The market did absolutely nothing to restore my confidence in it today - maybe it did something for you, but I don’t see how. The major indices spent most of the day near the zero line, and the only thing keeping the Dow from finishing in the red was a court ruling in favor of Altria (MO), helping that stock to a 3.7% gain. The Dow 30 Industrials did move higher by 4 points to 10555, but the S&P 500 fell 1 point (-0.1%) to 1219 and the Nasdaq dropped 9 points (-0.4%) to 2136. The Russell 2000 also lost 4 points (-0.6%) to 651 and the Dow Transports gave back 0.4%, but the Dow Utilities gained 0.2% as interest rates fell — the bond market rallied, pushing yields down yet again. The 5-year yield fell to 4.08% and the 10-year to 4.22%, and the yield curve flattens even further. We now have the fed funds rate at 3.5% and the 30-year bond at 4.43%. Yikes.
Market internals were worse than the indices might indicate. Volume was about average on the NYSE, but was pretty slim on the Nasdaq. Advances/declines were around 8 to 11 on both exchanges, and up/down volume was 2 to 3 on the NYSE but worse than 1 to 2 on the Nasdaq. New highs are pulling back to meet new lows as the market weakens: highs/lows were 55/32 on the NYSE and 47/43 on the Nasdaq.
The view of the industry groups isn’t very impressive: the biggest winners of the day were the natural gas stocks, with a paltry 0.4% gain. That’s the best we can come up with. On the losing side, the steel stocks were the only big losers, falling 2.6%, and many of the other metals stocks also took another beating. Just for kicks, we’ll toss in the airlines (-1.0%) and internet stocks (-0.9%).
Crude oil bounced around a bit before settling where it started, gaining 2 cents to $63.27/barrel. The dollar had another strong session, pushing the dollar index up 0.7% to 88.58. Gold hung in there at $440/ounce.
BMB Note: This market is a mess: very choppy and very trendless. BMB has been scaling back positions as they weaken, taking profits, and remaining quite defensive. Right now there are very few spots to put new money, if any. Many sectors are weak, and some are looking pretty shortable. The strongest areas, energy and commodities, are pulling back pretty hard. You decide what’s best for you, but be aware that market conditions are pretty murky.
