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.

In his market wrap for tonight, Ike Iossif reiterates his belief that, for now, the equity markets are slaves to oil prices and bond yields:

The key point is this: the equity markets are in a “high-end” consolidation, the outcome of which is dependent upon two different variables–oil prices, and bond yields. Investors/traders should not attempt to take a bullish/bearish position with regards to the equity markets, unless they can determine with a reasonable degree of certainty where oil prices and bond yields are headed. The equity markets are the wrong class of assets to focus on at the present time. Currently, the equity markets are not in charge of their “own destiny;” they are at the mercy of two other markets–oil, bond yields–which in turn are both vulnerable to exogenous events! At times like these, equity investors who are risk averse ought to be mostly in cash, or in hedged positions. Investors ought to be primarily concerned with preserving their capital instead of “catching” the next move. One of the lessons that we have learned in our 17 years of being students of the markets is to never worry about “missing” something that is coming, but to always worry about that “something” not missing us when it finally comes!

Apparently, it’s a problem that commercial tax preparers make too many mistakes:

“The results were shocking,” said Montana Democrat Max Baucus, the top Democrat on the committee. “They made up their own facts. And they made up their own tax laws.”

Well, Mr. Baucus, I have a very simple solution: a flat tax, that way everyone can do on their own. But you’ll never vote for that one, will you?

Leave to the politicians (in liberal haven Massachusetts, no less) to come up with one of the dumbest ideas I’ve ever heard of. I hardly believe that making health insurance mandatory is going to do anything to solve this nation’s health care problems. So what’ll they do to me if I don’t have health insurance - throw me in jail?

Lemme see, if I don’t have auto insurance, they can take away my driver’s license, maybe even my car, and try to keep me from driving. If I don’t have health insurance, will they try to kill me to keep me from living?

Then again, I’d like to see a lot less health insurance, not more. You see, I’m of the belief that health insurance is a big part of the problem - not the solution.

	The S&P 500 has traded in a range of less than 20 points since March 14th.
	This chart of the 20-day and 50-day moving averages of NYSE volume shows that the 20-day MA has dipped back to Thanksgiving-like levels. Does this make a lot of sense to you, considering that the major indices are all trading at or near 5-year highs? It doesn’t to me. Where’s the enthusiasm?

Charts courtesy of StockCharts.com

A mild recovery from yesterday afternoon’s reversal, with the major indices all showing gains for the day. The Dow Industrials picked up 59 points (+0.5%) to 11204, the S&P 500 added 8 points (+0.6%) to 1306, and the Nasdaq gained 9 points (+0.4%) to 2345. The Russell 2000 was higher by 3 points (+0.4%) to 762. The Dow Transports moved to yet another new high, adding 1.3% while the Utilities got back 1.1%. Bonds were mixed, some yields moving higher and some lower: 6-month: 4.84%, 2-year: 4.82%, 5-year: 4.82%, 10-year: 4.87% and the 30-year: 4.91%.

Market internals were mixed with a positive lean. Volume ticked up slightly on the Nasdaq, but fell on the NYSE. Advance/declines were 11 to 8 on the NYSE but only 15 to 14 on the Nasdaq. Up/down volume was 5 to 3 on the NYSE, but finished just below the flat line on the Nasdaq. New highs pulled in a bit: new highs/lows were 206/51 on the NYSE and 169/42 on the Nasdaq.

The groups were mostly green, but the gains weren’t huge. Leading the way were the oil services (+1.7%), brokers (+1.6%), oil stocks (+1.5%), banks (+1.2%), airlines (+1.2%), natural resources (+1.2%), retailers (+1.1%), utilities (+1.1%) and internets (+1.1%). Networking stocks led a short list of losing groups, down 0.8%.

Energy prices were mixed, with crude oil drifting lower to $66.23/barrel, gasoline a few cents higher to $1.90/gallon and natural gas slipping to $7.06/mmBTU. The dollar had a rough day, with the dollar index falling to 88.85. Gold ($588/ounce) and silver ($11.67/ounce) held pretty steady.

BMB Note: What did I tell you yesterday? That’s right - that reversal days just haven’t seemed to mean a heck of a lot lately. Today was a bit of a grind upward, but the bias was to the upside. As long as this bias remains, you have to give the market the benefit of the doubt, although finding good opportunities these days is a little difficult. It seems to me that some of the strongest areas are already quite extended, and certainly aren’t offering up good entry points - like the transports, for instance.

The Nasdaq seems to want to try and move higher, but the Nasdaq internals the past few days have been unconvincing. Volume on the NYSE is still running pretty low, on average, making the past month or so look almost like a holiday season. That’s another thing that I just don’t quite understand, and it’s hard to get excited about diving in when the big boys don’t seem to be overly interested.

So, the Delta pilots have voted to authorize a strike, though a date has not yet been set. The way I see it, the company may not be able to survive, even without a strike, but I would think that a pilots’ strike would be the kiss of death.

I don’t see too many winners in this game.

This article says that the launch of the silver ETF could trigger a correction in the silver price. Well, duh. That would only make some sense, since the anticipation of the ETF has caused quite a runup in the price.

Will the ETF launch start a correction in silver? I sure hope so. I’m looking for an entry point. Just like I did with gold (and GLD), I’ll wait for the correction, and then step in.

Not a lot of news out this morning, and the market is chopping around. The three major indices are all showing slight gains, and more groups are up than down, but the Russell 2000 is slightly in the red. Advance/declines are slightly in the green on the NYSE, but are a little in the red on the Nasdaq. So far, this is looking a little like yesterday with a lot less power in the morning move. Leading the groups up are paper stocks, airlines and disk drives.

Something a little different today is a move higher in bonds, pushing yields down for a change. Energy prices are lower, the dollar is lower, and gold and silver are both slightly lower.