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.

For those looking for ideas as to what elements go into a trader’s system, I ran across this series of lessons from Dave Landry from back in the summer of ‘05.

I’ll leave it up to you to decide whether Dave’s system is right for you. Any trading system or ’style’ is very much a personal preference - but all successful systems must employ the same important principles, like stock selection, position size and money management.

I do have give to Dave a big note of thanks here, though, and say that he is one of those ‘good’ guys who puts forth a lot of effort trying to teach others how to be better and smarter traders, and he is very free with his time and his knowledge. You might check out some of the other video lessons available at his web site, and his ‘Market in a Minute’ webcast every morning.

From Reuters:

Morgan Stanley former star economist Andy Xie warned of an imminent stock market crash in China — but still hopes to raise money to invest in the country.

Xie, who attracted a wide following while he was at Morgan Stanley because of his often contrarian views on China’s economy and stock markets, also warned that the global boom in equities would be over by 2008 and that this would coincide with a worldwide recession.

The recession would start from the United States and spiral down into Asia where exporters would be hit, Xie, 46, told Reuters in a telephone interview.

“I think it’s going to be bust very soon,” Xie said, adding that a combination of excess liquidity, rising inflation and rich valuations would result in a global crash soon.

“People will be surprised. When the end comes, it’s going to be pretty bad,” Xie added.

***

Xie said the Chinese government understood the importance of limiting the bubble in the market, but was reluctant to implement more forceful measures, fearing a political backlash.

“College students are putting their tuition money into the market…stroke-stricken retirees get wheeled into branches of securities firms to trade,” Xie said in his SCMP article.

“People are not paying attention to anything else,” Xie told Reuters.

Looking at the 6-month charts, the Materials and Utilities are holding their longer-term uptrends…

…while a few of the other sectors have made sharper, more recent moves upward, and are getting a little stretched away from their moving averages.

The Staples have pulled back slightly, and the Financials and Discretionary stocks still lag the rest of the market.

The numbers as the major indices remain overbought:

Charts courtesy of StockCharts.com