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.

Phil Flynn puts the finishing touches on BMB’s discussion of energy demand yesterday. From Futuresource.com’s Fast Break:

If we were seeing the stress of high commodity prices we would expect to see demand drop in the energies markets first. I am beginning to think that the rest of the world must think the inscription on the Statue of Liberty must read something like, “Give us your tired, your poor, your huddled masses and every drop of gasoline that you possibly have.” Once again near record gas imports seemed to overshadow impassive demand. In fact, we have stellar demand and let us face it, down right record demand. In fact the DOE reported that demand for gas in the month of June hit the all time record high for this country. And considering the type of gas guzzling nation we are, I think that that is something to be proud of. Once again Americans from sea to shining sea took their freedom seriously. Gas demand in the United States in the month of June averaged 9.057 million barrels of gas a day which is up 1.4% year over year. Gas demand in the week before the fourth of July holiday hit the second highest on record.

If today’s market action has you feeling lousy, you might want to take a pass on Peter Schiff’s latest column:

Today’s negative stock market reaction to the weak jobs data shows that the “bad news is good news market,” which has ruled for the past couple of years, may have finally become a “bad news is bad news market.” With the June non-farms payroll data rising by only 121,000, verses an expected gain of over 200,000, it appears that Wall Street is finally acknowledging that the reality that stagflation trumps, or potentially negates, the potential for a Fed pause. If that is indeed the case, things are about to get a lot worse for stocks.

Peter probably isn’t the guy you’d invite over to join you and the gang at your Cramer after-market “BUY BUY BUY !!” party…

You know, sometimes you just wanna give up.

Go ahead, list the reasons why again - blame the jobs number or wage increases, or 3M, or AMD. Who knows what the real reasons are, but the market made a mess of things again today, looking ugly right out of the gate and never getting any prettier. The Dow fumbled away 134 points (-1.2%) to 11091. The S&P 500 dropped 9 points (-0.7%) to 1265 and the Nasdaq dumped 25 points (-1.2%) to 2130. The Russell 2000 was hit as well, falling 11 points (-1.6%) to 709. The Dow Transports dropped 0.9%, but the Utilities moved higher by 0.7%. Bonds were the one good spot, as prices moved up and yields came down: 6-month 5.28%, 2-year 5.17%, 5-year 5.10%, 10-year 5.13% and 30-year 5.17%.

Market internals were well on the negative side, with volume just slightly above yesterday’s levels, but still below average. Advances/declines were 3 to 5 on the NYSE and 5 to 14 on the Nasdaq, with up/down volume 3 to 8 on the NYSE and 1 to 4 on the Nasdaq. New highs/lows were 80/76 on the NYSE and 50/101 on the Nasdaq.

Not much good to be found in the groups - utilities up 0.6%, that’s about it. Plenty on the down side: networking (-2.6%), oil services (-2.5%), gold stocks (-2.1%), disk drives (-2.0%), brokers (-2.0%), semiconductors (-1.9%), computer hardware (-1.6%), internets (-1.5$), metals and mining (-1.4%), chemicals (-1.3%) and natural gas stocks (-1.1%).

Energy prices slipped, with crude oil finishing down more than a buck at $74.09/barrel after hitting new record highs of $75.78 intraday. Gasoline fell a couple of cents to $2.24/gallon, and natural gas dropped to $5.52/mmBTU. The dollar got slammed as rates fell following the jobs report, the dollar index falling to 84.98. Gold held its ground near $633/ounce, but silver slipped to $11.38/ounce.

BMB Note: Not much good to say about the market here. It’s put in two pretty pathetic performances in the last three days. If you want to get technical, the major indices are still in an ‘uptrend’, but the trend is very choppy, and full of wild swings. Not the type of market to get agressive in.

With all the whipsawing back and forth, it’s easiest to just stay away. If you can’t stand it and you just have to trade, consider being positioned on both sides of the market to hedge yourself, and trade small with tight stops. You just don’t know, from one day to the next, which way things are going to go. But it seems that real “healthy” markets shouldn’t be having the sorts of days that we saw on Wednesday and Friday of this week.

A trading lesson on the stocks we mentioned yesterday: days like today are the reasons why you set entry points above current prices — to try to ensure that the uptrend in the stock is resuming, rather than buying as the pullback is in progress. Waiting for an upswing to ‘trigger’ the entry prevents you from buying into declines like we saw today. And of course, always have a mental or actual stop in place to curb losses. Especially in a choppy market like this one.

The markets have reacted somewhat negatively to the morning news, with the major indices in the red and market breadth also running on negative ground. Oil stocks, steel stocks and utilities are gaining ground, while networkers, disk drives, airlines, semiconductors, computer hardware and paper stocks are lower. Bonds, however, are moving higher again, and yields are down.

As noted by Deron Wagner in his column this morning, the S&P 500 is trying to form a short base here, and it looks as though the Dow may be trying to do the same. If the bottom of those short bases can hold out, they may form some support for the indices in the near term.

Energy prices are mixed, with crude up but gasoline and natgas lower. The dollar is getting smacked pretty good as yields come down, but that hasn’t seemed to help gold and silver much, as they are also lower.

Deron Wagner today, on earnings season:

Quarterly earnings season kicks into gear next week, so be aware of the exact corporate earnings dates for any new stock positions you enter in the coming weeks. As you probably already know, stocks often ignore technical patterns and exhibit highly erratic price action when companies surprise investors with better or worse than expected numbers. There are several web sites that enable you to search for corporate earnings dates, but we like the free earnings.com site.

Knowing when companies earnings reports are coming out certainly is handy info. The problem is that you don’t get advance notice of earnings warnings: just ask the 3M shareholders today.

The ‘under’ bet wins again. The June non-farm payroll report showed an increase of 121,000 jobs, below expectations. Unemployment held at 4.6%, but average hourly wages were up, and show an increase of 3.9% YOY.

US index futures didn’t budge much at first, but are considerably lower now. Also just out is an earnings warning from 3M.

Overnight, Asian markets were mixed with indices showing little change, and the same seems to be true in Europe this morning. Gold down a few bucks, crude oil hitting record highs, currently trading at $75.68/barrel.

In company news, we have AMD warning on revenue, Starbucks same-store-sales on the light side.

All this ahead of the big jobs number out in 20 minutes.