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.

In this week’s column, Martin Goldberg takes a look at analysts’ recommedations at or near market tops. I probably don’t need to tell you that these bright boys and girls are amazingly good at sticking with a stock too long, and downgrading them after most of the money is lost.

Phil Flynn of Alaron Trading thinks that at least part of the drop in energy prices is seasonal in nature:

Yet October seasonal softness can mask larger problems and it is still unclear whether this demand slowdown is a long-term or a short- term phenomena. October is notoriously a bearish month for energy. How many times has October set the low for energy for the entire year? Moore Research shows that the December crude oil contract has gone lower between 10/12 and 10/28 13 out of the last 15 years. The December heating oil contract has moved lower from 10/13 to 10/31 13 out of the last 15 years.

You can sign up for Phil’s daily report here.

I’m a little late gettin’ this out today from the MMS (GOM = Gulf of Mexico):

Today’s shut-in oil production is 1,202,364 BOPD. This shut-in oil production is equivalent to 80.16% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.

Today’s shut-in gas production is 6.628 BCFPD. This shut-in gas production is equivalent to 66.28% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.

The cumulative shut-in oil production for the period 8/26/05-10/6/05 is 48,959,351 bbls, which is equivalent to 8.942 % of the yearly production of oil in the GOM (approximately 547.5 million barrels).

The cumulative shut-in gas production 8/26/05-10/6/05 is 240.074 BCF, which is equivalent to 6.577 % of the yearly production of gas in the GOM (approximately 3.65 TCF).

Wow, another wild ride. The market started off ok, but deteriorated as the day wore on. The news folk are blaming more comments by the Dallas Fed president regarding inflation. But the market reversed with about 20 minutes left to go, and saved itself from another triple digit loss on the Dow. Nevertheless, the numbers weren’t real pretty.

The Dow finished 30 points lower (-0.3%) at 10287. The S&P 500 fell another 5 points (-0.4%) to 1191 and the Nasdaq dropped 19 points (-0.9%) to 2084. The Russell 2000 lost 6 points (-0.9%) to 639, the Dow Transports were up 0.7% and the Utilities fell another 1.6%. Bonds drifted lower, pushing yields up to 4.23 on the 5-year and 4.37% on the 10-year.

Market internals were quite negative again, on heavy volume. Advances/declines were about 1 to 2 on each exchange, and up/down volume was about 3 to 7 on each. New highs/lows were 34/164 on the NYSE and 61/117 on the Nasdaq.

Very few winners again today: airlines added 4.4%, and gold & silver stocks moved higher by 2.8%. On the down side, natural gas stocks took the biggest hit (-3.3%), followed by natural resources (-2.5%), biotechs (-2.4%), housing stocks (-2.2%), oil stocks (-2.2%), oil services (-2.1%), semiconductors (-1.7%), paper (-1.7%), software (-1.7%) and telecom (-1.5%).

Crude oil prices fell further, dipping to $61.36/barrel. Gasoline has fallen to about $1.85/gallon, and natural gas to $13.38/mBTU.. The dollar got hammered today, the dollar index falling 1.5% to 88.65. I guess that resistance around the 90 area hasn’t softened any. The dollar’s troubles and the market’s inflation fears gave gold a big boost, sending the yellow metal up above $473/ounce.

BMB Note: Be careful what you wish for. I was hoping for a little more volatility, but this is a little more than I had bargained for. The late-day reversal might hint that a bit of a bottom may be near, but that could be more of a hope than anything. I have to believe there will be some sort of an oversold bounce coming in many areas soon, especially in the energy/commodity areas that have been hit so hard. Considering the thrust downward, it looks like a pretty meaningful top has been put in for now, and bounces may be better sold than bought. You decide.

With earnings starting to come out in droves over the next few weeks, I don’t expect that the volatility will simmer down real soon. It could be a pretty wild October. I think I might be more comfortable just watching from the sidelines.

Update: And don’t forget, the monthly payroll numbers are out tomorrow morning. Usually has an impact on the early market direction.

Gary Kaltbaum offers his analysis on what’s happening, what to watch for, and what to do:

There are other things that worry me like an out of control government that is quickly losing all of our confidence and you can see there are challenges ahead. I am an optimist but I am also a realist. Just continue to follow the bouncing ball and you will be fine. But if the markets continue to be under pressure, do not just sit there.

Retail sales numbers have retailers trading all over the map this morning, depending on what they said. The weekly jobless claims had very little effect, but the natural gas inventory report has kept energy prices - and stocks - down.

The major indices are just in positive territory, with airlines, gold & silver stocks, banks and retailers moving up. Energy stocks are lower again: natural gas, oil and oil services, along with natural resources, housing and utilities.