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.

Martin Goldberg takes stock of himself and of his market calls over the past couple of years.

I know everybody likes stock picks.

If you’re looking for ideas on the long side, here are a few stronger names that look like they’re setting up nicely in pullbacks - I’d wait for a move back above at least today’s highs to trigger an entry: CHRW, CMI, EXPD, and maybe ODFL and SIAL.

3 from the strong transportation group, 1 industrial and 1 chemical. All could be stalled if oil prices keep going higher.

As always, these are observations and not recommendations. BMB currently holds no position in any of the stocks mentioned.

A rather unspectacular showing on the street, with very little to get traders going. The major indices managed to hold onto slight gains: the Dow Industrials picked up 73 points (+0.7%) to 11225, but nearly half of that gain can be attributed to one stock - Altria (MO) was up six percent on a favorable ruling by a Florida court. The S&P 500 gained 3 points (+0.3%) to 1274 and the Nasdaq added 2 points (+0.1%) to 2155. The Russell 2000 gained less than a point (+0.1%) to finish at 721. The Dow Transports lost 0.7% and the Utilities fell 0.5%. Bonds were higher, and moved yields lower: 6-month 5.30%, 2-year 5.21%, 5-year 5.15%, 10-year 5.18% and 30-year 5.22%.

Market internals leaned to the plus side, with trading volume right around yesterday’s below average levels. The NYSE looked healthier than the Nasdaq, with advance/declines and up/down volume near 5 to 3. The Nasdaq A/D line was just above flat, and up/down volume was just below flat. New highs/lows were 80/65 on the NYSE and 80/60 on the Nasdaq.

There were more groups up than down, but the moves were rather muted: gold stocks led the winners, up 1.2% and HMOs posted a 1.1% gain. On the losing side of the ledger were the oil services, falling 1.9%.

Energy prices were slightly lower, with crude oil slipping a nickel to $75.14/barrel, gasoline to $2.26/gallon and natural gas to $5.66/mmBTU. The dollar also slid on the day, leaving the dollar index at 85.36. Gold picked up a few bucks to $634/ounce, and silver gained another 13 cents to $11.52/ounce.

BMB Note: Doesn’t anyone else find it rather odd that the 6-month yield is the only spot on the curve that is above the Fed funds rate?

I guess today felt a little better than yesterday, but not much. Even though the sentiment indicators are telling us that we should be moving higher, the market still feels rather heavy here (ask the tech stocks how they’re feeling these days). I’m just not seeing many opportunities that I find attractive. Ok, ok. I don’t trust this market, at all, to support me in either direction right now.

Tomorrow we get the big June jobs report. Maybe that will get things moving. Of course, if the news is too good, remember that will be bad news. We’re still playing this funny ‘fear the Fed’ game and dying for them to stop raising rates — just in time for the slowdown/recession that the bond market says is coming…

While the major indices have bounced up off their lows, and haven’t really gone back to retest them, many major tech names are teasing their lows or have already broken them. Take a look at names like AAPL, ADI, ALTR, AMD, BRCM, EBAY, MRVL, MXIM, NSM, NVDA, PALM. QCOM, QLGC, SNDK and XLNX.

It’s hard to imagine the market being able to get much of a push higher going with these big tech anchors still dragging along the bottom.

Apparently the PHLX/PBOT have changed the method of distribution for some of their sector index products, effective July 1. It remains to be seen whether the Yahoos, MSNs, and StockCharts - not to mention my own broker - ever get hooked up to the new distribution.

It’s probably not a coincidence that every index I’m having trouble getting is on this list.

In the petroleum/energy space, it’s a simple picture of supply and demand. We hear on television that our inventories are near record highs, etc., but the bigger problem is that supply is NOT increasing, while demand IS still increasing.

From today’s data release from the EIA (emphasis mine):

Total products supplied over the last four-week period has averaged nearly 20.9 million barrels per day, or 1.8 percent less than averaged over the same period last year. Over the last four weeks, motor gasoline demand has averaged 9.5 million barrels per day, or 1.4 percent above the same period last year. Distillate fuel demand has averaged 4.1 million barrels per day over the last four weeks, or 1.8 percent above the same period last year. Jet fuel demand is up 3.3 percent over the last four weeks compared to the same four-week period last year.

The idea that we’re seeing demand destruction is a myth. It hasn’t happened yet. It will take much higher prices to start reducing demand. My guess is, we’ll get those higher prices.

A little more positive action than we saw yesterday. The major indices are holding on to modest gains, A/D lines are positive, and more groups are up than down. The biggest gains thus far are in the HMOs and drug stocks. Of course, a number of PHLX indices are still MIA. Bonds are also higher, and yields are down slightly.

Energy prices started lower this morning, and haven’t been affected a great deal by the weekly inventory report, which showed a drawdown of 2.4m barrels in crude inventories, but a build of 700K in gasoline and 1.0m in distillates. The dollar held its ground overnight but is slipping somewhat this morning. The precious metals are near unchanged.

On the US front, weekly jobless claims fell by 2000, but corporate layoffs were up in June.

Across the pond, the EBC held interest rates steady, but hinted that there could more hikes coming (would that be a ‘pause’???).

Update: Back in the US: pending home sales up in May, down more than 10% YOY.

A short rundown of the retail sales results flooding in today.

Deron Wagner this morning:

Despite yesterday’s correction in the broad market, our short-term bias remains bullish overall. Many leading stocks are holding their recent gains and breakouts are still holding. The S&P 500 slid back below its 50-day MA, but the 200-day MA is just below yesterday’s low. Unless it drops back below the 200-MA, we would not aggressively mess with the short side of the market. We’re certainly not “out of the woods,” and our intermediate-term bias remains bearish, but it seems the market still has enough momentum for continuation of the recent rally.