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.

Here’s a bit of a wrapup from Marketwatch on action after the bell, with earnings season starting to take hold. One of the more interesting stories is the earnings warning from Legg Mason (LM), especially in light of a number of the other brokers making new 52-week highs recently (BSC, GS, MER, MS).

	Yet another reminder of why I don’t like to play small drug stocks. The New River news was great for longs, but killer for shorts. It could just as easily have been the other way around.
	Since when is McDonald’s a ‘momentum’ stock?

Charts courtesy of StockCharts.com

A pretty unimpressive day for both the major indices and advance/decline lines, as they all hung right around the flat line for most of the day. The Transports and Utilities, however, managed to post some gains. Here’s what the scoreboard looked like when time ran out:

Bonds and interest rates continue to be the story that no one has noticed yet, as yields seem to have bottomed, and look like they want to try to move higher:
6-month: 5.07%   2-yr: 4.82%   5-yr: 4.71%    10-yr: 4.75%    30-yr: 4.88%.

Market internals were not spectacular, but leaned green, and volume improved over yesterday’s holiday levels. Advances led declines by 5 to 4 on the NYSE and 10 to 9 on the Nasdaq, with up/down volume 3 to 2 on the NYSE and 5 to 4 on the Nasdaq. New highs/lows were 212/15 on the NYSE and 165/49 on the Nasdaq.

The group picture was split, but the losers weren’t hurt badly. On the winning side were metals and mining (+2.4%), oil services (+2.1% despite the drop in oil prices), housing stocks (+2.0%), natural gas stocks (+1.8%), oil stocks (+1.7%), natural resources (+1.5%), steel stocks (+1.3%), transportation (+1.2%) and commodity stocks (+1.1%). HMOs, hospitals and networking led the losers, each down 0.8%.

Energy prices were again mixed. Crude oil is still suffering from the OPEC ‘will-they-or-won’t-they-cut-output’ syndrome, and fell more than a dollar to $58.52/barrel. Gasoline slid a few cents to $1.47/gallon, but natural gas is holding up for now at $6.47/mmBTU. The dollar has found some new strength as rates have climbed, moving the dollar index up to 87.01. Gold was lower by a few bucks at $573/ounce and silver slipped to $11.10/ounce.

BMB Note: Not a great day, but not a poor one either. Metals made a strong showing again - today it was the coal stocks that were the big winners. Energy stocks hung on and moved higher, even while oil prices turned around mid-day. And the homebuilders? Well, the upgrade news won out over the bad press, a demonstration of the ‘happy’ market environment.

Earnings season is getting underway. That might bounce things around a bit, but until the trend is broken, it remains pointed up, but still a little extended. It would be nice to see some pullback and/or consolidation to remove some of the risk from the air…

And keep an eye on those bond rates. If they continue this turnaround and start moving higher, you could see some of the air come out of this rally.

The recent uptick in the bond market gave a small boost to short-term rates at the Treasury auction today, with the 3-month T-bill pulling 4.978% (vs. 4.890% last week) and the 6-month yielding 5.084% (vs. 5.014%).

The last couple of days of action in bonds have sent the 10-year from near 4.65% to above 4.75%. Is the bond market changing its mind on the inflationary picture?

A new section has been added to BMB’s Investing 101:

Trading Wisdom — A collection of BMB posts containing tasty nuggets of trading wisdom and advice from successful traders.

The Trading Wisdom section will be continually growing - as we come across more and more good trading advice, those posts will be added to the “Wisdom” section at the same time they appear on the home page.

Not a lot of movement again out of the major indices, but the transports and utilities are showing some gains. A/D lines are pretty flat, however. Looking at the groups, they’re about evenly split between winners and losers, but the green guys are putting up slightly bigger numbers, led by oil services, homebuilders, metals and mining, natural gas, oil, natural resources and transportation. Chemicals and hospitals lead the losers.

The bond market gapped lower this morning, and that adds to the recent move up in interest rates - definitely something to keep an eye on. The stock market has really fed off the move down in both rates and oil prices, and now both of those declines seem to be either slowing or ending.

Energy prices prices are flat to lower today, with the dollar higher, gold and silver slightly lower.

“One of these things doesn’t belong here…”

From the front page at Marketwatch.com this morning: