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.

Yikes.

I said the path of least resistance was lower. I didn’t know there would be no resistance at all.

The selling was fast and furious all day. The Dow Industrials fell 124 points (-1.2%) to 10317. The S&P 500 was lower by 18 points (-1.5%) to 1196 and the Nasdaq got trashed for 36 points (-1.7%) to 2103. Even worse, the Russell 2000 dropped 19 points (-2.8%) to 645. Good night. The small and mid-cap indices were down similar percentages. The Dow Transports fell 2.0% and the Utilities got hammered to the tune of 3.3%. My word. Bonds were slightly higher, pushing yields down a little more: the 5-year to 4.23% and the 10-year to 4.36%.

The market internals were absolutely horrible - probably the worst I’ve seen in the year I’ve been doing this wrap. And of course, volume was big again. That is just not good news folks. Advances/declines were about 1 to 4 on each exchange, and get this: up/down volume was 1 to 10 on the NYSE. Holy cow. The Nasdaq was “better”, at only 1 to 3. New highs/lows flipped negative on the NYSE at 75/152, and were about even on the Naz at 81/79.

Of the 34 groups in my ‘watch’ list, none were positive, and only 4 (count ‘em, four) were down less than 1 percent (I don’t track the restaurant group - many of them were up on the day. Hard to believe that anything survived that mess). Best of the day were the banks, down ‘only’ 0.6%. Losers were large and numerous. Here are the worst: steel stocks (-5.0%), biotechs (-4.7%), natural gas stocks (-4.1%), oil stocks (-4.0%), natural resources (-3.9%), oil services (-3.8%), commodities (-3.2%), utilities (-3.0%), gold & silver stocks (-2.9%), housing (-2.8%), chemicals (-2.2%) and networking (-2.0%).

Crude oil prices fell again today, down $1.11 to $62.79/barrel. Gasoline is running about $1.90/gallon and natural gas about $14.22/mBTU. The dollar index is struggling to get much above the 90 mark, down 0.1% today to 90.01. Gold dipped a couple of bucks to $464/ounce.

BMB Note:The market is clearly suffering some very significant damage - how bad it gets, I have no idea. In just a couple of days, the major indices have come right back down to test their support levels: 10300 on the Dow, 1200 on the S&P, 2100 on the Nasdaq. If those support areas give way, there will be another leg down.

I will admit I’m surprised at the absolute carnage in the energy/commodity stocks. I don’t believe the fundamental picture for energy and energy prices has changed, but these stocks are obviously under severe selling pressure. It would seem that the momentum crowd is throwing them out the window for now, so moves higher will be harder to come by.

Read what Gary K. had to say yesterday in the post below. And protect yourself.

From Gary Kaltbaum’s radio show yesterday:

“There’s a lot of underlying ‘yuk’ going on in the marketplace. And that’s the one thing I need you to know is that it’s classic late-stage action in the market. Don’t believe anybody else, listen to what I have to tell you. Markets top over a long period of time. Markets can bottom suddenly, markets top over a long period of time. And basically how it works is the major indices hold up, but underneath the surface more and more stocks and sectors break down, and eventually the weight of all those stocks and sectors gets to the market. Ultimately. And I’m letting you know, everything I see right now in the action is reminding me of late stage action.”

BMB has been trying to tell you that things are not all wine and roses. You make your own decisions — it’s your money.

The latest stats from the Minerals Management service — slowly, we’re starting to see these numbers improve (GOM = Gulf of Mexico):

Today’s shut-in oil production is 1,299,928 BOPD. This shut-in oil production is equivalent to 86.66% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.

Today’s shut-in gas production is 6.895 BCFPD. This shut-in gas production is equivalent to 68.95% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.

The cumulative shut-in oil production for the period 8/26/05-10/5/05 is 47,756,987 bbls, which is equivalent to 8.723 % of the yearly production of oil in the GOM (approximately 547.5 million barrels).

The cumulative shut-in gas production 8/26/05-10/5/05 is 233.446 BCF, which is equivalent to 6.396 % of the yearly production of gas in the GOM (approximately 3.65 TCF).

A mid-morning selloff hit the market pretty hard, but the majors have come up off their lows. I thought this remark from Yahoo’s market update at 1pm Eastern was appropriate: “Range-bound underwater trading persists…”

Advance/decline figures are pretty horrible midday. Here’s how InPlay from Briefing.com puts it:
“12:59PM Downside extension on above averages trade :The market market averages have edged slightly off the midday lows but are still holding on to a firmly negative bias with the small- and mid-cap segments pacing the way (Russell 2000 -1.7%, S&P 400 -1.3%). Like yesterday’s breakdown, today’s extension has come amid above average volume (Nasdaq 1.057 bln, NYSE 983 mln). The worst performing sectors include: Steel -4.4%, Coal -4.3%, Biotech -3.6%, Housing -2.6%, Oil -2.3%, Natural Gas -2.2%, Oil Service -1.7%, Chemical -1.6%, Airline -1.6%, Paper -1.5%, Casino -1.5%. Little other than Restaurant +0.4% and Insurance +0.2% are in the plus column.”

Markets have followed through to the downside for the most part this morning. Lots of upgrades, downgrades and earnings outlook news have things bouncing around a bit, along with the non-manufacturing ISM report and the weekly energy inventory report.

The majors are resting slightly in the red at the moment, with virtually no winning groups (although the restaurants have gotten a nice pop this morning), and biotechs, steel stocks, housing and gold & silver stocks leading the losers. Bonds are continuing to recover, keeping yields down.

Crude oil is down a dime after the inventory data, but natural gas remains the big story, up 31 cents to $14.56/mBTU. For those of you in colder climates, you’d better start saving for those heating bills.