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.

“This will end in tears…”

Bill Fleckenstein weighs in with his thoughts on the housing bubble situation.

There’s been a lot of talk lately about whether the feverish activity in some real estate markets actually constitutes a “bubble” or not. After reading this article — which talks about how many people are buying houses that they don’t ever plan to live in, or buying and selling homes that aren’t even built yet — I’m thinking that you can call it what you want. Bubble or not, there are going to be a lot of people stuck with some expensive houses that they can’t unload when the music finally stops.

And it will stop. Someday.

The new edition of the ChartWatchers newsletter from StockCharts.com is available for your perusal.

In this issue:

• John Murphy has an S&P Elliott wave/retracement update.
• Richard Rhodes warns of a long term wedge pattern looming in the Nasdaq
• Carl Swenlin discusses the DVY, an ETF of dividend paying stocks
• Arthur Hill looks at the Nasdaq vs. NYSE composite ratio

Items of note on the latest industry moves:

• Airlines up during a week when oil prices tested record high levels. Go figure.
• Healthcare payors/HMO stocks up during a week when other health care groups were down. Go figure.
• Biotechs got hammered. Big time.
• Semiconductors suffered a bit of a setback this week in their attempt to move higher.
• Energy stocks rested only slightly this week.
• The networking area remains one of the weakest groups in the market.

The writer of “The Rude Awakening” column happened to visit the NYMEX on the day oil went back above $55 for a short time. In the midst of the trading itself, there are varied opinions as to why oil prices are high, and whether the move will continue.

Seems to me, the facts are on the bulls’ side. Demand continues to grow, and supply is having a hard time keeping up. I don’t see that condition abating anytime soon. As the column says:

The bears on oil hope - and maybe pray — that producers and refiners will soon begin to sell heavily into the crude market in order to lock-in future profits. Maybe so…Or maybe these industrial short-sellers would merely be locking in massive future losses.

$55 oil may seem like an “obvious” short sale to a world accustomed to $35 oil. But what if $55 oil is actually a counter-intuitive “long” to a world that might have to adapt to $75 oil?

It’s going to be an interesting next decade or two…