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.

	As the S&P 500 prepares to test its February highs, and possibly its December highs…
	…the Nasdaq has barely reached its highs of last week, never mind those of last December.

Keep in mind, however, that the S&P is reaching those levels with far fewer stocks in good technical shape than it had back in December — currently, less than 60% of S&P 500 stocks are above their 50-day moving averages, versus more than 85% in December. That’s the wonder of a weighted index - the topline number can look the same, but underneath the surface things can be quite different.

Charts courtesy of StockCharts.com

US auto makers continue to have trouble selling their vehicles. In GM’s case, I guess it’s a good thing that their financing arm makes money for them - for now. We’ll have to see how that holds up if interest rates continue to rise.

The market put together another relatively solid performance today, with investors opting for issues other than energy and commodity stocks today. The Dow finished up 64 points (+0.6%) at 10830, the S&P 500 added 7 points (+0.6%) to 1210, and the Nasdaq gained 20 points (+1.0%) to 2071. The Russell 2000 also made gains, tacking on 4 points (+0.7%) to 639, and the bond market held relatively steady, holding the 10-year Treasury yield near 4.37%.

Market internal were quite positive, although volume dropped off a bit from yesterday. Advances/declines were 7 to 3 on the NYSE and 18 to 13 on the Nasdaq. Up/down volume was even stronger, coming in at 2 to 1 on the NYSE and nearly 3 to 1 on the Nasdaq. There were 319 new highs to 74 new lows.

Big movers to the up side included airlines (+4.8%, with Continental moving 13.7% higher on news of new contracts with their workers unions), semiconductors (+2.3%), paper stocks (+2.2%), broker/dealers (+1.6%), disk drives (+1.4%), drug stocks (+1.3%), telecoms (+1.3%), insurance (+1.2%) and networkers (+1.2%). The down side was led by oil services (-2.5%), gold — silver stocks (-2.1%) and natural gas stocks (-1.8%).

Crude oil prices dropped just slightly to $51.68/barrel, the dollar index rose 0.3% and gold prices dipped to near $432/ounce.

• Construction spending up in January.
• National manufacturing survey data(ISM) lower for fourth straight month.

Keep an eye on the bond market. Interest rates have moved sharply higher in the past week or so, and trickled just slightly lower on the ISM report this morning. Currently, the 5-year Treasury yield is at 4.00% and the 10-year is at 4.38%. The market typically struggles as interest rates rise, and I don’t think higher rates will be very friendly to our somewhat fragile, debt-laden economy either.