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 pension news just never stops these days. General Motors, as many other companies have done, is freezing their pension plan. And the government’s Pension Benefit Guaranty Corp. isn’t prepared to handle the demands about to be placed on it by other corporations’ abandonment of their pension responsibilities.

Bottom line: Don’t depend on your company, or the government, to take care of your retirement needs. It’s up to you to take care of yourself, so you’d best get started.

Many of the industry groups are struggling, especially this week. These are a few of the groups that have broken through their moving averages and recent support areas over the past couple of days. Here we see charts of the Morgan Stanley Commodity Index ($CRX), the Philadelphia Semiconductor Index ($SOX), the Philadelphia Gold and Silver Index ($XAU) and the AMEX Natural Gas Index ($XNG):

Charts courtesy of StockCharts.com

Don’t let the media tell you that “stocks were mixed” today, just because the three major indices finished mixed. The truth is, today was a pretty horrible day, on the level of - if not worse than - yesterday. Considering the bloodbath in the industry groups and the pathetic market internals, it’s surprising the Dow wasn’t down 150 points.

The Dow somehow finished with a gain of 22 points (+0.2%) at 10981, while the S&P 500 lost 2 points (-0.2%) to 1276 and the Nasdaq dropped 18 points (-0.8%) to 2268. The Russell 2000 fell hard for the second day in a row, losing 10 points (-1.4%) to 721. Bonds rallied back to finish nearly level for the day, and rates even dipped on the long end. We now have the 6-month at 4.77%, 2-year at 4.75%, 5-year at 4.75%, 10-year at 4.73% and the 30-year at 4.71%.

Market internals were gross, and volume was split again - ticking up just slightly on the NYSE but falling on the Nasdaq. Advances/declines were 5 to 14 on the NYSE and 3 to 7 on the Nasdaq, and up/down volume was 2 to 5 on the NYSE and 1 to 3 on the Nasdaq. New highs/lows starting to show the struggles, falling to 39/52 on the NYSE and 85/58 on the Nasdaq.

The group picture is not a pretty one - the HMOs led a very small group of winners with a gain of one percent. The long list of losers was led by the disk drive stocks (-3.1%), followed by steel stocks (-3.1%), semiconductors (-2.9%), precious metals stocks (-2.3%), oil services (-2.3%), biotechs (-2.3%), natural gas stocks (-2.0%), natural resources (-1.8%), housing stocks (-1.7%), commodities (-1.7%), networking (-1.6%), brokers (-1.5%), telecoms (-1.5%), internets (-1.3%), paper stocks (-1.2%) and REITs (-1.1%).

Energy prices were mixed, with crude oil down to $61.58/barrel, gasoline falling to $1.63/gallon, but natural gas higher at $6.68/mmBTU. The dollar has been moving higher as rates moved up, with the dollar index back up to 90.76. Gold slipped to $553/ounce.

BMB Note: So what do we do now? Geez. After a few beers to ease the pain a bit, we have to evaluate our holdings pretty carefully. Keep a close eye on the weak ones, and unload them if you have to, assuming you haven’t already. This is no time to be aggressive - it’s time to play defense and make sure the market doesn’t try to take back all of your capital. You’ll need it later on, when conditions improve. How bad does this get? How long does it go on? Good question.

Is it time to start looking more carefully at the short side? My examination of the charts shows only a few good short opportunities, as any downtrend has really yet to get started. If you’re a pioneer trader and like to try to grab the early moves, have at it. I prefer to wait for pullbacks (pullups?) after initial breakdowns or downtrends, and I am not seeing a lot of those as yet. And those probably won’t develop unless this current weakness develops into a prolonged downturn.

I don’t know if you’ve looked lately, but the market absolutely stinks today. And there is virtually no place to hide. The HMOs are still hanging on to a 1 percent gain, but that’s about it. Significant losses being taken in steel, semiconductors, disk drives, biotechs and commodities stocks. Even the commodities themselves are being hurt, with metals and energies down.

Ugly. Just plain ugly. The Nasdaq is getting hit the worst of the three majors, and the Russell 2000 is also feeling some pain. Market internals are pretty gross.

Hope you’re paying attention, and taking action to protect yourself if need be.

Another weak open, and a good demo of the fact that the major indices don’t necessarily reflect what’s happening beneath the surface. At this time, we have the Nasdaq down 10 points and the S&P down 2 points, but the Dow is up 21 points. But if we look at up/down volume, we see that the numbers are about 1 to 3 - not a real healthy start to the day.

A few groups are in the green, led by the HMOs. Leading the losers are precious metals, disk drives, oil services and semiconductors. The selling in bonds has relaxed somewhat, and yields seem to be holding. Energy prices are mixed, the dollar is stronger, and gold prices have slipped a few bucks.

I still have no idea how they measure “productivity”, and consider that it is just another government number. Q4 productivity supposedly down 0.5%, while unit labor costs were up 3.3%.