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.

I can’t decide who is smarter–the guys that thought up the idea to allow people to hedge against the price of gasoline or the customers that are doing it.

Either way, it’s a great idea.

The ridiculous health care laws that are being passed in states like Tennessee and Massachusetts are truly scary - I’m not sure I could dream up any worse ideas than the ones these lawmakers have.

This article from Brendan Miniter breaks down some of the issues, but I have a couple of comments. First, on the Massachusetts law:

If there is one redeeming value to his approach, it is that it starts with the presumption that even the poor should pay something for their health care. That’s not a trivial point. Today many uninsured patients skip out on their bills and leave their health-care tabs for everyone else to pay in the form of bigger hospital bills and higher taxes.

Agreed. Everyone should pay something for their health care. But those “uninsured” people who might just choose to pay their bills (gasp!!) shouldn’t be forced to purchase insurance. And I’d be willing to bet that many of those “poor” that skip out on their doctor bills somehow manage to find the money to put gas in their cars and pay their cell phone and cable television bills, don’t they?

Secondly, Mr. Miniter brings up a point that goes along with BMB’s feeling on health insurance - why can’t we have some sort of catastrophic event coverage, like we have in the auto insurance world, and actually pay for checkups and doctor visits (unheard of, I know)?

What Tennessee and Massachusetts now have in common is that as lawmakers look for health insurance plans that are cheap enough for most people to afford, they’re going to run headlong into the reality that buying health coverage is very expensive. The reason isn’t just that health care across the country is expensive. It’s also that health insurers are prohibited from offering coverage that pays for only catastrophic events, such as a serious injury or heart attack. Rules vary by state, but in most places insurers are forced to cover everything from routine checkups to chiropractic care. Remove these mandates, allow deductibles and “copays” to be raised high enough, and in an instant the price for some health plans would fall to about that of dinner out and a movie for two.

Bingo. Catastrophic coverage would be a nice place to start for us to get a handle on this whole health care mess. But is that the direction we’re going? Sadly, it is not.

From “The New Market Wizards” by Jack D. Schwager, the second in the author’s Market Wizards series. The interview is with William Eckhardt, a designer of trading systems:

What advice do you have for dealing with the emotional pitfalls inherent in trading?

Some people are good at not expending emotional energy on situations over which they have no control. (I am not one of them.) An old trader once told me: “Don’t think about what the market’s going to do; you have absolutely no control over that. Think about what you’re going to do if it gets there.”

In particular, you should spend no time at all thinking about those roseate scenarios in which the market goes your way, since in those situations, there’s nothing more for you to do. Focus instead on those things you want least to happen and on what your response should be.

That’s how Bill Fleckenstein sees Intel. Of course, that’s how Bill Fleckenstein has seen Intel for a long time now. Not that he’s been wrong.

As for the current bullishness on tech, Fleck has this to say:

(The tech bulls) appear to be so infatuated with the Fed-is-done theme that nothing really bothers them. They seem to believe in some variation of the idea that we’re just finishing a tightening cycle, à la 1994, and the glory years of 1995-2000 lie directly in front of us.

Nothing could be further from the truth, in my opinion. But this fervently-held belief seems to be what’s powering the bullish enthusiasm. It explains why nothing has been able to take the tape lower.

Which means that for the market to sink, we will need either:

* Further negative macroeconomic developments, or
* Exhaustion.

When looking for exhaustion, one must be alert to possible reversals. Therefore, I will be much more focused than usual on the market action for the next couple weeks.

New issue of the ChartWatchers newsletter from StockCharts.com. In this issue, the experts look at Japan’s market, good and bad news on the dollar, and the continued strong performance of the Russell 2000.

Items of note on the latest industry moves:

• Last week we said that Transportation stocks ($TRANQ) had lost quite a bit of their momentum. Never mind.
• Oil services still the strongest group in the energy complex.
• Commodity/metal related stocks still strong.
• Retailers ($RLX) got a nice bump at the end of the week. Apparently the market has more faith in the consumers’ ability to keep speding than BMB does.
• Disk drives ($DDX) made a mini breakout this week, although much of that is due to the ADIC buyout.
• The Computer Tech index ($XCI) looks to be struggling.
• HMOs are far and away the worst group, and health care overall still lagging badly, but the drug stocks ($DRG) have made a decent comeback.
• For a more detailed breakdown of group movement over various time periods, try Prophet.net’s Industry Rankings page.