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 pretty solid performance for the market today, helped by rising bond prices, sent the Dow and S&P 500 to new closing highs for the year. The Dow finished with a gain of 75 points (+0.7%) to 11151, the S&P moved up 13 points (+1.0%) to 1297 and the Nasdaq had the best day of the three, picking up 29 points (+1.3%) to 2296. The Russell 2000 gained 8 points (+1.1%) to 736. The Dow Transports gained 0.9% and the Utilities were up 1.2%. Bonds finally had a strong day, moving higher and sending yields down on longer notes: 6-month: 4.79%, 2-year: 4.64%, 5-year: 4.68%, 10-year: 4.70% and the 30-year: 4.71%.

Market internals were strong. Volume picked up from yesterday, but is still running at relatively low levels. Advances/declines were 14 to 5 on the NYSE and 12 to 7 on the Nasdaq, with up/down volume 4 to 1 on the NYSE and 3 to 1 on the Nasdaq. New highs/lows were 181/43 on the NYSE and 146/43 on the Nasdaq.

Nearly every group finished higher, led by housing stocks (+3.6%), steel stocks (+3.1%), airlines (+2.9%), oil services (+2.6%), brokers (+2.4%), internets (+2.2%), semiconductors (+2.2%), gold & silver stocks (+2.0%), natural resources (+1.8%), commodities (+1.7%), retailers (+1.6%), paper stocks (+1.6%) and oil stocks (+1.5%).

Energy prices moved higher for another day, led by a big jump in gasoline, which surged to $1.86/gallon. Crude moved up more than a buck to $63.10/barrel, and natural gas was higher as well, at $7.15/mmBTU. The dollar slipped on lower interest rates, taking the dollar index down to 89.99. Gold moved back up to $551/ounce.

BMB Note: Nice move today, pretty much across the board. Volume was lacking, however, and that’s not encouraging. Even though the Dow and S&P moved back to the top of their ranges today, and held there, the Nasdaq is still lagging, and the Nasdaq 100 is still lagging badly, remaining below its declining 50-day moving average. We’ll need to see some pickup in those areas if this market is going to mount any sort of lasting move higher. And we’ll also need to see some groups step forward to become the leadership group, instead just having groups run to the front of the line and fade to the rear again. Like today - housing stocks led the way. Well, they’ve been pretty much the worst place to be of late - until today. That’s not leadership.

The day started out looking like it might be a lot like yesterday, but so far, things have held up a little better than that. The majors are holding on to slight gains, and advance/decline figures have been improving. Most groups are higher, and are being led by the housing stocks, airlines, brokers, steels, paper, precious metals and semiconductors (don’t a lot of those groups sound like the same ones that had been doing so poorly of late? That’s what I thought. More churning. Just like a washing machine - the stuff gets pushed to the bottom, then works its way back to the top, and down again - but the pile never goes anywhere.).

Bonds are doing better, and yields are down. That has to be part of the explanation for the bump in housing stocks - there can’t be any other good reason.

The dollar is getting hurt as rates fall, and gold is a bit higher. Energy prices are higher.

Deron Wagner tells you to wait for the market to make its move before committing your money:

The good news, however, is that we don’t expect the volatility contraction to continue much longer. With major relative weakness in the tech stocks, a complete lack of sector leadership, and lackluster performances from the former stock market leaders, we feel it is only a matter of time until we see a large volatility expansion in the S&P. We feel the direction of this expansion will be to the downside, but anything is possible when an index remains so close to its 52-week high. Therefore, remain vigilant and keep those stops in place. Be careful not to overtrade until the market resolves itself in one direction or the other. Overtrading in this environment can easily cause you to churn your account and bleed away your previous hard-earned profits.

The question still remains, and will be not be answered for certain until it’s too late: is there a housing “bubble” or not? Paul Farrell seems to think there is, and that many of you could be at risk.

Again, no big surprise here, as the US current account deficit hits yet another record, although it’s unlikely you’ll hear much mention of it on the nightly news. Just FYI:

The current account deficit is the broadest measure of the nation’s economic balance sheet with the rest of the world. It encompasses both trade and capital flows.

Retail sales fell 1.3% in February. I’m sure the numbers certainly weren’t as strong as some had hoped. This could be some of the giveback that was mentioned as being possible when the seasonal adjustment helped strong January numbers look even better than they normally would have.

Some interesting tidbits in the February report, focusing on some of the consumer areas:

Furniture-store sales decreased 4.0%, the sharpest drop since Feb. 2003. Electronics-store sales fell 2.0%, also the biggest decline since Feb. 2003.

Restaurant sales fell 1.9%, the biggest drop since 9/11.

BMB reader William points out an interesting paragraph in an article from the Financial Times yesterday morning:

The euro hit a one month high on Monday against the yen and its best in a week versus the dollar after the central bank of the United Arab Emirates said it was considering increasing its euro denominated reserves.

The bank said on Sunday it was looking to switch 10 per cent of its reserves from dollars into euros. The reserves were estimated at $23bn in December and are almost entirely in dollars.

Coincidence? Just shortly after the UAE ports deal was struck down? You decide.

Over the past few weeks, BMB has posted some of Amer Habda’s experiences in the Middle East as he traveled to Mecca, Saudi Arabia, for the Hajj (pilgrimage): “Dubai”, “Flying Out of This World”, and “Five Stars and Counting…Down”.

We now have some fabulous pictures to go with the stories - (click on thumbnails to see larger images):

	View of the Haram from Makkah Hotel: Mosque in Mekka. Millions of pilgrims pray at the mosque 5 times a day during Hajj (pilgrimage).
	Masjid El Nabawi by day: The mosque of the Prophet Mohamad in Medina (second holiest city in Islam). Note the various nationalities and colors used to easily locate your own group.
	Ghar E Hiraa : This is the cave where Prophet Mohamad was visited by the angel Gabriel. Prophet Mohamad was illiterate, yet the Qoran (Islamic Holy Book) delivered through him is a masterpiece in Arabic.
	Meeting place of Adam and Eve: It is said that this is the place where Adam and Eve met after they were cast from Heaven.
	Jamurrat being demolished: This is the place where the stampede occurred this year. 345 people perished while trying to visit the location, which symbolizes where Abraham stoned the devil who tried to make him doubt God’s commands.

Information and photos courtesy of Amer Habda.