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 media keeps trying to ignore the flattening yield curve, or at least tell you that it’s not a big deal. Don’t listen to them — it’s worth keeping an eye on, and David Yu has been doing just that:

All these yield curve charts unanimously confirm that the stock market’s in the process of topping out. There’s trouble ahead.

If you hadn’t been worrying about the possibility of an inverted yield curve, now might just be a good time to start.

That’s how long the new Xbox 360 has been available — and how long it took for the first class action lawsuit to be filed on it.

Yeesh.

The market started off on the wrong foot this morning, and really never got back in step as the day wore on, leaving most indices in the red for the day. The Dow Industrials fell 43 points (-0.4%) to 10835, the S&P 500 dropped 3 points (-0.2%) to 1262 and the Nasdaq lost 16 points (-0.7%) to 2258. The Russell 2000 was lower by 4 points (-0.6%) to 687. The Dow Transport took a 1.3% tumble, while the Utilities gained 0.3%. Bonds were lower, pushing rates higher once again: the 5-year now yields 4.49% and the 10-year 4.57%.

Market internals started off pretty poorly, and did manage to improve over the course of the session, but still ended up on the weak side. Volume ticked up slightly on the NYSE but fell a bit on the Nasdaq. Advances/declines were 5 to 7 on the NYSE and 11 to 18 on the Nasdaq, with up/down volume at 2 to 3 on the NYSE and 1 to 2 on the Nasdaq. New highs/lows were 150/77 on the NYSE and 165/36 on the Nasdaq.

A look across the industries shows that the energy/commodity groups backed off their early gains, leaving steel stocks the big winners with a gain of 1.6%, and oil stocks following with a 0.9% gain. On the losing side, we find semiconductors (-1.6%), paper stocks (-1.1%), airlines (-1.1%), retailers (-0.9%) and transports (-0.9%).

Crude oil added 59 cents to $59.91/barrel, but natural gas did pull back late in the day, back below $14 at $13.66/mBTU. The dollar index dropped 0.5% to 91.47, and the spot price of gold is now near $509/ounce.

BMB Note: A notable lack of enthusiasm from the buyers today. Probably a little early to start writing the eulogy for this rally, though it seems that momentum is slowing. On the sentiment front , the VIX is showing signs of having hit a bottom and the equity put/call ratio has slowed its fall, both indicating a little hesitance/fear slipping back into investors’ thinking. A couple of the groups that had great runs - retail and transportation - are starting to look more like they’re rolling over than pulling back. And interest rates, as well as energy prices, are on the rise again.

Once Gary K. gets around to talking about the markets, he says that oil stocks look like they’ve turned the corner, and that the tech bulls are making a little too much noise:

The bullish noises are getting as loud as they can get. TECH bulls are out in droves. Funny, we weren’t hearing from them 8 weeks ago. I say this because I do believe in extremes. And when thinking goes to extremes, it is usually time to think the other way.

Aside from the energy and commodity areas, the market is stuggling a bit today, leaving the major indices in the red thus far. Oil stocks lead the way, followed by steel, natural resources and natural gas. Leading the down side are semiconductors, transports, airlines and paper. Market breadth is quite negative, with advance/decline figures running near 1 to 2.

Bonds are lower, pushing rates up: the 5-year stands at 4.49% and the 10-year at 4.57%. Energy prices are also higher, with crude oil trading well back above $60, and natural gas back above the $14 mark. The dollar index is lower, and gold has moved up to $508/ounce.

The weekly look at technicals and sentiment from Schaeffer’s shows a mixed bag, leaving some question as to how much this market has left to give by the end of the year:

With stock prices fluctuating around overbought levels, the current market could quickly sour should investor sentiment truly begin to shift. A potential scenario is one where those who have been buying stocks for the past month decide that the few percentage points of short-term gains are sufficient and start selling. The more palatable alternative is that the market takes a break and tracks sideways for a few weeks to work off the overbought condition before buying resumes for the last few weeks of the year.