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 major indices made another nice move up, right back to the top of their recent range, but the move stalled at the resistance levels of the post-Fed days - and right back at those Fib retracement levels.
	The airlines got a nice bounce out of the doldrums as oil prices pulled back. Have the flyers put in a bottom here? If so, do I care?
	Telecom stocks have joined the commodities in moving to new highs. I have a hard time getting excited about buying things like AT&T and Verizon, but there they are.
	The Chinese stock market rolls on, as if the Feb. 27th drop never happened. The Shanghai composite has been up 18 of the last 21 sessions.
	Looking at a longer term weekly chart of the Shanghai composite, echoes of ‘irrational exuberance’ ring in my head, with the index having tripled in just over a year. I have to believe there will be tremors felt around the world if gravity ever takes hold of this market again. We got a hint of what it might be like back at the end of February, didn’t we?

Charts courtesy of StockCharts.com

The financial media was scrambling today, trying to come up with reasons for the rally in stocks. Personally, I’m not sure there was much of a reason, and it doesn’t really matter if there was. A good day for the most part, although I think the bulls would have liked to have seen more convincing volume:

Bonds did not rally along with stocks, and actually moved a little lower, holding those longer term yields up near their recent highs:
6-month: 5.07%    2-yr: 4.62%    5-yr: 4.56%    10-yr: 4.66%   30-yr: 4.85%.

Market internals were positive, but volume wasn’t really indicative of a huge rally day. Volume was better then yesterday, but about on par with the last few days of last week. Advances/declines were 14 to 5 on the NYSE and 2 to 1 on the Nasdaq, with up/down volume better than 3 to 1 on the NYSE and right around that ratio on the Nasdaq. New highs/lows were 292/22 on the NYSE and 168/60 on the Nasdaq.

No real losers to speak of in the groups today, and some of the recent laggards got the biggest bumps: airlines (+3.4%), paper stocks (+2.5%), HMOs (+2.2%), brokers (+2.0%), transportation (+1.9%), internets (+1.5%), retailers (+1.5%), homebuilders (+1.4%), banks (+1.3%), gold and silver stocks (+1.2%) and biotechs (+1.2%).

Energy prices were lower, as crude oil dipped nearly a buck-and-a-half to $64.57/barrel, gasoline fell a few cents to $2.02/gallon and natural gas backed off to $7.45/mmBTU. The dollar index rallied up to 83.18, but that didn’t seem to hurt the precious metals much, and gold continued to hold firm at $664/ounce and silver moved up to $13.34/ounce.

BMB Note: A good day for a change - we haven’t seen a lot of good happen since that ol’ “Fed day” bump. But I’m not sure there’s anything to get too excited about just yet. Volume was again on the unconvincing side, and the ‘rally’ in the major indices pretty much stopped right at the resistance of those old highs / retracement levels. Maybe if the market can break through that area of resistance we can start taking it a little more seriously. Until then, there are still an awful lot of ugly looking charts out there. Things are quite a ways from looking real ‘healthy’ yet, although maybe today could be a start. Let’s see how things go from here.

The recession among US automakers shows no sign of easing - Ford, GM, Chrysler sales all lower, while Toyota and Nissan move higher.

Stocks got an extra little pop this morning when the news came out that pending home sales had increased 0.7% month-over-month, but the number is down 8.5% YOY.

Update: BMB reader Steve mentioned the jump in copper prices today. Here is the scoop from Bloomberg:

Copper prices in New York jumped 3 percent to the highest in four months on declining stockpiles and concerns supplies from Peru may be disrupted.

Inventories monitored by the London Metal Exchange fell 0.7 percent today after dropping last week to the lowest since late December. Workers at the Doe Run plant in Peru went on strike yesterday, demanding higher pay, the Associated Press reported.

“The drop in stockpiles was fairly substantial,” said Daniel Vaught, a commodity analyst at A.G. Edwards & Sons Inc. in St. Louis. “The strike down in Peru is offering some support.”

Taking advantage of strength in Asian and European markets, a drop in oil prices and a positive seasonal effect, the market is off to a good start today, with the major indices working their way back toward the top of their recent ranges. In the groups, the airlines are getting a big bounce on the pullback in oil, and the homebuilders, HMOs, retailers, internets and brokers are joining in.

Bonds, however, are slightly lower, nudging yields up. As we mentioned, energy prices are pulling back. The dollar is slightly higher, with gold flat and silver higher.

Deron Wagner says we have no choice but to adopt a “wait and see” approach with the market for now:

Yesterday’s action did little to change the technical picture of the broad market. Although the major indices posted modest gains, the S&P, Nasdaq, and Dow each remain trapped between support of their prior highs from March and resistance of their 50-day moving averages. It’s bullish that the retracement off the March highs has not been very steep. However, it’s bearish that the indices are consolidating below their 50-day moving averages. The S&P 500, for example, has retraced less than one-third of its gain from the March 14 low to the March 23 high, but the index has tried and failed to rally back above its 50-day MA in each of the past three sessions. This leaves us with no choice but to patiently remain in “wait and see” mode. Remember that the S&P, Nasdaq, and Dow are still in both intermediate and short-term downtrends.

Note: Finding Deron’s columns these days is like playing hide-and-seek. He has been gone from TradingMarkets probably since the beginning of the year, but the columns were being published at MoneyBlogs. Now, as of yesterday, the MoneyBlogs site hadn’t been updated with the new one. The link I have above to HardRightEdge is not an archived link, so it changes every day to the new column. I think Wagner’s stuff may still be showing up on TigerShark, so if I find the link there, I’ll change the one above to a permanent one. It looks like, at least for now, the columns are available on TigerShark. The above link has been changed.