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.

Martin Weiss checks in from Brazil with the story on flex-fuel vehicles and the sugar cane that powers them.

Congressman Ron Paul’s essay is actually entitled “The Federal Reserve Monopoly over Money”, but when it comes to a discussion of fiat currencies, I think the term “Monopoly Money” is appropriate:

The greatest threat facing America today is not terrorism, or foreign economic competition, or illegal immigration. The greatest threat facing America today is the disastrous fiscal policies of our own government, marked by shameless deficit spending and Federal Reserve currency devaluation. It is this one-two punch– Congress spending more than it can tax or borrow, and the Fed printing money to make up the difference– that threatens to impoverish us by further destroying the value of our dollars.

The financial press sometimes criticizes Federal Reserve policy, but the validity of the fiat system itself is never challenged. Both political parties want the Fed to print more money, either to support social spending or military adventurism. Politicians want the printing presses to run faster and create more credit, so that the economy will be healed like magic- or so they believe.

Fiat dollars allow us to live beyond our means, but only for so long. History shows that when the destruction of monetary value becomes rampant, nearly everyone suffers and the economic and political structure becomes unstable. Spendthrift politicians may love a system that generates more and more money for their special interest projects, but the rest of us have good reason to be concerned about our monetary system and the future value of our dollars.

Just go read the whole thing. It’s short.

	The NYSE composite has bested its late February highs…
	…but the Dow Industrials are still a couple hundred points shy.
	Natural gas stocks are burnin’ it up…
	…but the disk drives are stinkin’ it up.
	China watch — Shanghai composite index up again overnight. That’s 16 of the last 17, and 23 of the last 26. I think I’d be a little nervous if I were invested over there. The index is already about 10% above where it was before the Feb. 27th tumble.

Charts courtesy of StockCharts.com

Dullsvillle II. Some days in the market are amazing in their movement, and others are amazing in their lack of movement. Lately, we’ve been getting quite a few of the latter.

Oh sure, the Dow put in its eighth straight up day (today by less than 5 points) - first time since March of ‘03 (see, CNBC is good for stats like that, if nothing else). But boy, the last few days haven’t been anything to be impressed by. Today things moved up a little early, pulled back, and then it was a lazy sideways drift into the close. Zzzzzzzz.

Bonds got back a bit of lost ground, and yields moved lower:
6-month: 5.09%    2-yr: 4.70%    5-yr: 4.63%    10-yr: 4.72%   30-yr: 4.91%.

Internals maintained their positive bias, and volume was a little better than the last couple of days - but NYSE volume still came in below even last Wednesday’s mark. Advances/declines were 3 to 2 on both exchanges, with up/down volume 5 to 4 on each. New highs/lows were 266/21 on the NYSE and 138/50 on the Nasdaq.

Energy stocks led the way today: oil services (+2.0%), natural gas stocks (+1.5%) and natural resources (+1.2%). Disk drives (-1.3%) led the down side, and chemicals slipped (-1.2%) as Dow squelched the buyout rumors - for now.

Energy prices were higher. Crude oil recovered some of yesterday’s losses, back up to $61.83/barrel. Gasoline added three cents to $2.13/gallon, and natural gas posted a big gain, to $7.90/mmBTU. The dollar weakness continues, with the dollar index moving back down to 82.66. Gold gained 6 bucks to $677/ounce and silver added a big 14 cents to $13.84/ounce.

BMB Note: They say “never sell a dull market”. Well, this one is so dull right now, that I’m not very interested in buying it either. If this is what we’ve got for ‘follow-through’ to last week’s holiday rally, they can keep it.

The energies still did well today, and metals are holding up nicely. Investors long those areas are doing just fine, but it seems like risk might be picking up a bit as they get a little stretched - after all, they’re pretty much the only areas seeing good money flows right now. So stay on your toes just in case the tide turns quickly. On the flip side, some techs still look disturbingly weak, namely disk drives and computer hardware. And not a lot of strength in the financials yet either.

As for the rest of the market, it’s going to need some sort of catalyst to get it going, in one direction or the other. I can trade up, and I can trade down - but this crawling up isn’t much fun. Finding good trades right now is like looking for that needle in a haystack - and requires some good luck as well.

Maybe earnings, tomorrow’s Fed minutes or Friday’s PPI will get things moving again. We can only hope that something starts happening soon. Just stop this drifting. Turn the darned engine on, and let’s get moving. Forward or backward, I don’t care. Just move.

Somebody please give the market a kick - I think it’s stuck again.

The major indices are holding on to modest gains, and A/D lines are holding in the green. In the groups, it’s pretty much the same story - commodity related areas are the ones showing the strength: gold stocks, paper stocks, oil services, natural gas stocks and natural resources. On the down side, disk drives lead a short list of losers.

Bonds are bouncing back a bit from yesterday’s drubbing, holding yields down. Energy prices are higher, with crude oil back up a bit after yesterday’s losses, and natural gas having a strong day. The dollar is weaker, and gold and silver are higher.