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.

The times they are a changin’ in the lending business. Calculated Risk has a copy of an email (supposedly) from Fremont Investment and Loan (part of Fremont General (FMT)), dated today, on some immediate changes in their lending practices:

Due to general negative Industry sentiment, due to recent articles in the media, and the ripple effect to the secondary market, Fremont has made the difficult decision to speed up some changes that were set to take place later in the year. PLS READ BELOW.

I’m sure we haven’t heard anywhere near the end of this mess.

	Another rough day for the REITs. Just another sharp pullback? Or the beginning of the end?
	Another failed breakout in the internets…
	…and one in the homebuilders.
	A few of the brokers…
	…are starting to look pretty toppy.
	Are they trying to tell us something?

Charts courtesy of StockCharts.com

Geez Louise. If the market doesn’t start getting more interesting, we might as well start cutting back blog entries to every other day, or maybe once a week. Something’s got to get moving eventually, but for now, the market seems to be in shackles.

Somebody slap me - I need to try to stay awake so I can finish this post:

Bonds were lower again today, and now it’s getting hard to tell whether yields are headed higher or lower from here:
6-month: 5.16%    2-yr: 4.93%    5-yr: 4.80%    10-yr: 4.80%   30-yr: 4.88%.

Market internals were maybe a little worse than the indices let on, but volume was on the light side. Advances/declines were 1 to 2 on the NYSE and 8 to 11 on the Nasdaq. Up/down volume was 7 to 13 on the NYSE and 3 to 7 on the Nasdaq. New highs/lows were 125/29 on the NYSE and 117/56 on the Nasdaq.

The groups saw more red than green, as a few groups joined with energy stocks to post losses: REITs (-1.8%), oils services (-1.4%), gold and silver stocks (-1.1%), natural resources (-1.1%), natural gas stocks (-1.1%), brokers (-1.1%) and biotechs (-1.0%). Airlines (+1.1%) got a boost from lower oil prices, and paper stocks (+1.0%) moved higher as well.

I’m not sure why the OPEC folks keep opening their mouths. It seems like every time they do, oil prices fall, and you wouldn’t think that was what they were after. But that’s what they got again today, as crude oil dropped more than two bucks to $57.81/barrel. Gasoline fell 6 cents to $1.55/gallon, and natural gas tumbled 60 cents to $7.23/mmBTU. The dollar index held its overnight gains at 85.13. Gold and silver both slipped, gold to $662/ounce and silver to $13.63/ounce.

BMB Note: I know this is getting pretty dull, with there not being much to talk about, but the fact is, there isn’t anything to talk about! Today was another lackluster day, though we did have a negative tone for another day. But again, things haven’t reallly broken down yet - and every time they’ve teased to the downside before, something has come along to save them.

Looking at the groups, maybe the energies will provide some opportunities on this pullback - and maybe not. Gold and silver pulled back today, maybe they’ll be worth a look. Who knows? Right now, I just don’t see a lot that I’m just dying to have…

So we wait. At least I do. The saying goes “never short a dull market.” Well, I’m going to take that one step further, and say that I’m not going to be buying this dull market either. Sometimes the best thing to do is nothing. It’s boring, I know. But you can’t force opportunities - you have to wait until they come along. And if they’re not there, you just end up spinning your wheels.

Another pretty ‘blah’ day, at least at the start. The indices are floundering right around UNCH, A/D lines are in the red. In the groups, the airlines are getting a bump from lower oil prices. On the flip side, there is more profit taking in the REITs, and energy stocks are a little lower.

Bonds are showing little change. The dollar got a boost overnight. Energy prices are lower, gold and silver a bit lower as well.

Bill Fleckenstein continues to be amazed by the way this market reacts to news. This time, it’s Dell in his spotlight - the company’s supposed plan to get back on its feet, Michael Dell’s “return” to the CEO position (as if he had been gone), and a lawsuit alleging kickbacks from Intel:

Meanwhile, another problem looms for the company. Witness a recent Wall Street Journal story: “Dell’s Woes Mount as Investors File Improper-Accounting Suit.” According to the paper, “the complaint alleges that Dell received ‘e-cap payments’ (rebates) from Intel (INTC) for not doing business with Advanced Micro Devices (AMD). The approximately $1 billion a year that Dell received in such payments was spread out unevenly over the four quarters, money that would be applied to reduce the portion of Dell’s expenses known as cost of goods sold, the complaint states.”

This is a powerful accusation that, based on the specificity, I think could only have come from a disgruntled employee or some similar source. Essentially, the accusation says Intel provided a cookie jar for Dell to manage its operating-profit and gross-margin numbers. I have long believed that Dell — and thousands of other companies — had to be doing something “unorthodox” to magically always hit the number and not experience the margin pressure that I think they should have.

When it comes to the market, Fleck is left scratching his head pretty hard:

Thus, it’s now good news when you raise guidance, lower guidance, your CEO/CFO stays, your CEO/CFO leaves. Higher oil prices are bullish, as are lower prices. We are in an environment that is 100% concept-driven. Facts matter little, though on occasion they seem to matter for a few moments.

As I suggested at the outset, this is the zaniest moment I have ever seen. The 1998-2000 period was silly (”new era” thinking), but it was just about massively overpaying for nonstop good news. Today’s mentality is: We can do anything we want because there is no downside.

Obviously, this level of lunacy can’t continue indefinitely, but while it goes on, it can reach any magnitude. There’s no determining in advance whether it lasts for five minutes or 90 days. One can only try to tell when it has exhausted itself. All I can say is, the spectacle that I see on a daily basis is really something for the history books.