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 donut maker is in trouble. Period.

Bankruptcy looming? At least the airlines can try and cut new deals with their employee unions to help them out. Not here.

Cisco’s earnings are out - it doesn’t matter that much what the numbers are, but how the market reacts to them. Currently, the reaction seems to be indifferent to slightly negative: in after-market trading, CSCO is trading at $17.88, down 36 cents from its close.

Like I said this morning, CSCO just isn’t the market mover it used to be.

A reader asks for BMB’s take on Applied Materials (AMAT), so for what it’s worth, here it is - in full disclosure, BMB holds no position in AMAT.

Longer term, I don’t have high hopes for the tech/semiconductor world in general. I think the tech ‘revolution’ of the past 20-odd years - driven by the PC, Internet and cell phones - has pretty much run its course and is very much a mature industry. The easy money has been made, and there isn’t much ‘revolution’ on the horizon to drive further growth. I hate to be the one to break it to ya - the IPod is not a revolutionary product, and Google isn’t going to kickstart a 20-year boom in search engines. In addition, I have heard reports from research firms saying that as many as 40% of today’s semiconductor companies could be out of business in the next 10 years. That’s a lot less demand for AMAT’s products.

Turning to AMAT’s current state, let’s take a look at the charts:

AMAT hasn’t done much of anything since July, trading between the high 15s and 18. Even the big Nasdaq rally from August to December didn’t do any more than push AMAT to the top of its range - not an indication of a strong stock. And AMAT showed its weakness by tumbling right down to the low 15s when the market faltered in January. On the positive side, the 50-day MA has flattened out here, and AMAT may be putting in a bottom of sorts, as long as that 15.50 level holds - if not, all bets are off. But any potential moves higher face resistance from the 200-day moving average just above 17 (the stock hasn’t closed above that barrier since April) and congestion in the 18-20 area (any buyers still holding the stock may be anxious to sell once they ‘get back to even’).

The longer term chart shows AMAT in a clear downtrend since the fall of ‘03. As an investor, I wouldn’t look to be a buyer of this stock until I saw that downtrend line broken and some signs of strength (a move back above that 18 level, breaking above the 50/200 MAs, 50-day turning up, good volume, etc.). AMAT may just hold support in this area and continue to move sideways. A break down through the 15 area could send the stock quickly into the low teens.

Charts courtesy of StockCharts.com

The market continues to slog its way through a rather uninspiring week, with the major indices turning in very slight gains after trading in tight ranges all day. The Dow moved up by 9 points (+0.1%) to 10725, the S&P 500 gained less than a point to 1202 and the Nasdaq added 5 points (+0.2%) to 2087. The Russell 2000 managed a 2 point gain (+0.3%) to 638 and bond market continues to mystify, with the yield on the 10-year Treasury way down at 4.03%.

Market internals were modestly positive, with volume again on the light side. Advances/declines came in at 17 to 15 on the NYSE and just better than flat on the Nasdaq. Up/down volume ran 13 to 12 on the NYSE and 9 to 7 on the Nasdaq. New highs were still comfortably ahead of new lows, 397 to 39.

Semiconductors led the way higher today, with a 2.2% gain, followed by housing (+1.5%), networking (+1.5%) and defense stocks (+1.1%). The losers were led by airlines (-1.3%) and biotechs (-1.1%).

Crude oil stayed steady at $45.40/barrel. The dollar index edged slightly higher and gold prices remained at $413/ounce.

Microsoft joins the anti-virus game by purchasing a solution. Nothing new here - MSFT has been either buying up competition or buying help to compete for a long time.

A short roundup on latest happenings:

• Chinese portals are getting whacked (SINA down more than $6.00) - blaming new government text messaging rules. I don’t know - sounds like spam to me.
• Marriott, Taser stocks fall after earnings. Face it folks, Taser is done.
• The articles are out telling us how the market is poised, waiting on Cisco’s earnings after the bell today. That may be true - but the market needs to move on. Cisco is a company of yesteryear. If people are still hanging on to Cisco stock, hoping it’s going somewhere, they haven’t looked at the chart lately. Dead money, or worse.