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.

Not long ago, we noted the large drops that the Bombay Sensex index had been taking and wondered if things in India were getting a little shaky. Since that time, the $BSE has followed a pattern similar to the US markets, with the big drop and retracement. That is, until today, when the $BSE got hit for nearly 5% on a surprise interest rate hike, and fell to a retest of its recent lows.

The bank stocks are looking anything but healthy these days, as fear of fallout from the mortgage meltdown is spreading. As we’ve said before, this market will have significant difficulty moving higher when the financials are in trouble like this:

Charts courtesy of StockCharts.com

More unimpressive action. With the exception of the Utilities, which put in another solid performance, the indices danced around the flat line most of the day, with the Nasdaq lagging the other biggees:

Bonds were pretty flat as well, and yields barely budged:
6-month: 5.07%    2-yr: 4.58%    5-yr: 4.53%    10-yr: 4.64%   30-yr: 4.84%.

Market internals were mixed once again, and looked a lot better on the NYSE than on the Nasdaq. Volume was almost up to Friday’s levels on the NYSE, but lagged on the Nasdaq. Advances/declines were 3 to 2 on the NYSE but 9 to 10 on the Nasdaq, with up/down volume 3 to 2 on the NYSE but 8 to 11 on the Nasdaq. New highs/lows were 193/33 on the NYSE and 117/73 on the Nasdaq.

The groups showed a few more winners than losers. The winners were again dominated by the commodities and utilities: oil services (+1.9%), utilities (+1.8%), metals and mining (+1.7%), natural gas stocks (+1.5%), gold and silver stocks (+1.3%), natural resources (+1.1%), HMOs (+1.1%), steel stocks (+1.1%), commodities (+1.1%) and oil stocks (+1.0%). On the losing side, we found the banks (-1.5%), disk drives (-1.3%) and homebuilders (-1.2%).

Energy prices were mixed. Crude oil held near the $66 mark at $65.94/barrel, while gasoline slipped back to $2.04/gallon and natural gas dropped to $7.67/mmBTU. The dollar index gave up a little ground to 82.84. Gold held steady at $664/ounce but silver slid to $13.23/ounce.

BMB Note: This is getting a little old. It’s pretty tough to get a read on “the market” when a few things are going the right way, a few things are going the wrong way, and the rest are going nowhere.

The major indices are stuck between the post-Fed highs and those post-Fed breakout levels, and the tape is split. Utilities, commodities, energies and the like remain strong, while the financials - like the banks in particular today - along with the housing stocks are stinkin’ up the joint.

Sooner or later, things will start to come together and get moving in one direction or the other. Until that happens, the chop is too difficult, and too frustrating, to trade.

Not a lot of data on the way to move things around much either. The biggest number of the week doesn’t come until Friday when we get the monthly non-farm payroll figures.

New Century, upgraded by Bear Stearns just a month ago, files for bankruptcy.

Thanks guys. You’re a big help.

BMB has been concerned about the recent weakness in the financials, and today’s news isn’t helping matters at all. With M&T Bank warning ‘that earnings would be hit by “unfavorable market conditions” in its so-called Alt-A mortgage business’, the banking sector has suffered even more damage in today’s trading.

M&T (symbol MTB) is trading down more than 8 percent, and has dragged some others down with it: NCC, STI, WB, COF, ZION all down more than two percent, and those charts weren’t in great shape to begin with.

Stocks tried to make a slight move higher at the open this morning, but hit the brakes when a somewhat disappointing ISM report was released at 10 Eastern. That has left most of the major indices near the flat line, but the Utilities higher. A/D lines are also near flat.

In the groups, the utils lead the upside, while the banks, disk drives and brokers lead the losers. Bonds are fairly flat. Energy prices are just slightly lower. The dollar is pretty flat, with precious metals lower.

A few interesting moves overnight, with the Japanese indices falling more than 1.5%. And in India, the Bombay Sensex dumped nearly 5% after a surprise interest rate hike.