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.

When it comes to both politicians and celebrities that shoot their mouths off, as many of them do, you always have to wonder: Do they practice what they preach?

Well, umm, no. At least not in Al Gore’s case:

Gore tells consumers how to change their lives to curb their carbon-gobbling ways: Switch to compact fluorescent light bulbs, use a clothesline, drive a hybrid, use renewable energy, dramatically cut back on consumption. Better still, responsible global citizens can follow Gore’s example, because, as he readily points out in his speeches, he lives a “carbon-neutral lifestyle.” But if Al Gore is the world’s role model for ecology, the planet is doomed.

Oh. I’m just shocked. Absolutely shocked.

IBM announced a $1.6B acquisition of FileNet today. But looking at the action in FILE stock over the past 3 weeks or so, one doesn’t get the impression that the deal was a very closely guarded secret.

Chart courtesy of StockCharts.com

So much for a few of those semis trying to turn up:
ADI - closed at 31.90, trading at 29.10
NVDA - closed at 24.16, I see an ‘ask’ of 22.12

On the retail front,
KSS - closed at 58.19, trading at 60.15

On a day when you thought you might get some big reactions to the terror news, we really got very little action at all. Oh sure, the indices drifted higher, oil and gas prices came down and brought a few energy stocks with them, and some of the beaten down groups got a bit of a bounce, but not a lot more than that.

Here’s where the major indices ended up:

Bond prices, like stocks, moved very little, and yields held pretty steady:
6-month: 5.15%   2-yr: 4.91%   5-yr: 4.85%    10-yr: 4.92%    30-yr: 5.06%

Market internals were mostly positive, but volume lightened up from yesterday’s levels. Advance/declines were 3 to 2 on the NYSE and 11 to 8 on the Nasdaq, with up/down volume 3 to 2 on the NYSE and 5 to 3 on the Nasdaq. New highs/lows were 49/117 on the NYSE and 37/199 on the Nasdaq.

Some of the laggard groups bounced today, with retailers leading the way (+2.2%), followed by transportation (+1.9%), semiconductors (+1.5%), hospitals (+1.4%), defense (+1.3%), HMOs (+1.1%) and software (+1.1%). Leading the losers were the gold and silver stocks (-1.6%) and the oil stocks (-1.1%).

Energy prices took a dive, for whatever reason - I couldn’t figure it out. Crude oil fell more than 2 bucks to $74.00/barrel, and gasoline dove 17 cents to $2.00/gallon. Natural gas pulled back as well, to $7.53/mmBTU. The dollar index was all over the place but finished back where it started at 84.73. Gold was up a few bucks to $649/ounce and silver moved back up to $12.44/ounce.

BMB Note: The good news is that the market didn’t melt down further today. But the bad news is that it didn’t do much to convince that it won’t melt down tomorrow or the next day. Stay on your toes and we’ll see how things unfold from here - and be ready to protect yourself if need be.

We did see some bounces in the retailers, transports and the restaurant stocks today. Some of the semis look like they’re trying to hold their ground and grind higher as well. But the market, on the whole, has a lot of healing to do if it’s going to get healthy. That’s if it doesn’t get sicker first.

CNBC obviously hasn’t done anything to solve their on-screen graphics problem, like their incessant ‘alerts’ the other day.

Today it’s been “Breaking News”. All day long, the bright red “Breaking News” banner has been up on the screen, and the news they’re talking about at the time has been anything but ‘breaking’.

Isn’t there some sort of statute of limitations on what can be called “breaking news”? Certainly there must be some sort of law or standard that defines a time past which news can no longer be termed “breaking”? I mean, I’ve known about the terror plot arrests in London for more than 8 hours now, and CNBC has known about them longer than I have.

Give it up, gang. Please.

Crude oil prices have acted somewhat strangely in the past 24 hours. Perhaps Phil Flynn has an explanation for us:

Terror alert on high and the oil market may continue its fear of flying. Oil prices fell overnight as a terror plot was detected in London. A plan to blow up as many as 20 jets flying the route from London to the USA raised fears that demand for jet fuel may falter if the general public refuses to fly. Some flights were canceled and those that will fly will be under the strictest of security.

Yet will this have a long term effect? Probably not, unless the terrorists are successful. The sad truth is the world has become accustomed to these threats. If the market senses the attack has been thwarted then they’ll assume the risk of an attack has been diminished. Even before these terrorists events happened the oil market that was flying had a late session crash landing. A very bullish drop in gas and distillate stocks sent the market soaring. Yet late in the session the market fell as hopes were raised that the Prudhoe Bay oil field may not have to be entirely shut down. That was encouraging to a market that had seemingly lost faith in the big oil industry.

Speaking of Prudhoe Bay, the pressure is mounting on BP big time. Aside from all the lawsuits and the wrath of Senator Hilary Clinton, now comes word that Alaska, which relies heavily on oil pipelines revenue, had to lay off state workers and now will try to see if they have any recourse against BP. According to the London Financial Times, the State of Alaska is exploring whether it can hold BP accountable for tax and royalty losses of 6.4 million dollars a day.

So far, the reaction to the terror plot news out of London this morning has been rather muted, with the biggest impact being in the energy space. Oil prices are down on a reaction to the possibility of fewer flyers, but I’m not sure that’s very real - and the airline stocks aren’t reacting nearly as much as crude oil is - of course, the airlines have already been hit pretty badly over the past couple of weeks.

The indices are hugging the flat line, with the A/Ds and group action biased to the downside at the moment. In the groups, we find gold stocks, steel stocks, biotechs, oil services, natural resources, oil stocks and natural gas stocks lower. Bonds are showing little change.

Crude oil is down over a buck, with gasoline and natgas lower as well. The dollar is higher, gold and silver are both lower.

Gary Kaltbaum lays out all the evidence in detail. And the evidence shows that:

The bear market continues. I know you want to hear differently but all evidence up to now indicates nothing but. We have seen the past 3 out of 4 days reverse negatively on volume as the major indices fall off their latest wedges up…

Kids, this is all the evidence I need. You can’t hide bull markets and you can’t hide bear markets. If things were fine, these areas would not be blasted like they have been. What I am showing you is reality. Until we see signs of accumulation and follow through, our bearish stance on the condition of this market stands firm.

Deron Wagner asks the question:

In recent weeks, the Dow was one of the few indices holding the market up. But now the Dow has also begun to show relative weakness, making a short sale in the DIAMONDS (DIA | charts | news | PowerRating) an interesting possibility. Before doing so, however, we would first want to see the Dow fall back below its 200-day MA at the 11,000 level. The $SOX broke out above its three-month downtrend line on August 3, but has gone absolutely nowhere since then. The index tried to get a rally going on August 4 and 9, but failed to hold its gains both times. If the Dow has started to roll over and the $SOX keeps failing its breakout attempts, we must ask the question, “What will save the market from testing and perhaps breaking below its prior lows?” The trend is your friend, and the simple fact is the major indices remain in their downtrends that started in mid-May.

The US airline threat level has been raised as the news of a foiled terror attempt has been released in London:

British authorities said Thursday they had thwarted a terrorist plot to simultaneously blow up several aircraft heading to the U.S. using explosives smuggled in carry-on luggage. Britain’s Home Secretary John Reid said 21 people had been arrested in London, its suburbs and in Birmingham, including the alleged “main players” in the plot.