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.

A little bit of relief from the selling late in the day helped the major indices to muster slight gains today, and market breadth managed to climb up from the basement for the day. The Dow Industrials managed to tack on another 25 points (+0.2%) to 11006, and the S&P 500 gained 3 points (+0.2%) to 1278, but the Nasdaq lost just less than a point to 2267. The Russell 2000 gained less than a point +0.1%) to 722. The Dow Transports lost 0.3% while the Utilities gained 0.2%. Bonds got a small bounce, and pushed yields a little lower. We find the 6-month at 4.76%, the 2-year at 4.72%, 5-year at 4.75%, 10-year at 4.73% and the 30-year at 4.73%

Market internals ended pretty near flat, with volume increasing on both exchanges. Advances/declines were right around even on both exchanges, with up/down volume just positive on each. New highs/lows were 70/62 on the NYSE and 72/60 on the Nasdaq.

By the time the smoke cleared today, there were actually more groups in the green than in the red - certainly a first for the week. Leading the winners were paper stocks (+2.1%), biotechs (+1.5%), airlines (+1.4%), drug stocks (+1.1%), HMOs (+1.1%) and hospitals (+1.1%). Leading the losers column were gold & silver stocks (-2.2%), disk drives (-1.4%) and chemicals (-1.2%).

Energy prices were mixed, with crude slipping to $60.02/barrel, gasoline up a couple of cents to $1.65/gallon and nat gas down a few cents to $6.65/mmBTU. The dollar index was flat at 90.62, and gold fell to $542/ounce.

BMB Note: At least the selling slacked off in the afternoon, and gave the market a bit of a rest. But where does that leave us? Not in great shape - a lot of tops have been forming, and very few areas of the market are in good shape right now. So be patient. Cash is looking pretty good right now, especially if you can earn upwards of 4%. Wait this turmoil out and see how the market handles it. There’s bound to be some sort of a bounce coming soon. The big question will be how strong the bounce will be, and what happens at the other end. I’d like to see some groups hang on and maintain some strength rather than have the entire market rolling over as we’ve seen the past few days. But I rarely get what I want.

Well, things are a little better this morning - but not a lot better. The major indices are slightly in the red, but we’re still seeing more groups down than up, and advance/decline figures still rather red. One group showing decent gains is the paper group, while precious metals, disk drives, semiconductors, chemicals and utilities are taking losses. Bonds are holding pretty steady.

Energy prices are mixed after the release of the weekly inventory numbers, which showed a sizeable build in crude, but drawdowns in gasoline and distillates. It’s unclear how much of the crude build is due to the refinery maintenance season. The dollar is pulling back a bit after a couple strong days, and gold has pulled back further to near $543/ounce.

…to that Dow behind the curtain. Gary Kaltbaum weighs in on yesterday’s action:

The first thing I want to say is to pay no attention to what the DOW did on Tuesday. The average stock was much much worse. In fact, the A/D was 3-1 to the negative. The DOW held up because the market is getting defensive. When it gets defensive…it goes defensive. THERE IS NO WAY THE MARKET WILL BE ABLE TO STAND TOO MANY MORE OF THESE DAYS! Everyone needs to watch this closely. At the very least, the market has lost many areas and many names to help it go higher. In fact, today had probably the largest and widest divergence between the DOW and the real market we have seen in a long time. We would rather see the DOW down 100 with the A/D flat. Most people do not get this.

We here at BMB get it. You need to get it too.

Maybe GOOG stock would hold up better if they would stop screwing up.

At least, according to St. Louis Fed President William Poole it will.

That’s fine. He can have his opinion. But is HE buying housing stocks?

This is the big story that CNBC is obsessed with today.

Doesn’t matter much to me. It’s up to you whether you want to invest in NYX or not, although in general, the exchange stocks have done pretty well.

From this morning’s Wagner Daily:

After the close of trading, we noticed that many of the popular financial web sites were saying it was positive that the Dow bucked the trend and closed higher yesterday. This, of course, is not surprising because the financial press always has a tendency to portray a positive slant to each day’s action, regardless of the actual outcome. The reality, however, is that yesterday was pretty nasty overall. The biggest concern was the major relative weakness in nearly all the market leading stocks. Although the giant blue chip corporations such as Intel, Wal-mart, Microsoft, and Pfizer have huge market caps, they are no longer considered to be “market leaders” because their aggressive growth years have passed long ago. Instead, the performance of today’s market leading stocks such as Marvell Technology, Google, Hansen Natural, and SanDisk is much more an indicator of the market’s health. This is so because the direction of aggressive growth stocks historically tends to lead the market in both bull and bear markets. When many market leading stocks are registering huge gains and consistently climbing to new highs, the broad market tends to follow. Conversely, the broad market often drops sharply after the market leaders begin to fall apart. Unfortunately for the bulls, the latter scenario is what we see happening right now.