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.

Jim Jubak offers up some advice on how to handle your investments if the next few years turn out to be not-so-great, but not-a-disaster either. Check out his Pessimist’s Portfolio.

BMB has mentioned before that he likes Martin Goldberg’s Thursday market commentaries at Financial Sense Online. This week, it’s a look at consumer stocks from a number of different retail areas.

The market managed to get up after yesterday’s knockdown, but it didn’t exactly come back fighting. Looked more like it was taking the standing eight-count…with record high oil prices waiting to come in for the kill.

The Dow Industrials fell 7 points (-0.1%) to 10626, the S&P 500 gained 2 points (+0.2%) to 1190 and the Nasdaq added less than a point to finish at 2016. The Russell 2000 moved more than the others, gaining more than 2 points (0.4%) to 625, the Dow Transports added 0.5%, the Dow Utilities gained 0.9%, and the bond market rallied to push 10-year Treasury yields back below 4.5% to 4.47%.

Once again, volume dropped off on what could be construed as a slightly positive day, continuing the bothersome pattern of lower volume up days and higher volume down days. The market internals were mixed, with advances/declines at 19 to 14 on the NYSE and flat on the Nasdaq. Up/down volume was just shy of 3 to 2 on the NYSE and pretty much flat on the Nasdaq. We had the second straight day of more new lows than new highs on both exchanges, more evidence of the deteriorating breadth. New highs/lows were 61/79 on the NYSE and 48/88 on the Nasdaq.

Energy and commodity stocks came back to lead the way today, with steel stocks moving 1.9% higher followed by natural gas (+1.6%), oils (+1.5), chemicals (+1.0%), REITs (+1.0%) and commodities (+1.0%). Downside leaders were the housing stocks (-1.2%) and disk drives (-1.1%).

Crude oil prices backed down after reaching record high levels during the day, actually closing down a bit at $56.40/barrel. The dollar gained a little ground today, with the dollar index moving 0.3% higher and gold prices falling to $438/ounce.

OPEC is considering another production hike of 1/2 million barrels.

I don’t get this OPEC stuff - I think it’s mostly lip service, and I can’t blame them. I fail to see why the world expects them to increase production to help keep prices under control. What’s in it for them? Where is their incentive to keep prices low? Sure, they say that if prices get too high that consumption/demand will fall, but I fail to see how that would happen to a significant degree. Here in the U.S., the higher prices don’t appear to have changed people’s behavior much at all. There are virtually no conservation efforts in process, not even any suggestions at all toward conservation (at least not yet, nothing like back in the 70s), nor is there any movement whatsoever toward alternative energy sources. Oh sure, we talk about wind power, nuclear power, solar power, etc., but the efforts there are still relatively small and insignificant. And whenever programs are proposed to build new nuclear power plants or wind farms, we either have the environmentalists fighting it tooth and nail (they even fight any old energy efforts: new oil drilling - e.g., ANWR - or building of new oil refineries) or the rich folks (like in Massachusetts) don’t want the wind farms near them because “they’re ugly.” Then those same groups turn around and complain about high oil prices. Sorry - you can’t have it both ways.

It’s time to wake up folks. Ugly or not, we need some alternatives. The world, not just the U.S., is a slave to oil. And the competition for that limited amount of oil that remains in the earth is getting tougher and tougher.

Once oil prices moved through that old high yesterday, it was up and away. Near end of overnight trading, crude oil futures are now at $57.22 / barrel. Double ouch.

Just a few weeks ago, when the price had dipped into the low 40s, the folks on CNBC were giving legendary oilman T.Boone Pickens a hard time because he had predicted that the price would hit $60 before it hit $40. His response was “It hasn’t hit $40 yet.” Looks like he might get the last laugh.