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.

You know the news can’t be good when a company comes out with it after the market close on a Friday before a long weekend - they’re hoping that no one is paying attention.

Sounds like things are getting a little dicey at SanDisk:

SanDisk Corp. (SNDK) after Friday’s closing bell said it expects to lower first-quarter prices for many products by 30% to 40% from the prior quarter’s levels to maintain market share. The flash storage cards company said deteriorating component pricing and seasonally weak demand is impacting pricing at a steeper rate than it had anticipated. Also, SanDisk said it is cutting expenses with actions such as reducing its worldwide workforce by up to 10%, or 250 employees, and reducing salaries for all executives, with the chief executive’s base pay falling 20%. The company sees annualized cash cost savings of $30 million to $35 million, excluding severance costs. SanDisk expects to incur a restructuring charge of $15 million to $20 million, with the majority of the expense in the first quarter.

Update: More comments on the new “PC boom”, or the lack thereof, from Barry today at The Big Picture.

I’m not sure how much of it was intentional - associated with options expiration - but the market did an awfully good job of pinning prices in place today. Maybe it was the upcoming long weekend. Whatever the case, it was about as dull a day as you can get from a price movement perspective. But of course, that didn’t stop them from pushing the Dow into the green just as time expired. CNBC was probably buying up futures to try to help it along, just so they could put their orange ‘new record’ banner up at the top of the screen:

Bonds moved slightly higher, pushing yields down once more:
6-month: 5.14%    2-yr: 4.83%    5-yr: 4.68%    10-yr: 4.69%   30-yr: 4.79%.

Market internals were split pretty much down the middle: advances/declines were flat on the NYSE but 5 to 4 on the Nasdaq, with up/down volume flat on both exchanges. New highs/lows were 213/14 on the NYSE and 160/41 on the Nasdaq.

No groups managed to move a percent or more. Paper stocks (+0.9%) led the winners, while the disk drives (-0.8%) led the losers.

Energy prices were higher, with crude oil up more than a dollar to $59.39/barrel, gasoline up a nickel to $1.65/gallon, and natural gas up twenty cents to $7.50/mmBTU. The dollar index moved only slightly higher, to 84.07. And the precious metals were flat as well, with gold holding at $669/ounce and silver at $13.95/ounce.

BMB Note: Not much to talk about when things don’t move. Maybe we’ll catch a little excitement after the long weekend, but there’s not much coming in the way of news next week. On Wednesday, we get the CPI number and the minutes from the January Fed meeting, but that’s about it.

Stuff like this is just hard for my tiny little brain to resolve.

Here’s what came out of MHK’s earnings last night:

Carpet and flooring maker Mohawk Industries Inc. said Thursday it expects tough industry conditions to continue in the first quarter, as it forecast earnings that were below Wall Street’s projections.

Mohawk said it expects first-quarter earnings per share of $1.01 to $1.10, including about $5 million in refunds from U.S. customs. Wall Street, on average, expects $1.18 in quarterly earnings per share, according to an analyst poll by Thomson Financial.

The company said it expects continued slow U.S. industry sales, as the flooring industry struggles along with the housing industry. Mohawk Industries said it has cut manufacturing, administration, and marketing expenses in response to the tough market.

Today’s reaction? MHK shares up $8.57, or 10.1%.

Update: MHK finished up $9.26, or 10.94%.

A rather uninspiring open to this expiration Friday, with major indices hanging just below the flat line, and A/D lines trying to bounce up from their worst levels in several days. Not many big movers in the groups, with natural gas stocks leading the winners, homebuilders and REITs at the end of the train.

Bonds are just slightly higher. Energy prices are higher. The dollar is edging higher, with gold and silver pulling back just a little.

Deron Wagner is watching a few setups, as he always is. But he advises you to stay on your toes:

As for the broad market, our advice remains the same as yesterday. Remain very nimble on any long positions, ready for the market to change direction without notice. There are very few quality short setups as well, so keep a hefty portion of cash reserves to capitalize on the market’s next clearly defined move.

• Producer prices (PPI) fell 0.6% in January, helped by the drop in energy prices. The beloved ‘core’ rate, which ignores non-essentials like food and energy, rose 0.2%.
• Someone needs to speak to the NAR about their predictive abilities when it comes to the “bottom” in housing. Housing starts fell 14.3% in January, to their lowest level in 10 years, and down 37.8% YOY. More on the housing numbers over at Calculated Risk.
• Microsoft’s CEO isn’t nearly as excited about Vista’s chances as the analysts are.