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.

Jim Jubak is hearing from his banking buddies that banks aren’t putting away enough reserves to protect themselves if the number of bad loans picks up - which is bound to happen, sooner or later. The reason?? Accounting reform, i.e., the Sarbanes-Oxley bill:

There’s been a battle inside the banking industry between federal and state bank regulators on one side and the SEC-backed accountants on the other. The bank regulators have argued, from their own experience, that banks must put aside extra reserves at the top of the cycle, while the accountants have argued that putting aside these reserves violates current securities regulations under Sarbanes-Oxley. And recently, after much struggle, according to my correspondents, the bank regulators have given in.

	Utilities had the best of a pretty poor week overall. Surprisingly, the utils are holding up quite well even as interest rates sneak higher.
	Financials had the second best week - coming off a pretty ugly August dive - thanks to solid earnings reports from a few brokerage houses. However, the financial area remains quite divergent, with brokers doing well but banks and lenders having a much rougher time of it.
	The leading energy stocks had a relatively quiet week. Nothing to worry about here yet. A little consolidation in the energy sector might provide a nice entry point for adding to your energy positions. We will see how it plays out.
	The tech sector seems to be holding the market up at this point, with some tech stocks still looking very strong. Others, however, are not - and as a group, they’re starting to look a little toppy. You can see from the chart how the sector was ’saved’ in early July when the London bombings occurred, and now in late August by Katrina. It will be interesting to see what happens if there isn’t another ‘disaster’ in the next few weeks - and I’m certainly not wishing for one.
	The losers of the week were the consumer discretionary stocks. This sector remains very avoidable.

The numbers for the week:

Charts courtesy of StockCharts.com