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.

What’s wrong with these people? Don’t they know anything?

Barry Ritholtz at The Big Picture today:

The University of Michigan Consumer Sentiment Index revealed this morn that U.S. consumers are worried about inflation, pressing consumer sentiment index down to 78.7 in August — a greater than expected drop from the prior reading of 84.7 in July.

Why don’t someone tell these dang fools that there is no inflation! I think its high time the consumer focuses their consumption only on the products in the core — where it belongs — and where prices are nice and calm (kinda like the eye on a hurricane). The sentiment readings are down because these silly consumers foolishly insist on buying non-core items. That must stop right away.

Don’t these people know what the Fed likes to focus on? Whatsthematterwith these people anyway? Why doesn’t the American public pay more attention to what matters the most to what economists choose to econometrically model?

I don’t know, Barry. You go on to say that the consumer isn’t fooled by this inflation nonsense. I would agree that they do see the inflation. The problem is, I’m just not sure they really care. It’s just another speed bump in the road, as they continue to try to find ways to keep spending themselves into oblivion, and our financial system does everything it can to help them bury themselves in more debt.

	While the big-caps in the S&P have moved back above their June/July highs…
	…the small-cap Russell 2000 still has some work to do to get there…
	…and the Transports haven’t even broken their downtrend.

Charts courtesy of StockCharts.com

Options expiration Friday didn’t quite live up to its billing, as volatility was subdued and volume was light. But stocks, after a rocky start to the day, managed to crawl higher throughout the session and finish in the green for yet another day. The final scores:

The bond market took yields back down again:
6-month: 5.18%   2-yr: 4.87%   5-yr: 4.78%    10-yr: 4.84%    30-yr: 4.98%.

Market internals were positive, but volume didn’t show the usual expiration day expansion, coming in well below the levels of the past couple of days. Advances led declines by 9 to 7 on the NYSE and 10 to 9 on the Nasdaq, with up/down volume 3 to 2 on the NYSE and 9 to 7 on the Nasdaq. New highs/lows were 90/21 on the NYSE and 66/58 on the Nasdaq.

The groups only had a few big movers, and they were NOT in tech for a change: oil services (+2.4%), oil stocks (+1.3%), utilities (+1.2%), natural resources (+1.2%) and steel stocks (+1.1%). A few groups did finish in the red, but none worse than a half-percent down.

Energy prices recovered slightly, with crude up a buck and change to $71.14/barrel, gasoline up four cents to $1.97/gallon and natural gas up a few cents to $6.73/mmBTU. The dollar was mixed, with little change in the dollar index at 85.09. Gold and silver hovered near $612/ounce and $11.97/ounce respectively.

BMB Note: Not a lot to say about today’s action, other than it finishes off a very strong week for stocks. Now that options expiration is out of the way, maybe we can get a better picture of how far this goes.

Some food for thought: 1) the Dow Transports have fallen a bit each of the past two days while the other indices have moved higher. 2) Some folks like to watch Fibonacci retracement levels, so I ran the numbers on the S&P. A 78.6% retracement of the move down in the S&P from the May 8th high of 1326.70 to the June 14th low of 1219.29 would be 84.42 points up, or 1303.71. The $SPX closed today at 1302.30.

“Top 10 Ways To Lose All The Money In Your Trading Account In 30 Days Or Less - Guaranteed!”

I hope the author doesn’t mind me republishing his “Top 10″ here - just in case that link becomes invalid someday. They’re just too good to lose:

Top 10 Ways To Lose All The Money In Your Trading Account In 30 Days Or Less - Guaranteed!

#10 - Put all of your efforts into finding the perfect technical indicator. Once you find this magical indicator, it will be like turning on a water faucet. Go all in. The money will just flow into your account!

#9 - When your technical indicator says that the stock is oversold, BUY IT RIGHT THEN. Always do what your technical indicator says to do. It takes precedence over price action.

#8 - Make sure to visit a lot of stock trading forums and ask them for hot stock tips. Also, ask all your friends and family for stock tips. They are usually right, and acting on these tips can make you very rich.

#7 - Watch what other traders do and be sure to follow the crowd. After all, they have been trading a lot longer than you so naturally they are smarter.

#6 - Pay very close attention to the fundamentals of a company. You MUST know the P/E ratio, book value, profit margins, etc. Once you find a “good company”, consider going on margin to pay for shares in their stock.

#5 - Forget about developing a trading plan. If you see a good stock just buy it. Don’t worry about when you’re going to sell. No need to get caught up in the details. Besides, you’ll probably get rich the first year of trading anyway.

#4 - Buy expensive computers and trading software. While your at it, buy a couple more TV’s so that you can watch CNBC on multiple screens! You NEED all of these gadgets in order to trade stocks successfully. Then watch the money roll in!

#3 - Always follow your emotions. They are there for a reason. If you feel nervous, sell the stock! If you are excited, buy more shares. This is the best way to trade stocks and fatten up your trading account.

#2 - Don’t worry about using stop loss orders. When the time comes, you will be able to sell your shares and take a loss. Your emotions won’t even come into play. Besides, stop loss orders are for sissies!

#1 - Absolutely, without a doubt, FORGET about managing your money. Don’t worry about how much you can lose on a trade. Only think about how much loot your gonna make. Then start planning that trip to Fiji!

Well, there you have it - my top 10 tips for new traders.

This list was easy to write.

I followed them all when I first started trading.

A little more of a negative start than we’re used to seeing this week. The major indices are flat to down, and the A/D lines are painted red for the time being. Movement in the groups isn’t real strong in either direction: more down than up, but not big numbers yet. The few winners are the metals and utilities, while the semis lead the losers - getting hurt by the likes of MRVL, AMD and BRCM.

Bonds are only slightly higher. Energy prices are higher by a few cents. The dollar is mixed, gold a little lower, silver a little higher.

This article says that the U of Michigan consumer sentiment fell on “worries about inflation”. But we just spent the past week rallying the stock market because the PPI and CPI told us inflation was “under control”.

Hmmm.

Ford is cutting its 4th quarter North American production by 21%. I’m trying to figure out how the market will spin this as good news on the economy.

I’ve got it: Ford is having trouble selling vehicles, so therefore, they will have to continue to cut prices, which will keep inflation down and the Fed won’t have to raise rates, and we all know that is good news.. We have always try to get it back to the Fed somehow.

I’m having trouble spinning the potential job cuts as good news…

Deron Wagner has some advice for traders on options expiration days:

Today is monthly options expiration day, so be on guard for potential volatility and odd moves in the late afternoon. Most of the time, we avoid entering new positions in the latter half of the day on options expiration days, which occur on the third Friday of each month. This is because many of the moves tend to be falsely exaggerated, as institutions attempt to move stocks closer to the strike prices that will cause the most damage to the most traders. Therefore, today may be good for simply entering your stops on existing positions and shutting down early in the afternoon.