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.

Martin Goldberg this week at Financial Sense Online:

Is the bull market everywhere sustainable? When a key component of economic growth, oil, is in a bull market, it is unlikely that a bull market everywhere is sustainable. When low cost money appears to be trending toward high cost money, it is unlikely that a bull market everywhere is sustainable. Cracks are beginning to show in the fundamentals of companies fueling the US upper middle class spending spree and it seems to me that this is where the everywhere-bull market will end.

	No, I’m not talking about the Packers. At least not yet - just a few more weeks… Today it’s about the dollar and gold. The dollar had a nice run-up off its lows around the end of the year, but as we’ve mentioned before, the run looks to be over, at least for the short term.
	One of the effects of the dollar weakness has been renewed strength in the price of gold, represented here by the exchange-traded-fund GLD (1/10th the price of an ounce of gold). Longer term, the price of gold is trying to break out of a consolidation between $420 and $440 an ounce that it’s been in for nearly a year.
	Gold stocks are finally responding as well. The Phildelphia Gold and Silver index broke above a 9-month downtrend the first week in August, and enjoyed a 4% jump today.

Charts courtesy of StockCharts.com

Another crazy day in this messed-up market. After a strong start, it looked like we might see a repeat of yesterday’s reversal, but the market dug in its heels and rebounded to finish strongly, with the major indices right near their highs of the day. The Dow Industrials, led by McDonald’s and United Technologies, finished up 91 points (+0.9%) at 10686. The others followed along, with the S&P 500 gaining 9 points (+0.7%) to 1238 and the Nasdaq picking up 17 points (+0.8%) to 2175. The Russell 2000 gained 6 points (+0.9%) to 666, the Dow Transports were higher by a half-percent and the Utilities added 0.9%. Bonds rallied today on the weaker-than-expected retail sales and a strong 10-year note auction, bringing the 5-year yield back down to 4.18% and the 10-year to 4.33%.

Market internals were quite positive on average volume. Advances led declines by 2 to 1 on the NYSE and 12 to 7 on the Nasdaq. Up/down volume was nearly 3 to 1 on the NYSE and about 8 to 5 on the Nasdaq. New highs/lows were 193/33 on the NYSE and 95/36 on the Nasdaq.

The biggest winners on the day, by far, were the gold & silver stocks, up 4.1%. They were followed by commodity stocks (+1.5%), biotechs (+1.4%), defense stocks (+1.1%), REITs (+1.1%), steel stocks (+1.1%), internets (+1.0%), oil stocks (+1.0%) and natural resources (+1.0%). No groups lost big today, the airlines being the worst at -0.9%.

Crude oil continued its bull run, tagging $66 before finishing at $65.80, up another 90 cents. Ouch again. The dollar took another beating, the dollar index falling 0.6% to 87.03. Gold has been a huge beneficiary of the falling dollar, and it moved up to $445/ounce.

Dell reports after the bell - oops, here it is: looks like they met expectations (they always do), but were a little light on revenue. After-market trade has them around $37 after a $39.58 close. That’s not good.

Today’s Treasury auction of 10-year notes went considerably better than the other auctions earlier this week. That news has helped to push bond prices higher and yields lower.

Looks like the gold miners’ strike in South Africa may be ending.

Oops, I see that someone beat me to that news…

The good news is that US retail sales increased 1.8% in July. The bad news is that most of that increase was due to increased auto sales, spurred by the huge discounts offered by the US auto makers.

That’s not very good news for the rest of the retail sector, the stocks of which have been looking pretty shaky of late.

Wow. Crude oil at $65.40/barrel, and the market is holding up reasonably well with all of the major indices up slightly. If we see oil pull back at all in the next few days, it wouldn’t surprise me to see a little relief buying.

The one thing that isn’t tied to the oil prices is the weakness in the dollar. The buck is struggling again today, and that has gold prices up above $440/ounce and commodity stocks doing well again.

Leading groups so far: gold & silver stocks up 2.7%, steel stocks up 1.5%, commodity related stocks up 1.3%, natural resources up 1.1%, oil stocks up 1.0%, and transportation stocks (huh?) up 1.0%.

Scott Sullivan, the former WorldCom CFO, got sentenced to 5 years. He got a big break because he helped bring Bernie Ebbers down.

Another decent session for both the Japan and Hong Kong markets. On the US front, the song remains pretty much the same. The dollar is still leaking, gold is higher. Crude oil prices are hovering around $65. Bond rates have come down a bit. Stock index futures are indicating a slightly lower open.

Target beat estimates, looks to open higher, and Intel was downgraded.