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.

Even where housing bubbles are concerned.

I know we probably pay a little too much attention to the Cramer guy (the “great bald one”, as BMB reader Steve has deemed him). He doesn’t really deserve the attention, and we certainly don’t run out and buy up his stock picks, but he does provide good fodder for entertainment and discussion, so what the heck. And after seeing what happened today, I just have to just follow up on what we talked about last night. Cramer was right. He stuck his neck into the guillotine on this one alright. And he got his bald head chopped off big time. Maybe the lemmings will think twice about jumping on his stock picks the second they leave his mouth next time. Yeah, right. Who am I kidding? Hey, it’s their money - what they have left of it. On second thought, maybe this “great bald one” can teach us some valuable lessons, eh? Update: Cramer starts the show admitting he was wrong about Dick’s. Yes, he was wrong about their earnings. That’s not a big deal. Where he really screwed up was recommending the stock the night before earnings, guessing that they would be good, rather than waiting to see what the earnings were and how the market reacted. Don’t guess where your money is concerned.

Chart courtesy of StockCharts.com

We’re seeing a few areas of the market showing signs of cracking, and with today’s action, it looks like the retail sector is collapsing under the pressure. We’ve been telling you that the retailers were weak, and I think it’s pretty safe to say at this point that many of them are severely broken. And as if they need any more bad news, Abercrombie & Fitch (ANF) reported an earnings miss of 6 cents after the bell today, and is down another 7% in the after-market.

One of the leading groups in the market is finally breaking down. If many more groups start to look like this we’ll have some serious trouble on our hands. Symbols for the following charts: $RLX, AEOS, ANF, ARO, BBBY, BEBE, JCP, JWN, SHLD and WMT.

Charts courtesy of StockCharts.com

	Let’s assess the damage to the major indices. The Dow’s been lagging the whole time. All today’s selloff did was drive it back down into a trading range it has already spent some time in back in March/April and May/June. The index is also testing the area where its 50 and 200-day moving averages have converged. Any further fall probably brings 10400 into play.
	The S&P 500 has a clear goal - to hold the 1220 level. That is the area of both the June high and the 50-day moving average, and is also where the uptrend line off the April lows currently resides.
	The Nasdaq is a different story. Having risen so far, so fast, there isn’t much to hold it up at this point. The 50-day MA and the uptrend line from the spring lows have to hold down at 2127, or a return trip to 2100 could be in the cards.

Charts courtesy of StockCharts.com

Whew boy. I sure am glad that’s over. That was kinda ugly.

We warned you that you should be cautious because this market was shaky, and it tripped and fell today. I don’t think any bones were broken, but it might be limping for a while. The Dow Industrials dumped 121 points (-1.1%) to close at 10513. The S&P 500 lost 15 points (-1.2%) to 1219 and the Nasdaq fell 30 points (-1.4%) to 2137. The Russell 2000 dropped 11 points (-1.7%) to 655, and the Dow Transports and Utilities each fell 1.5%. About the only bright spot was the bond market, where bonds rallied for another day, sending yields down even further. The 5-year yield is now at 4.10% and the 10-year at 4.23%. This news has the Federal Reserve reaching for the “Condundrum Therapy” hotline…

The market internals were…you guessed it — gross. And volume picked up from yesterday. Advances/declines were about 2 to 5 on the NYSE and 5 to 14 on the Nasdaq. Up/down volume was worse than 1 to 5 on the NYSE and about 4 to 11 on the Nasdaq. New highs/lows were 60/27 on the NYSE and 64/44 on the Nasdaq.

Not much joy in the various industry groups, with airlines moving 3.4% higher on a 13.7% move in Delta. REITs hung on with a 0.5% gain helped by the lower interest rates. But the rest of the scoreboard was pretty red. Leading the charge lower were computer hardware stocks (-3.3%), followed by steel stocks (-3.2%), retailers (-2.6%), semiconductors (-2.0%), natural gas stocks (-2.0%), oil stocks (-1.9%), natural resources (-1.9%), chemicals (-1.8%), biotechs (-1.7%), oil services (-1.6%), commodities (-1.6%) and the list goes on.

Crude oil surged back near $67 early in the day, but finished down 19 cents at $66.08/barrel. The dollar also gave back much of its early gains, but the dollar index did finish up 0.1% at 87.39. Gold recovered much of yesterday’s loss, climbing back to $446/ounce.

So how much damage was done? Actually, the major indices did a pretty good job of holding support levels. We’ll take a look at a few charts in a later post.

Could be. At least the snakes seem to think so.

The morning’s news hasn’t been real kind to the market, with the major indices all opening lower. Biggest losses are coming in computer hardware, retail and semiconductors, while airlines are making gains thanks to a 16% move higher in Delta - all the way up to $1.63.

The retail sector seems to be reeling a bit from the morning’s earnings reports. That sector has been shaky, and today isn’t helping matters any. A lot of the retail charts are looking like pretty decent short candidates. I don’t think I’d be buying in that area.

As I mentioned in the update to my post on Cramer and DKS last night, Dick’s reported earnings this morning - and the stock has dropped like a rock.

I’m not trashing Cramer on this one - he admitted he was sticking his neck out, and it looks like he was pretty wrong, at least for now. The real losers in this game are the groupies who jump on any stock he mentions and buy it up in the after-market, especially the night before earnings.

Like I said last night, you could get your head handed to you. Hope you don’t mind being without your head: at 9:38 ET, DKS is trading at $34.88, down $4.41, or 11.3%.

Update: 11:34 am ET. DKS at 33.83, down 5.40 or 13.8%.

A bit of data and earnings overload this morning:

• CPI up a half-percent. Blame energy.
• July housing starts slipped.
• A glut of earnings reports from the likes of John Deere, Home Depot, JC Penney, WalMart, etc.
• Index futures are indicating a slightly lower open.
• And no disrespect intended toward the late Peter Jennings, but how many people do you think really want to sit down and watch a collection of his news reports on DVD? Yeesh.