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.

Bill Fleckenstein parses the column penned by former Fed Chairman Paul Volcker (required reading for BMB visitors, see previous post), and says that if Mr. Volcker were the man currently at the helm, things would have been different.

Fleckenstein suggests that the Fed should have just raised its short-term interest rates and gotten it over with. Get the rates where you want them, endure the pain and be done with it. BMB agrees. This Chinese water torture method of 1/4 point hikes every month or two isn’t getting the job done fast enough, and the entire process gets dragged out — prolonging the agony and delaying the recovery.

“An Economy on Thin Ice”, by former Fed Chairman Paul Volcker, in the Washington Post. If you can’t get to the Post article for some reason, here’s another link to the same column.

If you haven’t yet read it (we linked to it here on BMB a few days ago), you must go read it now. You need to be aware of the risks and imbalances that exist in today’s economy, and that the economy is in a relatively fragile state.

These warnings aren’t coming from some yokel in the back woods on his shortwave show, or even from some yahoo writing in his weblog (you know, like me). These are from a guy who should know, a guy who has been in the middle of it.

I’m not saying that disaster is right around the corner, and neither is he. But the potential for trouble is out there. Be aware of it, and be ready to react to it. That’s all.

This week, we’re going to start with the ”worst’ list, and expand it to include all tracked groups that are down more than 10% over the past 8 weeks:

The latest edition of the ChartWatchers newsletter from StockCharts.com is available, but I have to warn you — the pictures aren’t very pretty.

In this issue:

• John Murphy looks at how far the S&P could fall
• Richard Rhodes examines the “mini-crash” of the Nasdaq
• Carl Swenlin shows you the trends in small-cap new highs/lows
• Arthur Hill considers a downside target for the Nasdaq