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.

I would hope that sensible minds would be quick to realize that measuring inflation without including such necessary items as food and energy is incredibly silly. Peter Schiff, CEO of Euro Pacific Capital, agrees:

Measuring inflation while excluding energy prices makes about as much sense as dieters weighing themselves while excluding all the fat around their stomach, hips and thighs. Just how did this ridiculous concept get started in the first place?

If you read the article, Peter will tell you how this idea came to be.

Gary Kaltbaum seems to agree with BMB that retail is done. He still likes the energy and commodity stocks on a pullback - but they’re pulling back pretty hard here, especially after today. The energy and commodity fans are hoping this is just that - a pullback - and doesn’t turn into something more serious like it did in the spring.

	The tech junkies got their fix today, with some good earnings news from Hewlett-Packard helping to send HPQ shares to new 4-year highs. The stock had recently broken below its 50-day moving average, but was saved today by a jump of more than 13%.
	Shares of Applied Materials also rose, after the company reported a decline in profits but said their bookings had increased. Apparently investors believed them, at least a little. It too had dipped below its 50-day yesterday MA before gaining 6% today.
	The joy in techland didn’t do much to help out the Nasdaq composite or the Nasdaq 100, however. Here, we see that the QQQQ, the ETF representing the Nasdaq 100, remains stuck in a downtrending channel that has contained it since the beginning of the month.

Charts courtesy of StockCharts.com

If you would have told me at the beginning of the day that the price of oil would be down nearly $3 today, I would have guessed that the Dow would have been up 120 points. Or more. Oh sure, the major indices were up on the day, but it wasn’t quite the celebration one might have expected. The Dow Industrials gained 37 points (+0.4%) to close at 10551. The S&P 500 gained only one point to hang around 1220, and the Nasdaq picked up 8 points (+0.4%) to 2145. The Russell 2000 was virtually unchanged at 655. The Dow Transports picked up 0.5%, but the Dow Utilities fell 0.2%. The bond market slid throughout the day after the morning PPI report, and pushed yields higher: the 5-year to 4.14% and the 10-year to 4.27%.

Market internals leaned to the positive on about average volume. On the NYSE, advances trailed declines by 15 to 16, but the gainers led the losers on the Nasdaq by 16 to 13. Up/down volume was just above the flat line on the NYSE, but better than 2 to 1 on the Nasdaq. We continue to see the number of new highs shrink: new highs/lows were 66/30 on the NYSE and 56/37 on the Nasdaq.

There was joy in Techville today, with perceived good news from the likes of HPQ and AMAT helping to push tech stocks higher. Leading the way, however, were the airlines (+2.7%), which usually get a boost when oil prices fall. Following the flyers was the computer hardware index (+2.6%), disk drives (+1.4%), computer tech. (+1.3%), semiconductors (+1.3%) and transportation stocks (+1.0%). Taking the hits today were the energy and commodity related issues: gold & silver stocks (-2.7%), oil stocks (-2.6%), natural resources (-2.4%), oil services (-2.3%), commodities (-1.9%) and natural gas stocks (-1.9%).

As we mentioned earlier, crude oil prices pulled back hard today, falling $2.83 to $63.25/barrel (now, before everybody gets too excited, remember how much room oil has to fall - we’ve already been over this). The dollar continued to rebound, pushing the dollar index up 0.6% to 88.00. The rising dollar helped push the price of gold down to $440/ounce.

So far today, a dip in oil prices and some optimism in the tech sector is helping to hold the market up, with the major indices all in positive territory between 0.4% and 0.7%. The price of crude is pulling back again, currently down more than $2 to $63.80. On the tech side, the market was pleased with the earnings reports from HPQ and AMAT.

Groups leading the way today are airlines, computer hardware, semiconductors, disk drives and retail. Moving lower are gold & silver stocks, oil stocks, natural resources, oil services, and commodities.

The index futures have moved slightly into negative territory on a 1% jump in the Producer Price Index. Much of that 1% increase was due to energy prices, with the core rate (ex. food and energy) rising 0.4%.

“The core PPI is up 2.8% on a year-over-year basis, the highest in nearly 10 years.” But don’t worry, Uncle Al says inflation is under control.