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.

The outlook isn’t exactly rosy for American auto makers. Lee Iacocca should know:

Lee Iacocca, who led Ford in the 1970s and is credited with saving Chrysler from extinction in the 1980s, summed up the grim mood in Detroit when he visited his adopted hometown last week and chided its automakers for lagging the Japanese in developing fuel-sipping hybrids.

“They should get off their asses and build more hybrids,” he told The Detroit News.

“Something’s got to happen in this town to turn it around, or we’re all going down the tubes,” Iacocca said.

Here’s one of Cramer’s recommendations - you can see what he did to the stock when he talked about it back in late July. Last week (9/13), he said this about Intralase (ILSE): “The shorts are leaning on this thing … I think it’s a buy here, and I’m sticking my neck out.” When it comes to your money, don’t listen to a bald guy on TV, or some guy on the radio, or even BMB, especially when he says he’s sticking his neck out. Do your own homework. When Cramer made that statement last week, ILSE had already crashed through its 20-day and 50-day moving averages, the moving averages were rolling over, and it had violated the lowest levels of its recent support. You just shouldn’t buy stocks that are in that poor of shape technically - and you can see what happened to it today. Blame it on the “shorts” if you’d like - it doesn’t matter what the reason is. If you own it, you’re losing money, and it looks like you could lose even more. Let “the great bald one” stick his neck out - that doesn’t mean you have to stick yours out too.

Chart courtesy of StockCharts.com

Oh boy. That wasn’t very pretty, was it? I think the “post-Katrina” rally has been officially declared over. And let’s hope today wasn’t the start of the “pre-Rita” selloff.

The selling started early and continued throughout the day. Stocks did come off their worst levels in the last half-hour of trading, but that didn’t keep the major indices from giving up most or all of their gains from Friday. The Dow Industrials were down 84 points (-0.8%) to 10558, the S&P 500 lost 7 points (-0.6%) to 1231 and the Nasdaq dropped 15 points (-0.7%) to 2145. The Russell 2000 fell 5 points (-0.7%) to 667. The Dow Transports dropped 1.2% while the Utilities gained 0.3%. Bonds finally bounced back a bit, sending yields down: the 5-year to 4.02% and the 10-year to 4.25%.

Market internals were pretty lousy, and volume was strong. Advances/declines ran about 1 to 2 on both exchanges with up/down volume about 3 to 7 on each. New highs still outnumber new lows, at 290/103 on the NYSE and 220/104 on the Nasdaq.

The winners of the day can be summed up in one word — yup, the ‘E’ word - Energy. That means oil services (+3.2%), natural gas (+2.6%), natural resources (+2.3%) and oil stocks (+2.2%). As for losers, the list was long and somewhat broad: airlines (-3.4%), paper stocks (-2.2%), retail (again, -1.5%), semiconductors (-1.4%), networking (-1.2%), housing (-1.1%), chemicals (-1.1%), banks (-1.0%), defense (-1.0%) and HMOs (-1.0%).

Crude oil handed the market - and consumers - another strong blow today by rising more than $4 to $67.39. Fears of another storm moving into the Gulf region has traders a bit jittery, I guess. Gasoline and natural gas prices also rose sharply. As for the dollar, it moved higher yet again, with the dollar index gaining 0.4% to 88.44. But the stronger dollar still isn’t keeping gold down. The spot price for the yellow metal fell back to $464/ounce after reaching above $468 early in the day.

BMB Note: The market got hit with higher energy prices yet again today, and the threat of another storm in the Gulf (Rita) isn’t good news. The same old stocks led today - energy and precious metals - and even the metals stocks pulled back later in the day. Many tech stocks had a rough day, and with tech being one group that had been holding up well, more deterioration there could be trouble. Fed meeting tomorrow, and no one seems to know what will be said, nor how the market will react to it. We’ll see how things go, but for now, I’d be careful. Things are kinda wobbly, if you know what I mean.

From the standpoint of technicals and sentiment, things are still looking a bit shaky, according to Schaeffer’s:

Wrapping it up, while the market has been making strides to improve itself, a lack of consistency in the technicals and in current market sentiment restrains me from taking too much of a bullish outlook. As it stands right now, the market looks vulnerable to selling. With technology sectors such as the PHLX Semiconductor Index (SOX - 474.77), which has remained a market leader, flashing signs of vulnerability, it is difficult to take an overall bullish stance on this market.

So far, today’s action isn’t providing much in the way of encouragement.

Things aren’t real pretty in the early going. Most groups in the red, with the groups doing well concentrated in the energy and commodity areas. Leading the way are oil services, natural gas, natural resources, oil and precious metals stocks. Leading the way down are airlines, paper, banks, semiconductors and transportation.

Part of the blame goes to a big boost in crude oil prices, currently up $2.40 to $65.40. Gasoline is up more than 16 cents to $1.95, and natural gas is at $12.45/mBTU. Think about this as winter approaches: natural gas prices are currently more than double what they were last fall. Make sure you’re prepped for those heating bills.

Gold is enjoying another good morning, with the spot price up more than $5 to above $464/ounce.

Update: Crude oil up more than $3, back above $66/barrel, gasoline up nearly 18 cents. Gold up more than $8 this morning. Wow.

• Uncertainty in Germany following election.
• Oil prices back up a buck to $64.10. There could very well be another pop coming as tropical storm, soon-to-be-hurricane, Rita moves into the Gulf. Just what we need.
• North Korea pledges to halt its nuclear program. I’ll believe when I see it.
• Gold up another $4. For now at least, gold doesn’t seem to need a weaker dollar to move higher.

So says Bill Fleckenstein. He thinks the latest news from the likes of Best Buy tells us an awful lot.