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.

LCA Vision, a very strong performer for more than 2 years, has sold off hard over the past couple of days. Why? I have no idea. No news, no mention of problems. Maybe somebody knows something. If they do, they haven’t told me.

Charts courtesy of StockCharts.com

The market made another surge higher today, tacking a few more points onto Thursday’s reversal and Friday’s rally. The Dow Industrials gained 71 points (0.7%) to close at 10516, the S&P 500 added 8 points (+0.6%) to 1219 and the Nasdaq was up 23 points (+1.1%) to finish at 2135. The Russell 2000 added another 10 points (+1.5%) to its all-time high, now 672, the Dow Tranports were up by 0.9%, the Dow Utilities gained 1.0%, and bonds didn’t move much, with the 10-year yield at 4.10%.

Market internals were positive on rather average volume. Advances led declines by about 3 to 1 on both exchanges, and up/down volume was nearly 4 to 1 on the NYSE and better than 5 to 1 on the Nasdaq. New highs/lows were an impressive 500/19 on the NYSE and 266/17 on the Nasdaq.

It was all good across the industries today, with steel stocks leading the way, up 2.8%. Following them higher were gold & silver stocks (+2.1%), disk drives (+2.0%), semiconductors (+2.0%), housing stocks (+2.0%), paper stocks (+2.0%), airlines (+1.8%), chemicals (+1.4%), internets (+1.4%), networkers (+1.4%), transportation (+1.4%), oil services (+1.3%) and REITs (+1.3%).

The landfall of hurricane Dennis helped bring crude oil prices down 71 cents to $58.92. The dollar took a hit today, with the dollar index falling 0.9% to 89.52, and the price of gold moved up to $426/ounce.

According to Schaeffer’s, the sentiment landscape hasn’t changed a great deal. The post-London-attacks rally at the end of last week only served to bolster investor optimism, which may be good for the short term, but not so good longer term.

Looking at BMB’s track of the CBOE equity put/call ratio, Friday’s end-of-day value of 0.424 was the lowest daily reading since December 15th of 2004, indicating we may be reaching some extremes in investor optimism. The chart shows that the moving averages of the put/call ratio are still dragging along at very low levels, with the 21-day MA at a level below where it was last December. With optimism running this high, it looks to me like we’re a lot closer to a market top than we are a bottom.