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.

It’s kind of hard to deny that there’s a boom in commodities when stuff like this is going on.

Here are a few groups that just haven’t been playing along very nicely as the market has moved higher over the past few weeks. In this market, there’s not much reason to even mess with a group that’s moving sideways, never mind one that might be falling. Here we see the airlines ($XAL), banks ($BKX), chemicals ($DJUSCH), HMOs ($HMO), hospitals ($RXH), paper stocks ($DJUSPP), telecom ($XTC) and transportation ($TRANQ).

Charts courtesy of StockCharts.com

A solid positive day in the market today, and the major indices don’t tell the story very well, as things were much more positive than the majors would indicate. The Dow Industrials picked up 26 points (+0.2%) to 10881, the S&P 500 gained 7 points (+0.6%) to 1285, and the Nasdaq had a big day, adding back 22 points (+1.0%) to 2302. The Russell 2000 hit another new all-time high, and finished up up 11 points (+1.6%) at 715. The Dow Transports bounced up 2.6% and the Utilities were higher by 0.8%. Bonds were lower, and yields were higher, but the distortion of the yield curve remains: the 6-month at 4.46%, 2-year at 4.37%, 5-year at 4.31% and the 10-year at 4.37%.

Market internals were stronger than the indices would indicate, and volume was strong. Advance/decline figures were about 13 to 6, with up/down volume around 7 to 3 on each exchange. New highs/lows were a combined 438/58.

A big list of winners today, led by oil services (+3.9%), precious metals stocks (+3.1%), semiconductors (+3.1%), natural gas stocks (+2.4%), natural resources (+2.4%), steel stocks (+2.2%), brokers (+2.2%), networkers (+1.8%), commodities (+1.7%), disk drives (+1.6%), transportation (+1.5%) and oil stocks (+1.5%). Very few losers, led by the banks (-1.0%).

Energy prices moved higher after the morning inventory data release was out of the way. Crude oil was higher by more than a dollar at $66.90/barrel. Gasoline held fairly steady at $1.78/gallon, while natural gas moved back up to $9.02/mBTU. The dollar index was unchanged at 89.37, and gold moved back up to $557/ounce.

BMB Note: Nothing to complain about here. A pretty solid day. Stick with what’s working, and avoid the lagging areas: banks, retail, airlines, etc.

Motorola (MOT) is the big earnings report after the bell tonight, and it’s not going over real well.

Scary stuff in the housing/lending business. From yesterday’s USA Today:

As housing prices soared last year, an eye-popping 43% of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors.

NAR President Thomas Stevens says he isn’t worried that nearly half of first-time home buyers put no money down, but adds, “If the number was higher than that, I’d be concerned.”

So tell me, Mr. NAR dude, what makes you think that 43% is ok, but that 53% would be too high?

Hat tip to Gary K. for mentioning this on yesterday’s radio show.

An initial euphoria has faded somewhat, but the major indices are holding onto slight gains at this point, and internals remain positive. The moves higher are being led by the semiconductors, disk drives, and precious metals stocks (there’s a combination for ya), while a small group of losers is led by the HMOs and housing stocks. Bonds are lower, yields are higher.

Energy prices are slightly lower ahead of the release of the weekly inventory data in about 10 minutes. The dollar is slightly higher, as is gold.

Isn’t is somewhat amazing that Apple’s earnings release was worth an $8 haircut last night, but only worth a cut of a buck-and-a-quarter this morning? And Ebay’s statement was worth a $2 cut in the stock last night, but this morning, it’s worth an increase of $1.60? The market is not logical.

• A recovery in Asian markets overnight, with the Nikkei getting back about 350 points, or about 2.3%.
• Housing starts down to a nine-month low, building permits down as well.
• Weekly initial jobless claims at near 6-year lows.