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.

Literally.

Another slight bump up in T-Bill rates this week, with the 3-month bill bringing 5.072% (up from 5.062% last week) and the 6-month returning 5.116% (up from 5.094%).

As long as those short-term rates hold up, holding cash isn’t such a bad idea.

	The Russell 2000 teased the downside today, but managed to save itself for another day.
	The homebuilders haven’t been quite as lucky when it comes to hanging on - they’re beginning to slide.
	While some struggle, a few of those old, big-cap tech names continue to cruise, like IBM and Cisco. But for how much longer?

Charts courtesy of StockCharts.com

You gotta admit, this guy has learned well from his buddy, ol’ Mister Castro:

Venezuelan President Hugo Chavez announced plans Monday to nationalize the country’s electrical and telecommunications companies, calling them “strategic sectors” that should be in the hands of the nation.

The New York Stock Exchange immediately halted trading in CANTV, Venezuela’s largest publicly traded company, which was singled out in Chavez’ speech. The decision was also likely to affect Electricidad de Caracas, owned by AES Corp.

It was the boldest move by the Venezuelan leader since he was re-elected by a wide margin last month promising to a more radical turn toward socialism in Venezuela.

I feel very sorry for the citizens of Venezuela.

After a shaky start, stocks managed to stave off a further decline, recovering as the day progressed to finish back on positive ground. But I wouldn’t get too excited about today’s action - it wasn’t that impressive:

Bonds were near unchanged, leaving yields pretty much where they were:
6-month: 5.10%   2-yr: 4.78%   5-yr: 4.66%    10-yr: 4.66%    30-yr: 4.74%.

Market internals turned mostly postive after a lousy start, but volume was lighter than any of the trading days last week. Advances/declines were 3 to 2 on the NYSE and flat on the Nasdaq, with up down volume 3 to 2 on both exchanges. New highs/lows were 124/20 on the NYSE and 92/52 on the Nasdaq.

More groups moved to the green side than we were seeing this morning, but the gains weren’t widespread. Steel stocks (+1.7%), brokers (+1.4%), hospitals (+1.4%) and metals (+1.0%), led the winners. The homebuilders (-1.4%) lost the most ground.

Energy prices were mixed, as crude oil was unable to hang onto morning gains, and finished lower at $56.09/barrel. Gasoline dipped a couple of cents to $1.47/gallon, but natural gas was higher, moving to $6.38/mmBTU. The dollar index was flat at 84.60, gold gained a few bucks to $609/ounce, and silver moved up to $12.25/ounce.

BMB Note: Not too spectacular a day, and doesn’t change the picture much in my view. Basically, we’re still waiting for the market to make a move, one way or the other: break out or break down. Until that happens, it’s hard to be committed to one side or the other.

Few groups are showing much strength, so there’s not a lot to get excited about on the long side. The shorts are teasing - the Russell and mid-cap indices are threatening to break, but really haven’t yet. The major oils maybe look interesting on the short side with nice pullbacks here. Also, the chemicals and the homebuilders have made some moves down, maybe we’ll start seeing something set up there.

For now, it’s a little frustrating waiting for opportunities, but that probably beats banging your head against the wall trying to trade the chop.

At The Big Picture today, Barry runs down the yield curve debate, with help from commentary from the WSJ and one of Kudlow’s rosiest regulars, Art Laugher Laffer:

That is a rather significant track record that suggests inverted yield curves ought to be closely watched for other confirming signs. And I am watching the following very closely: Transports, Retail sales, Durable Goods, Manufacturing, Housing Foreclosures, Auto sales, Business Capex. These are significant sectors of the US economy — and all of these indicators are flashing a danger sign.

One other warning factor worth watching: Laffer ends his piece by claiming “This time is different!” History teaches us that those are the four most expensive words in the English language.

The market has gotten a bit of an uptick since lunchtime, with a little help from the Fed Folks. Don’t worry, everything is fine. But it seems to me, that’s what they were saying back in 2000-01. Matter of fact, I think they say that just about all the time.

The New York Post reports that last week’s meltdown in the energy markets may have been a result of more index changes from Goldman Sachs:

It might be a better idea to thank Goldman Sachs, not the weather, for the recent plunge in oil prices.

While recent balmy temperatures have certainly played a role in last week’s dip in oil prices, a lesser known, but equally powerful, move by Goldman at the start of the year might bear some responsibility as well.

Goldman cut the energy portion by as much as 50 percent in some of the sub-indexes that comprise the widely followed Goldman Sachs Commodity Index, tamping down moves to buy them by large investment funds who mimic Goldman’s index.

It’s always something, ain’t it?

Hat tip to Joe Duarte in his free weekly Market IQ.

Update: Here are the new “before” and “after” weightings in the GSCI:

Still a lot of uncertainty in the energy markets, as OPEC ponders more cuts and the Russia/Belarus dispute lingers on.

A bit of a tug-of-war going on this morning between the bulls and the bears, with the bears having just a slight edge at the moment. The major indices are coming off their lows back toward the zero mark, but A/D lines remain in the red for now. In the groups, the energy stocks have made a slight bounce, and hospitals and computer hardware are slightly higher. On the down side we find paper stocks, homebuilders and chemicals.

Bonds are just slightly lower, yields up a bit. Crude and gasoline are flat, with natural gas higher. Gold and silver are also slightly higher, with the dollar pretty flat.

Deron Wagner is watching the Russell 2000 as it stuggles, and says that the small-cap indices have become important market indicators in recent years:

Over the past several years, monitoring the performance of the Russell 2000 has become very important because the index has led the other indices in both bullish and bearish reversals. In the first several years of the new millennium, traders found that the Semiconductor Index ($SOX) was one of the best leading indicators of the overall market’s health, but that has changed in recent years. While the direction of the heavily weighted $SOX is still important, the index has lost a lot of its luster as earnings growth in most chip companies has slowed. Instead, institutional money flow into small-cap companies, typically focused on aggressive earnings growth, has become an accurate way to determine the level of confidence institutional traders have in the state of the market. The $SOX index, for example, has been trading in a wide, sideways range since 2003, but the Russell has been trending steadily higher over the past three years, continually setting new all-time highs. The S&P Midcap 400 Index has become a similar leading indicator, which is why we discuss the performance of both the Russell and S&P Midcap indices on a daily basis.