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.

Whether you like it or not, Google and Apple have been strong stocks for quite some time now. But it would appear that the landscape may be changing. AAPL broke down big today, after giving up its recent support area just above $70. Once that area was violated, investors couldn’t get through the exits fast enough. And now that area will serve as resistance, as any bounce up near or into that area will likely be met with selling, as those who are still hanging onto the stock look to get out — especially those who bought in the last month or two.

GOOG stock took a big hit on its earnings last week, but the top had already been put it in the second week in January. With the stock now trading below its moving averages and those averages rolling over, it looks like there will likely be more downside pressure.

Charts courtesy of StockCharts.com

Kind of a mixed bag today - a lousy day for some, a great day for others, and a slightly positive day overall. The major indices were mixed: the Dow finished with a tiny gain of 5 points to 10798, the S&P 500 squeezed out a 1 point gain (+0.1%) to 1265, but the Nasdaq fell 4 points (-0.2%) to 2259. The Nasdaq 100 continued to lag all others, falling 7 points (-0.4%) to 1658. The small-cap Russell 2000 was higher by 4 points (+0.5%) to 728. The other Dow indices looked better as well, with the Transports and the Utilities both up about 0.6%. Bonds were slightly lower and yields edged higher, and the yield curve is an absolute mess as we near the re-issuance of the 30-year bond: the 6-month yields 4.64%, the 2-year 4.61%, the 5-year 4.51%, the 10-year 4.54% and the 30-year 4.62%. You decide what it all means.

Market internals managed to finish on the positive side, but volume was much lighter than it has been. Advance/declines were 11 to 8 on the NYSE an 10 to 9 on the Nasdaq, with up/down volume 3 to 2 on the NYSE and just better than flat on the Nasdaq. New highs/lows were 130/30 on the NYSE and 142/30 on the Nasdaq.

The group picture found more groups higher than lower: the winners led by steel stocks, which had another big day, up 4.7%, oil services (+2.9%), gold & silver stocks (+2.7%), commodities (+2.2%), semiconductors (+2.2%), natural resources (+1.9%) and oil stocks (+1.5%). Losers were led by HMOs (-1.5%) and airlines (-1.1%).

Energy prices slid lower, with crude oil dropping to $64.99/barrel, gasoline to $1.64/gallon and natural gas to $7.91/mBTU. The dollar index was higher by 0.5% to 90.34, and gold was up to $569/ounce.

BMB Note: The major indices are still holding on, but aren’t doing much to instill a great deal of confidence in me. The Dow, S&P and Nasdaq are all hanging below their 50-day MAs, with the S&P and Nasdaq threatening their recent lows, about 1260 and 2240, respectively. Those levels need to hold. The Nasdaq 100 already violated its recent lows last Friday, and dropped even further today. Not good.

Stick with what’s working: if your positions are doing well or holding up, great - stick with them. But if they’re starting to slide, go ahead and let them go, because the market is looking a little wobbly here. If you’re a trader, you might keep an eye out for good short opportunities if you find them. BMB is hedging his bets a bit and testing the waters on the short-side, and so far, those positions are working too.

Gary K. sees that yes, Google can indeed go down. And it appears that BMB and its readers weren’t the only ones to notice the “China Anything” mania…

You can add Apple to the list of stocks that can go down - AAPL broke through the last wall of near-term support around $70-71 this morning, and is down 5% on the day. Some of the leaders are starting to give it up.

While the major indices have been bouncing around just above and below the flat line this morning, the market has weakened somewhat from it’s slightly positive open, and advance/decline figures have turned negative. Commodity related stocks are bouncing back nicely, led by oil services, gold & silver and oil stocks. Losing ground are the HMOs and airlines. Bond prices are generally lower, and yields are higher, but more so on the short end than the long end. The 2 and 10-year are now pretty solidly inverted, the 2 at 4.62% and the 10 at 4.54%.

Energy prices are mixed, with crude oil higher but natural gas lower. The dollar is higher — but so is gold.

In the weekly outlook from Schaeffer’s, we see that the recent downward move in prices has done a little technical damage, and appears to be doing some damage to sentiment as well:

Summing it up, some of our key sentiment indicators appear to be going through a metamorphosis from their recent bullish setup to one that is more bearish. This change will accelerate unless the major indices muster up the strength to quickly break back above their respective 50-day moving averages. Failure to do so will likely add to the recent selling pressure. The last time that we saw a sentiment and technical setup similar to the one I’ve described above was in September 2005.

If you watched the Superbowl solely for the commercials you were probably disappointed. Here’s my round-up; feel free to opine.

Stupidest: There were Many contenders for this category, but Burger King won by a mile (the “Whopperettes” - yeesh). I’d be hard-pressed to pick only one for runner up, but they include the Pepsi with Jackie Chan commercials. If that’s the best you can do, just let McDonald’s back on.

Weirdest (and possibly most disgusting): Who thought a hairy dinosaur and a tin robot were a good idea? H3. Yuck.

Best Overall: Has to be Budweiser. Okay, some of them weren’t that great, but they have the horses. The “Streaker” Bud commercial takes the “Best” Honors, with second going to the Bud Commercial with the colt trying to pull the Bud Coach. Third place, probably the stadium of people holding up cards that link around to the other half, pouring a beer into a glass and then drinking it. Fourth place, even though it was kind of stupid, had to be the grizzly bear, with the idiot at the end saying something like, “Did you see my moves back there?”

Most Redone to No Avail: Maybe Godaddy.com should have taken the hint on the “sex appeal” angle when ABC asked them to redo the commercial somewhere in the neighborhood of 14 times.

Most Overdone: Gillette. Come on folks, it’s a razor, not a technological breakthrough of “fusion” proportions. This should have stood a chance at the “Stupid” list, but there were way too many other contenders.

Could have Been: ESPNs new commercial touting service on the cell phone wasn’t bad–except for the song. You’re trying to portray a guy that loves sports and that was the best song you could think of??? Sappy, guys. Sappy.

Wrong Image When Al Michaels kept reading from the prompt, “Brown and Bubbly,” soda did not come to mind. It’s not his fault, not really, but the bubbling cauldrons in Yellowstone park and the smell of sulphur…my first guess was, “sewage?”

What about the game? Well it wasn’t a 10, but it was far from a zero.

Contributed by BM Wife