance.

A wild week in the market, with a huge down day on Tuesday and three days of recovery to make the week a wash in the major indices. But the action continued in favor of energy and commodity related stocks, with little net change in the other sectors.

	Energy. Wow.
	Materials stocks have clearly been the second strongest group in recent weeks.
	Utilities pulled back to support on interest rate fears and appear to have saved themselves for the time being with a nice bounce this week.
	Health care - it’s trying. Really trying. A move higher from here would be promising.
	Financials are hanging on after a bounce off of support back up into the range. A break into the low 29s or lower could spell trouble.
	Looks like the belief is that consumers might be a little less free with their money. Consumer Discretionary stocks have been heading lower. A break below 33 would be a big problem.
	A similar story in Technology. Support has held in the 19.50 area for now.

Here’s a look at this week’s numbers:

Charts courtesy of StockCharts.com

The market wrapped up a pretty wild week by putting together a third straight rally day today, and managed to gain back all of Tuesday’s big losses in the major indices. But one cloud still lingers - you guessed it, the ‘V’ word - volume. Volume was on the light side again today, especially so on the Nasdaq. The price action was great, but how long does it last without some conviction?

The Dow moved higher by 93 points (+0.9%) to 10843, boosted by a 3.5% gain in Exxon Mobil, registering a new closing high for the calendar year. The S&P 500 gained 11 points (+0.9%) to 1211 - also a new high close for ‘05 - and the Nasdaq moved 14 points higher (+0.7%) to 2065 (not a new high for the year). The Russell 2000 beat out the big boys by adding 8 points (+1.3%) to 636, and bonds made slight gains pushing the 10-year Treasury yield down a bit to 4.27%. The Dow utilities index came back with a 2% gain on the day.

Market internals were decidedly positive, with the exception of the volume, especially so on the NYSE. Advances/declines ran better than 3 to 1 on the NYSE and just less than 2 to 1 on the Nasdaq, with up/down volume coming in at 4 to 1 on the NYSE but only 6 to 5 on the Nasdaq. There were 469 new highs to 62 new lows.

Big gainers on the day were steel stocks (+3.7%), natural gas (+2.8%), semiconductors (+2.2%), housing (+2.2%), commodities (+2.0%), utilities (+2.0%), broker/dealers (+1.9%), REITs (+1.9%) and oil stocks (+1.8%).

Crude oil picked up a dime on the day to $51.49/barrel. The dollar index fell 0.3%, and gold prices snuck back above $435/ounce.

The Reuters CRB commodities index hit the 300 mark today for the first time in 24 years. And we’re told there’s no inflation. Are we really supposed to believe that the highest commodity prices in 24 years isn’t having an effect on consumer prices? You’re joking, right?

Here’s a description:

The Reuters CRB index has been trading since 1956. It tracks 17 component commodities ranging from key economic indicators like gold and oil to other important commodities such as cocoa, coffee and orange juice. The CRB can be divided into six categories of components which include energy, grains, industrials, livestock, precious metals, and what are termed soft commodities.

Some view the equal weighting of the CRB as a good thing, in that it doesn’t allow a single commodity like oil to skew the index. On the other hand, some view the equal weighting as a flaw, citing the fact that commodities like oil and orange juice don’t really carry the same weight in terms of their importance to our everyday lives and economies.

As an investor, don’t ignore the bull market in commodities. You can take advantage of it - check out Jim Rogers’ new book, Hot Commodities.

Sales of existing homes dipped slightly in January, but remain at historically high levels.

The US economy grew at a slightly better rate in Q4 than originally estimated. Can the economy keep up the pace?

I thought this was over with. Now Qwest has submitted a revised bid for MCI.

Does anybody really care who buys MCI? I sure don’t.

I couldn’t finish this article on who will be picking up the costs of health care in the U.S. over the next decade. I had a hard time getting past the first sentence:

The introduction of the Medicare prescription drug benefit means that soon the government will be picking up almost half of the nation’s healthcare costs, a report released Wednesday shows.

Someone needs to let these writers know that they are the “government” that’s going to be picking up the tab. Note to LA Times: The “government”doesn’t have any money. You see, they are not a business that sells good and/or services. They take money from you and me, and that should be quite clear to you this time of year, as you fill out your income taxes!!!

The “government” won’t be paying half of the nation’s healthcare costs, that portion of the population that actually pays income taxes will be. And that portion gets smaller every year. What happens when a minority of the population is paying for all of the services enjoyed by the majority? That doesn’t sound like a very solid plan to me…

The way to make money in the market is to be where the action is, and stay away from the areas where nothing is happening. Here’s what’s been hot lately - keep in mind, now is not necessarily a good time to be buying into these groups. Buying in after a big move is buying into risk, and asking for trouble. Better to wait for pullbacks to support/moving averages or breakouts from consolidation areas.

	Oil, oil, and nearly every day it seems, oil. No entry points on this chart!
	Commodity related stocks continue to be hot, steel in particular.
	Housing stocks continue to be strong, even in the face of higher interest rates.
	Semiconductors made a strong move off the bottom and pulled back, but a nice move up today has them threatening to go higher.
	Gold & silver stocks have come back to life on weakness in the dollar and a jump in gold prices. They look like they might consolidate at these levels before they take off again (If they take off!).

Charts courtesy of StockCharts.com

The market managed to pick itself up off the mat again today, starting to rally a little after midday and closing with solid gains on good volume. The major indices all finished near their highs of the day, with the Dow adding 75 points (+0.7%) to 10749, the S&P 500 gained 9 points (+0.8%) to 1200 and the Nasdaq managed to rally for a change too, climbing 20 points (+1.0%) to 2051. The Russell 2000 joined in, moving 7 points higher (+1.1%) to 628 and bonds trickled lower pushing yields a bit higher, with the 10-year finishing at 4.29%. The Dow Transports added another 1.9%, and the Dow Utilities climbed 1.1%.

Market internals reflected the good topline numbers: advances/declines were 11 to 5 on the NYSE and 3 to 2 on the Nasdaq. Up/down volume came in at 7 to 3 on the NYSE and just under 2 to 1 on the Nasdaq. There were 263 new highs to 98 new lows.

The biggest positive moves came out of housing (+3.6%), steel (+3.2%), semiconductors (+2.4%), disk drives (+2.4%), transportation (+1.7%), oil (+1.5%), and commodities (+1.4%). The only group moving to the down side were the gold & silver stocks, which pulled back 1.2%.

Crude oil prices bounced around all day, but finished a bit higher at $51.39/barrel. The dollar index moved higher by a quarter percent, and gold prices dipped to just under $434/ounce.

Initial jobless claims edged up slightly last week, and durable goods orders dropped more than expected.

The way I read it, you people out there haven’t been buying enough commercial aircraft — so get with it. Do your part to help the economy and get your orders in. Maybe Boeing has an online store…

Internet search engines (GOOG, YHOO, ASKJ) are getting smacked in pre-market trading on an analyst downgrade. Not that I necessarily think these companies are worth what they’re trading at, but I’m always suspicious of analysts. Always wondering if maybe they were just looking for a better entry point…

In order to achieve its desired goals, the Federal Reserve has to do more than just raise the short-term Fed funds rate. It also has to tighten up the money supply so that money becomes a little tougher to get, helping push longer term rates higher. And it would seem that they’ve been doing just that for a while now — you just don’t hear about it.

	Banking stocks are really struggling here. The Philadelphia Banking Index (components) couldn’t hold its 50-day moving average over the past couple of weeks, and has fallen hard all the way down to its 200-day, and has made a series of lower lows since mid-November.
	The Regional Bank HOLDRs, an ETF representing 19 banking stocks (components), is following a very similar path. I don’t think I’ll be looking to pick up any banking stocks anytime soon.

Charts courtesy of StockCharts.com

Well, the market managed a bit of a bounce after yesterday’s selloff, but it wasn’t a real impressive one as buyers failed to show up in any significant numbers, and the Nasdaq didn’t bother to put together even a make-believe bounce.

The Dow finished 63 points (+0.6%) higher, getting back just over a third of yesterday’s loss, at 10674, the S&P 500 added 7 points (+0.6%) to 1191, but the Nasdaq didn’t show up again today, gaining only 1 point to 2031. The Dow Transports put together a 2% gain, the Russell 2000 managed to tack on 3 points (+0.4%) to 621, and the bond market went back and forth on the South Korea bank news, the morning CPI report and the release of the Fed’s meeting minutes, ending the day up a bit from yesterday with the 10-year Treasury yield falling slightly to 4.26%.

Volume was lighter than yesterday (not good), with internals pretty healthy on the NYSE but unimpressive on the Nasdaq. Advances/declines ran 7 to 3 on the NYSE but nearly flat on the Naz, and up/down volume came in at about the same ratios. New highs/new lows: 97 to 24 on the NYSE - on the Nasdaq there were more new lows than new highs, at 50 to 63. That hasn’t happened in quite some time. A rather ominous sign.

The industry groups were led by transports (+1.7%), oil services (+1.6%), paper (+1.5%), airlines (+1.4%), chemicals (+1.4%) and hospitals (+1.3%), while the only group taking a significant hit was the disk drive index, which fell 1.4%.

Crude oil prices dropped a quarter to $51.17/barrel, the dollar index rebounded 0.4%, and gold prices stayed near $435/ounce.

The South Korean central bank “clarified” its statement of yesterday involving their diversification of currency reserves:

The Bank of Korea on Wednesday clarified that it won’t sell existing dollar assets to diversify but instead plans to buy bonds denominated in other currencies with new funds.

So, everybody freaked when the dollar folded yesterday, and the Koreans were forced to come out and say, “We’re not selling dollars - yet. But we won’t be buying more either.”