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.

From HedgeFolios.com, via Barry Ritholtz at The Big Picture:

You know you are a Permabull when……

- each time the market declines you declare it a “healthy pullback”,
- sideways moves are actually just the market “taking a breather” or a “pause”,
- missing earnings estimates is ok as long as management confirms next quarter’s guidance,
- bad guidance is ok as long as last quarter’s earnings beat estimates,
- you criticize any analyst that downgrades your stock from “Strong Buy” to “Buy”,
- you applaud poor economic results as good for the market because this time they will cause the Fed to stop raising rates,
- any negative market commentary is evidence of a huge “wall of worry” that the market needs to go higher,
- you plead that a 10% decline is a “great buying opportunity”,
- you blame any market decline on short sellers who just don’t understand,
- oil declines to $60 and you expect that will cause the market to head higher,
- oil increases towards $70 and you point out how the market has been able to absorb higher oil prices,
- you quote the cliches “history repeats itself” for positive things and “it’s different this time” for negative ones,
- an inverted yield curve doesn’t concern you at all……

And there’s more in the comments on Barry’s site…

As BMB readers know, BMB reporter William Kwan was in China recently. We posted a few economic tidbits about Hong Kong and China at the time. One of the things we didn’t get around to talking about was something you’ll probably be hearing more about as the Summer Olympics of 2008 in Beijing get closer: Tourism. There are fascinating places opening up in China now that they have discovered capitalism—and the fact that people will pay money to glimpse history.

One of the incredible periods in China history is the Qin Dynasty (220BC). This was the time of China’s first emperor, who united seven countries to form China. You may not remember this emperor’s name well, but Qin was responsible for the building of the Great Wall. It turns out that the Wall wasn’t his only building project. His tomb was discovered in 1974—and let’s just say that the Pharaohs in Egypt had nothing on him when it came to tomb building.

The tomb area covered 56 square kilometers and contained–in part–8000 life-sized terra cotta soldiers, along with life-sized horses in underground rooms. The maze of rooms comes complete with secret traps to prevent looters. Each soldier created has a unique expression, different hair style and different clothing. The faces and unique details were all sculpted separately, rather than clay fired from one mold. Each carved soldier wears a uniform that depicts his rank and includes such detail as belt buckles, buttons, etc. The horses are not just carbon copies of one another either. Some have their heads thrown back, some are calm, some appear to be fighting the bit. The scene is incredibly life-like.

Click on the thumbnails below to view a larger image:

	Rows of restored terra cotta soldiers.
	Note the detail on the bottom of the boot and the coloring on the soldier. The original soldiers were all colored–skin color, uniforms, etc. The paint oxidized and faded almost completely from most of the soldiers.
	The detail on the front of the soldier is just as precise as the back. Because some of the color on this soldier was retained and because it needed very little restoration, it is one of the most valuable in the collection.
	The horses and chariot in bronze are about half life-sized rather than life-sized. The umbrella can be turned to any angle to follow and block the sun. It is also removable. The turning mechanism is an amazing piece of technology–especially considering it was designed over 2000 years ago.

It took somewhere around 750,000 people over 36 years build this tomb. The Emperor believed in the after life and wanted to ensure he would have the same power as when he was alive. Of course, being an emperor, when he died, all of his wives, their jewelry and belongings, had to go too. This was in addition to having already buried those that designed the tomb and those workers that had died while working on it. Keep in mind that much of the tomb has not been uncovered or restored yet.

It’s a fascinating look into history and the mind/culture that existed then. It is very far removed from our little world in the United States!

Information and photos courtesy of William Kwan.

	The S&P and Nasdaq charts just don’t seem to be sending screaming “BUY” signals, if you know what I mean.

Charts courtesy of StockCharts.com

The market tried to get little something started in the morning, but by midday that move had pretty much failed, and things just worsened as the day went on. The damage certainly wasn’t as severe as the past few days have been, but there wasn’t a lot to be encouraged about either.

The Dow Industrials finished with a loss of 33 points (-0.3%) to 10972. The S&P 500 dropped 6 points (-0.5%) to 1272, and the Nasdaq fell 18 points (-0.8%) to 2250. The Russell 2000 slipped another 4 points (-0.5%) to 718. The Dow Transports were lower by 0.1% and the Utilities lost 0.6%. Bonds were mixed to unchanged, leaving yields pretty much where they were: 6-month - 4.76%, 2-year - 4.71%, 5-year - 4.74%, 10-year - 4.72% and 30-year - 4.72%.

Market internals once again fell to the negative side, but volume also dropped off today. Advances/declines were 4 to 5 on the NYSE and 2 to 3 on the Nasdaq. Up/down volume was just better than 1 to 2 on each exchange, and new highs/lows came in at 88/42 on the NYSE and 85/44 on the Nasdaq.

The groups were doing better in the morning, but fell off as the day wore on, and the finish found most groups in the red. The REITs led a small group of winners with a gain of 0.9%. On the losing side were precious metals stocks (-1.9%), biotechs (-1.6%), airlines (-1.4%), semiconductors (-1.4%), HMOs (-1.2%) housing stocks (-1.1%), natural gas stocks (-1.1%) and internets (-1.0%).

Crude oil moved up to $60.66/barrel, gasoline moved up 8 cents to $1.73/gallon, and natural gas dropped a couple of cents to $6.63/mmBTU. The dollar index moved up to 90.69, and gold prices hung around $546/ounce.

BMB Note: The major indices have now gone sideways since late November. Many of the industry charts have a similar sideways look to them, and some look like they’re rolling over here. There just aren’t any compelling reasons to be long this market at the moment. Stick with playing defense. If the market gets a little bounce here, it might set up some attractive short opportunities for those that are willing. Until that happens, I just don’t think there’s much to do.

Not much more than a mini-bounce at this point. The major indices are up only slightly, and advance/declines are in the green for a change. More groups are higher than lower. Leading the group movement on the plus side are disk drives, computer hardware, transports and semiconductors. Losers are led by the biotechs. Bonds are a little lower, rates up a bit.

Energy prices are mixed, with gasoline higher, crude and natgas lower. The dollar is higher, and gold is up a few bucks to $555/ounce.

The Bank of Japan has finally declared an end to its “quantitative easing” policy, termed “the most aggressive monetary easing in the history of central banking.” I guess you could say that, considering something like 20 trillion yen was injected into the global economic picture just in the last few years.

The BoJ did not move on its zero-interest rate policy, but hinted that changes in rates may be coming in the near future. The news sent the Nikkei 225 index up more than 2%.

The moves in Japan, in tandem with rate hikes by the European Central Bank and the US Federal Reserve, have the potential to change the global asset allocation picture a great deal in the foreseeable future.

Again. Nothing really new here. The US trade deficit just keeps getting bigger and bigger.