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.

Bill Fleckenstein sees some similarities between the market’s reaction this summer and the summer of 2000, and he sees the results being similar as well:

…to see tech stocks rally so hard in the last three weeks — with even the data from the no-news period being weak on a bottoms-up (micro) level and ugly on a top-down (macro) level — I can only conclude that the buying had been by beta chasers (and perhaps uncomfortable shorts), as the risk/reward for stocks in general and tech in particular hasn’t been this poor since the fall of 2000. Yes, valuations were much higher then, but the economic risks are much greater today, given the leverage.

What we have is a recipe for enormous financial losses. I believe the countdown into when we start to see more data points in the form of bombs should be measured in days, not weeks.

	Minor, short-term support on the S&P around 1290, more significant down near the 1280 breakout level, along with both the 50 and 200-day MAs.
	Short term support on the Nasdaq is around 2125, while a break of 2100 would take it down in the July-August trading range.
	On the small cap Russell 2000, a dip below 700 would invalidate the August trading range ‘breakout’, and would likely bring retests of the 670-680 lows into play.

Charts courtesy of StockCharts.com

Items of note on the latest industry moves:

• Not a very impressive week, with only four groups in the green.
• Energy/commodity stocks led the way down.
• A bad break in the disk drives this week ($DDX chart).
• Energy groups are in trouble, with the oil stocks now breaking down ($XOI chart), and natural gas ($XNG chart) and oil services ($OSX chart) on the brink.
• The banks, after holding up better last week, also are rolling over a bit ($BKX chart).
• The next week or two in the market should be rather telling, since most groups have now pulled back into their ranges. If we start to see more groups breaking down, it’ll be bad news for the market.
• For a more detailed breakdown of group movement over various time periods, try Prophet.net’s Industry Rankings page.