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.

The major indices didn’t make it very far out of the gate today, and were lucky to finish where they did on a day with light trading volume and poor market breadth until late in the session. The Dow Industrials finished with a gain of 12 points (+0.1%) at 10641, the S&P 500 moved 1 point higher (+0.1%) to 1223 and the Nasdaq added 4 points (+0.2%) to 2157. The Russell 2000 gained less than a point to 664, the Dow Transports slipped 0.4%, the Utilities were unchanged and bonds moved slightly higher, pulling the 1o-year yield back to 4.17%.

Market internals were negative most of the day, but edged toward the positive by the close. Advances just led declines on both exchanges, and up/down volume was just below the flat line on the NYSE and about 5/4 on the Nasdaq. New highs/lows were 125/18 on the NYSE and 99/22 on the Nasdaq.

Not too many movers and shakers across the industries today, with housing stocks (+1.4%) and biotechs (+1.1%) gaining ground and airlines (-1.3%), gold & silver stocks (-1.3%) and paper stocks (-1.3%) losing ground.

Crude oil prices await news on the path of Hurricane Emily, and rose 29 cents to $58.09. The dollar got another boost against other major currencies, moving the dollar index higher by 0.4% to 89.72. The price of gold per ounce held right near the $420 mark.

Here is Gary Kaltbaum’s take on where the industry sectors/groups stand today.

We’ve talked about the put/call ratio before here at BMB. The 21-day moving average of the CBOE equity-only put/call ratio has now moved below the levels from last December, and is now at its second-lowest level in the last three-and-a-half years (lower levels were reached in early 2004).

Check out this chart of the put/call ratio vs. the S&P 500 at VTOReport.com (at the bottom of the page). Note that ‘bull’ moves in the market are not launched from levels of extreme optimism (valleys in the put/call ratio). On the contrary, moves higher begin when pessimism is at an extreme - spikes in the put/call ratio. Extremes in optimism tend to accompany market tops. It’s simple - when everyone is bullish and optimistic, everyone is already in the market. The buying power is exhausted, and the market stalls and falls back.

I maintain my belief that we are much closer to a top in the market than to a bottom.

More economic data out this morning, with industrial production up and May producer prices kept in check by lower energy prices. Consumer sentiment also ticked up.

No matter. The overbought market is pulling back a little this morning.

Looks like the winds of change will be blowing soon at Hewlett-Packard (HPQ) again. Numbers being tossed around as to potential layoffs range from 15,000 to 25,000. Whew. That’s a lot.

Investors seem to like the idea, with HPQ stock moving to new 52-week highs today.