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.

David has some good stuff at Finance Trends Matter on a probable surge in solar power deployment here in the U.S. :

Solar power got another much-needed boost recently when Wal-Mart announced that it would plan on adding solar equipment to a number of its U.S. stores.

The company has asked potential solar equipment suppliers to bid on initial projects and to include costs for possible build-out and expansion over the next five years. If the plans are carried out, it could make Wal-Mart America’s largest user of solar power.

Go check it out.

Don’t get too excited about this post-Fed rally until we see how it really shakes out. Here’s Deron Wagner this morning:

The knee-jerk reaction to yesterday’s Fed comments was encouraging, but bear in mind the stock market often moves in the opposite direction a few days later. We’re not trying to be bearish here, but merely warning you not to get caught up in the excitement of the post-Fed rally until after traders and investors have had a chance to digest the real meaning of the Fed comments. With both the S&P and Nasdaq stuck in the middle of their ranges, whippy and erratic trading action could remain the dominant theme as we enter the month of February. As mentioned several times last month, capital preservation, not scoring large profits, should be your top priority as long as most of the major indices stay range-bound.

To follow up on Wagner’s post-Fed performance comment, here’s some analysis from Ticker Sense:

…we also looked at the S&P 500 return in the one week following Fed days. 71% of the time the market’s direction in the one week period after the Fed day is the opposite of the direction it takes on the day of the announcement.

Following up on yesterday’s Chicago PMI, the national PMI number also indicates contraction in manufacturing:

Factory activity in the United States contracted in January, the Institute for Supply Management reported Thursday. The ISM index fell to 49.3% in January from 51.4% in December. The decline was unexpected. The consensus forecast of estimates collected by Marketwatch was for the index to rise to 52.0%. A reading below 50 indicates contraction.

So where does contraction fit in the “Goldilocks” scenario? Are we supposed to root for ‘just a little’ contraction?

People once again spent everything they made and then some last year, pushing the personal savings rate to the lowest level since the Great Depression more than seven decades ago.

The Commerce Department reported Thursday that the savings rate for all of 2006 was a negative 1 percent, meaning that not only did people spend all the money they earned but they also dipped into savings or increased borrowing to finance purchases. The 2006 figure was lower than a negative 0.4 percent in 2005 and was the poorest showing since a negative 1.5 percent savings rate in 1933 during the Great Depression.

No surprise on my face. Stanley Johnson comes to mind, the guy in the commercial: “I’m in debt up to my eyeballs. I can barely pay my finance charges. Somebody help me.”

Today? Nobody cares. But someday…this house of cards will come crashing down.

In his column today, Peter Brimelow quotes Richard Russell on the US and Chinese markets:

This seems to be what Dow Theory Letters’ Richard Russell believes. He said in his post-market wrap-up Wednesday night: “(Stock) market continues to plow higher with no semblance yet of a correction. This is a very unusual market, and it’s senseless and dangerous to try to outguess it. When the inevitable correction comes, I think it will be fast and scary … Trying to catch the turn can be expensive and nerve-wracking. I don’t recommend it.”

This is one reason why I like Russell: his restless mind.

In Wednesday night’s hotline, he went on: “China is in a stock-buying super-frenzy with people mortgaging their homes, taking out loans, doing anything and everything to get in on that wild ride on the Shanghai Exchange. From below 1,000 in June of 2005, the Shanghai Composite has tripled to a current 3,000. The Composite has gone parabolic … The price of the composite is an astounding 36% above its 40-week moving average.

“If you’re looking for international trouble, you might start looking here. The Shanghai Exchange is on fire, and it’s hard to know what to expect next. What would a stock crash in China mean? It would have worldwide implications, and it would be deflationary, particularly for commodities. By the way, the Chinese authorities are now actively warning the populace about over-speculating (”irrational exuberance”?)”