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.

I challenge any member of the Democrat party to appear on television for a discussion of government budgets/spending without uttering the phrase “tax breaks for the rich.”

You can’t give tax breaks to those who don’t pay taxes. Did you know:

- That the top 50% pays 96.5% of all income taxes?
- That the top 10% pays nearly two-thirds of all income taxes?
- That the top 1% pays more than one-third of all income taxes?

I’ve always wondered what would happen if that top 1% finally decided they’d paid their share and decided to leave the country. Hey, they’ve got bucks. They can live wherever they want.

Having spent a number of years in the Houston area, BMB was pulling for the ‘Stros to make it to their first World Series. Congrats to the team and the folks of Houston, and good luck in the Series against the Sox!

Is that Roy Oswalt just a menace or what?

Gary Kaltbaum said in his column this morning:

I wish I had better things to say, but hey, I just interpret the action. Unless we see a monstrous high volume reversal day to the upside, stay clear. A high volume reversal to the upside would wash out all sellers for the near term. I don’t predict an occurrence like that. I react to them. What you would be looking for is a very weak open on so-called bad news…and a reversal to the upside.

Today was exactly the type of day he was describing - and on his radio show today, he said as much.

So what happens now? Well, that’s up to you. I’d like to see some consolidation and bases formed here, and we still need to see which groups are going to be the strong ones, assuming that market action remains positive. You’d like to have all of the odds in your favor - market, sector, stock - and today’s action might just get the market back on your side for a little while.

This market is making me seasick. After a pretty healthy move down in the morning, many stocks reversed course and moved higher midday, sending the major indices to the highest levels they’ve seen in a week.

On this day - the 18th anniversary of the ‘87 crash - the Dow Industrials were higher by 129 points (+1.3%) to 10414, the S&P 500 gained 18 points (+1.5%) to 1196, and the Nasdaq was up a whopping 35 points (+1.7%) to 2091. The Russell 2000 also moved higher, getting back 13 points (+2.1%) to 638. The Dow Transports were up 1.2% and even the Utilities index was up by 0.3%. Bonds also moved higher, pushing the 5-year yield down to 4.32% and the 10-year to 4.46%.

As you might expect, market internals were quite positive, and volume increased over yesterday’s levels. Advances/declines were 12 to 7 on each exchange, and up/down volume was about 7 to 3 on each. New highs/lows were 34/234 on the NYSE and 45/144 on the Nasdaq.

Only one group was lower on the day, that being the gold & silver stocks, down 1.8%. Leading the way up were housing stocks (+3.3%), brokers (+3.1%), retailers (+2.8%), oil services (+2.7%), HMOs (+2.5%), internets (+2.1%), banks (+2.0%), natural resources (+1.9%), steel (+1.9%), defense (+1.9%), insurers (+1.9%), natural gas (+1.8%), oil stocks (+1.7%), networking (+1.5%) and drug stocks (+1.5%).

Crude oil prices took a big dip after the morning inventory report, but rebounded to finish down 79 cents at $62.41/barrel. The dollar index fell 0.3% to 89.92, and the spot price of gold fell back to $465/ounce.

BMB Note: Well, that was pretty impressive. Seems like the market may have been saying “no mas” today. I don’t know what prompted it - I’m sure there was some short covering that added fuel to the fire -but it doesn’t really matter. The market had a chance to give up today, but instead held above the lows of last week and reversed to the upside on healthy volume. Even a lot of the energy stocks had nice reversals. That could mean a low has been put in, at least in the very near term. We’ll see if we get any follow-through higher in next few days - hopefully it won’t all be given back tomorrow! With earnings reports coming out every day, anything can happen.

The latest figures from the MMS (GOM = Gulf of Mexico):

Today’s shut-in oil production is 973,084 BOPD. This shut-in oil production is equivalent to 64.87% of the daily oil production in the GOM, which is currently approximately 1.5 million BOPD.

Today’s shut-in gas production is 5.242 BCFPD. This shut-in gas production is equivalent to 52.42% of the daily gas production in the GOM, which is currently approximately 10 BCFPD.

The cumulative shut-in oil production for the period 8/26/05-10/19/05 is 62,595,113 bbls, which is equivalent to 11.433% of the yearly production of oil in the GOM (approximately 547.5 million barrels).

The cumulative shut-in gas production 8/26/05-10/19/05 is 316.006 BCF, which is equivalent to 8.658 % of the yearly production of gas in the GOM (approximately 3.65 TCF).

The market has worked its way through an initial selloff and a bounce on better-than-expected oil inventory data, and ended up back where it started from the standpoint of the major indices. Still more groups down than up, though, with commodity and energy stocks getting hit yet again, along with semiconductors and disk drives. The semis are suffering from a bit of an Intel hangover.

A positive report on housing starts hasn’t seemed to help the housing stocks at all.

Bonds are up slightly, energy prices are down even further with crude oil below $62/barrel.

It didn’t take long for Wilma to strengthen into a very powerful hurricane. The 5-day track still has it taking a northeast turn and heading toward Florida. Get out of the way.