Bear Mountain Bull

If you read BMB, you know that I’m a big fan of Martin Goldberg’s weekly column at Financial Sense Online. This week, Mr. Goldberg looks at the charts of all 30 of the Dow stocks.

A free technical examination of all of the big ‘blue chip’ stocks – how great is that?

Qwest has raised its bid for MCI. Enough already.

Kind of a mixed up day in the market today, as the major averages drifted slightly lower and internals were mixed. The Dow Industrials dropped 37 points (-0.4%) to 10504, the S&P 500 lost less than a point (-0.1%) to 1181 and the Nasdaq lost 6 points (-0.3%) to 1999. The Russell 2K gained less than a point, finishing at 615, the Dow Transports dropped 0.5% while the Dow Utilities gained 1.1%, and bonds rallied to push the yield on the 10-year Treasury down to 4.48%.

Internals were mixed, with the NYSE putting in the better performance on good volume, while the volume on the Nasdaq fell back from yesterday’s levels. Advances/declines came in at 19 to 13 on the NYSE and just less than even on the Nasdaq, with up/down volume 10 to 9 on the NYSE and 8 to 11 on the Nasdaq. The NYSE put up more new highs than new lows, 45 to 40. The Nasdaq posted 48 new highs to 95 new lows.

The industry groups, too, were mixed, with energy and commodity stocks chipping away at their losses of the past couple of weeks. Leading the way higher were oil services (+3.1%), natural gas stocks (+2.5%), disk drives (+2.1%), commodities (+1.6%), oil stocks (+1.5%), steel stocks (+1.4%) and paper stocks (+1.3%). Moving lower were airlines (-1.6%), health care products (-0.9%) and networkers (-0.9%).

Crude oil prices rallied again, moving higher by $1.41 to $55.40/barrel. The dollar index dropped 0.3% and gold prices moved up to $428/ounce.

Those who keep trying to call a top in oil prices had better keep calling, and maybe a little louder. After dipping below $53/barrel yesterday, crude is trading back above $55 this morning.

Government reports indicate that personal incomes rose 0.3 percent in February. My income didn’t go up, did yours?

The interesting add-on is that consumer spending also rose by 0.5 percent. Note that the spending rose more than the incomes did. Can you say ‘debt’? (Hint: the ‘b’ is silent).

Bounce. Nice bounce. Does today’s action lead to more than just an oversold bounce? Too early to tell. But it sure felt good to see some green on the screen for a change.

Today, the indices started off strong and just got stronger, rallying into the close instead of fading. The Dow Industrials rose 135 points (+1.3%) to 10541, the S&P 500 gained 16 points (+1.4%) to 1181 and the Nasdaq led the day – for a change – tacking on 32 points (+1.6%) to regain the 2000 level at 2006. The Russell 2000 bounced back from yesterday’s drubbing with a 10 point gain (+1.7%) to 615, the Dow Transports added 1.7%, the Dow Utilities moved higher by 1.4% and the bond market rallied along with stocks, pushing the 10-year Treasury yield down to 4.55%.

Market internals were strong, volume was good but dipped just slightly from yesterday’s selloff. Advance/decline numbers were as good as we’ve seen in some time, at 25/8 on the NYSE and 7 to 3 on the Nasdaq. Up/down volume was very positive, at 5 to 1 on the NYSE and nearly 7 to 1 on the Nasdaq. New highs still trailed new lows, at 27/52 on the NYSE and 32/90 on the Nasdaq, but with so many stocks beaten down you might expect that it isn’t easy for them to snap back to new high levels.

Gains were across the board, with none of the groups tracked by BMB losing ground today. Leading the way were the airlines (+5.2%), followed by internets (+2.4%), semiconductors (+2.3%), networkers (+2.1%), disk drives (+1.9%), broker/dealers (+1.7%), natural gas (+1.6%), and transports (+1.5%). Nearly every group gained at least 1%.

Crude oil was all over the place after the morning inventory data was released, but finished the day down only slightly at $53.99/barrel. Both the dollar and gold prices held steady today, with the precious metal hanging around the $426/ounce mark.

BMB Commentary: So what does today mean? Not much just yet – the S&P 500 and the Nasdaq did manage to take out their highs of yesterday, but the Dow did not, and volume still didn’t swamp the down days we’ve been having. We’ll have to see what happens over the next week or so – if the market can hold here and maybe follow through with another day like today, then maybe the indices can make a short-term move higher. Longer term, there is much work to be done and a lot of damage to be repaired. But you have to deal with what’s happening now – and right now, there is still no market leadership. In order to push things higher, a group or two are going to have to step forward and show the way. Right now, that job is still up for grabs.

So far, the market looks good for a change, following the final Q4 GDP report and the weekly oil inventory data. Crude oil prices have dipped to $53.00/ barrel, and the major indices are all showing solid gains for the day.

The key will be volume and the internals, which both look relatively strong so far, and whether or not the gains can hold into the close. Let’s hope so – it would be nice to find a near-term bottom to this recent slide.

In a market like this, it’s difficult to find bullish charts. Sometimes, you have to be somewhat “creative”, as Dave Landry from TradingMarkets.com demonstrates.

	The Nasdaq can’t find a friend as it has broken below its January lows, and today finally gave up trying to hold its 200-day moving average. If you’re not much for charts, this would be considered a very bad one.
	The S&P 500 has held up better, but is now challenging its January lows as well, and threatening to fall all the way back to the 1140-1150 range where it broke out in November. This is not a healthy market right now, and it could swallow you whole if you’re not careful.

Charts courtesy of StockCharts.com

Looks like the ‘lucky’ winner of the HP CEO sweepstakes is going to be Mark Hurd, the CEO of NCR Corp.

He’s got his work cut out for him. But the market seems to like the idea, at least for the afternoon. HPQ stock was up $1.99, or just over 10%, on the day.

Slip slidin’ away. I remarked earlier in the day that the market’s challenge was to try to hang onto the gains made early this morning. Well, that didn’t happen. The market slid all day long from that point, finishing near the lows of the day yet again on another pickup in volume. This just gets uglier and uglier.

The Dow Industrials fell 80 points (-0.8%) to 10406, the S&P 500 lost 9 points (-0.8%) to 1165 and the Nasdaq dropped 19 points (-0.9%) to 1974. The Russell 2000 got slammed for more than 10 points (-1.7%) to close at 605, the Dow Transports lost 1.8%, the Utilities fell 1.4%, and bonds rallied to push the 10-year Treasury yield down to 4.58%.

Market internals, positive early in the day, finished deeply in the red. Advances/declines were 9 to 23 on the NYSE and 4 to 11 on the Nasdaq, with up/down volume 1 to 3 on both exchanges. New highs/lows continue to show the degradation of the market, coming in at 25/90 on the NYSE and 44/132 on the Nasdaq.

Hospitals remain one of the only bright spots, as the group moved higher by 2.2%, but they are a glaring exception. Commodity related stocks got hit hard again today, with steel stocks down 4.7%, followed by paper (-2.7%), oil services (-2.5%), transportation (-2.4%), chemicals (-2.1%), biotechs (-1.6%), housing (-1.6%), broker/dealers (-1.6%), disk drives (-1.5%), natural gas (-1.5%), commodities (-1.5%), utilities (-1.3%) and semiconductors (-1.3%).

Crude oil prices rose slightly to $54.23/barrel, the dollar index fell 0.3% and gold prices held near $426/ounce.

How long does this last? Hard to say, as oversold levels obviously can become more oversold – you’re seeing it happen. Sooner or later, the market will have had enough, and the buying will begin to bounce the market higher again, even if it’s only slightly higher. All we can do is watch and wait, and continue to play defense as best we can. Sentiment is shifting to the pessimistic side and once that finally reaches an extreme, a short-term bottom will be put in. Could be tomorrow, next week, next month. Only the market knows, and right now, it’s not giving many hints at all.

The major indices have moved into slightly positive territory, and so far today, the market internals have been biased to the positive, despite a rather lackluster consumer confidence report.

The market has been having problems holding onto gains through the day lately. It will be hard to get any buying interest in the market until it proves that it can begin to move higher into the close and/or hold intraday gains, rather than giving them all back.

MCI says they will be accepting Verizon’s higher offer, over the offer from Qwest, for the buyout of the company. That’s today. Tomorrow the news may change. And I still won’t care.

The market hung on by its fingernails today, putting in what seemed like the best performance it could muster, but the major indices could only hang onto slight gains on very light trading volume. The Dow Industrials gained 43 points (+0.4%) to 10486, the S&P 500 added 3 points (+0.2) to 1174 and the Nasdaq moved a little more than a point higher to 1993. The Russell 2000 fell less than a point to finish at 615, the Dow Transports lost 0.1%, the Dow Utilities gained 0.5% and bonds dipped, sending the 10-year Treasury yield higher to 4.64%.

Market internals were mixed, with advances/declines slightly negative on both exchanges (NYSE 7/9, Nasdaq 7/8), and up/down volume slightly negative on the NYSE but slightly positive on the Nasdaq. New highs continue to take a back seat to new lows, with the highs/lows figures coming in at 36/71 on the NYSE and 53/85 on the Nasdaq.

Few big movers across the groups today, with oil services (+1.3%) and retailers (+1.3%) leading the gainers, and steel stocks (-2.8%), biotechs (-1.3%) and paper stocks (-1.2%) moving to the down side.

Crude oil prices fell to $54.05/barrel, the dollar index gained 0.5% and gold prices rose slightly to just over $425/ounce.

Gary Kaltbaum is back from vacation, and he’s warning you to be very careful in following the crowd, especially now – after the moves have already been made.

Listen to Gary’s radio show whenever you can – some of the best and most straightforward information you’re going to get on the market anywhere, and it’s free!.

In their weekly market outlook, Schaeffer’s finds that there might be some support for the market at or near current levels. Then again, if that support doesn’t hold…

Why you should not listen to analysts, example #3,426,819: This morning we get a downgrade on General Motors stock from UBS, to a rating of “reduce”.

Let me see: GM was trading at 55 in January of ‘04, 45 in July, 40 in January of ‘05, and is now less than $30. If you held GM that whole time, seems to me you’ve already been pretty substantially “reduced”.

Thanks for nothing.

Bill Fleckenstein must read BMB (yeah, right). His column this week on the trap the Fed is in makes the same point that BMB made last week – it wasn’t the Fed’s remarks that moved the markets. The markets were just waiting for an excuse to move.

Items of note on the latest industry moves:

• Energy and commodity related stocks still the strongest over the 8-week period, but some of the weakest of late as they pull back from their highs. Many of those areas got hammered hard this week.
• Hospitals seem to be the one group that’s holding up well.
• Only two groups in the green over the past 4 weeks. You’d hope that would get better soon, even in a tough market.

Yuk. Just a horrible week in the markets – all of them. This week it really didn’t matter what asset classes you were invested in – stocks, bonds, commodities – they all took a fall. The dollar was the only asset that really gained value this week, and it’s hard to say whether that will continue or not.

Many stocks, and the major indices, remain in a relatively oversold condition. Could they go lower? Absolutely. But sooner or later, the slide will slow, and there will likely be some sort of a bounce higher. The question will then be whether it is only a bounce or not. Right now, the underlying health of the market is quite poor, and it’s going to need to do some impressive recuperating to mount any meaningful rallies.

Now on to the sectors for the week. Only 3 sectors are in the green year-to-date, and all sectors are in the red for the last 4 weeks. This is not a pretty picture at the moment.

	Health care stocks really haven’t been going anywhere, but they were the only sector to hold their ground this week.
	Energy stocks remain in pullback mode. They had a lousy week, but still appear to be trying to hold the 42 level.
	Financial stocks went from bad to worse.

Here’s a look at this week’s numbers:

Charts courtesy of StockCharts.com

The market couldn’t even put in much of a positive performance going into the holiday weekend, with the major indices giving up early gains to fall slightly negative. The Dow Industrials fell 13 points (-0.1%) to 10443, the S&P 500 dropped 1 point to 1171, and the Nasdaq gained a little less than a point to finish at 1991. The Russell 2000 picked up a little ground, rising 3 points (+0.5%) to 615, the Dow Transports gained 0.3%, the Utilities moved 1.5% higher and the bond market rallied slightly to push 10-year Treasury yields back down to 4.59%.

Market internals came in relatively positive on light pre-holiday volume. Advances/declines were 19 to 13 on the NYSE and 8 to 7 on the Nasdaq, while up/down volume ran 7 to 5 on the NYSE and 9 to 7 on the Nasdaq. New highs were still outdone by new lows, with highs/lows of 32/57 on the NYSE and 41/79 on the Nasdaq.

Not a lot of big movement in the industry groups today, with the leaders being utilities (+1.3%), hospitals (+0.8%), computer hardware (+0.8%) and natural gas stocks (+0.8%), and the losers being airlines (-1.7%) and gold & silver stocks (-1.0%).

Crude oil prices bounced higher after selling off a couple of days, moving more than a dollar higher to $54.84/barrel. The dollar index moved slightly higher, and gold prices held near $425/ounce.

I keep thinking that the market will bounce a little out of the oversold condition it’s in, but that just hasn’t materialized as yet. Of course, with deteriorating market internals and the inability to mount any sort of significant rally, I don’t see the overall picture moving to the positive side real soon.

Don’t forget that the market takes the day off tomorrow for Good Friday.

• Durable goods orders up, but less than expected.
• Weekly initial jobless claims rise.
• General Electric raises guidance, as does Northrup Grumman.

Bernie Schaeffer gives his perspective on the market and those who are telling you, “Don’t worry, be happy, buy stocks.”

It was bound to come to this. In an investment world where complacency and obliviousness to risk had already become boundless, it was just a matter of time until it became shameless.

I have a couple of big problems with the ‘perma-bull’ attitude (and ‘perma-bears’ too, for that matter). I think those folks do you, the investor, a tremendous disservice by always coloring the picture a rosy-red, when it may be actually an ugly brown from time to time. These people will never tell you to sell stocks – which you must do at certain times to make money. And they will never tell you not to buy stocks at any point – when the truth is that at certain times, the best place to be is on the sidelines.

Your job is to be smart enough to see through their eternal optimism and be able to evaluate the health of the market on your own, allowing you to make good investment decisions.

Some stocks, although very few, haven’t seemed to notice that the market is struggling. Take Johnson & Johnson, for instance.

Chart courtesy of StockCharts.com

Martin Goldberg’s column makes its appearance on Wednesday this week. Today he looks at whether the market is just making a head fake/correction, or if this action looks to be something more serious.