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.

Ok, I borrowed that title from Bennet Sedacca’s 3-part series on the credit markets at Minyanville.

Anyway, the SEC is plotting their next attack on the short sellers as we speak, since their ‘emergency’ rule on the financials expires tonight. While it may not be done immediately, I think it’s pretty much guaranteed that there will be more rules against short selling put in place, and on a more ‘permanent’ basis. Along those lines, I would be extremely surprised if the ‘uptick rule’ isn’t brought back from the dead, this one possibly even more restrictive than the previous incarnation.

Tip from Toddo. And like he said, “Why didn’t they target the buyers at S&P 1500?”. But we all know the answer - markets are allowed to go as high as they want, but they’re not allowed to go down. We’ve got to keep this ‘game’ going at all costs…

They could just outlaw short selling altogether. That would work, wouldn’t it? Hey, they don’t allow short selling at all in China, and they’re only down 57% from the high…

Think about it. How would the market have rallied up off the July lows if there hadn’t been a boatload of short covering??

Something a little funny going on in the indices. While the Russell and Nasdaq have made moves up off the lows and gone back above the 50-day (red line):

…the NYSE Composite has gone virtually nowhere. A healthy market should have the indices much more in sync.

The railroads, which had been quite strong going into the market’s June highs and were trying to make another go of it here, suffered a mini-breakdown today:

Charts courtesy of StockCharts.com

A fairly lackluster day for stocks after poking to new relative highs yesterday, and today not even a little more weakness in oil prices seem to help.

The Naz-100 held up the best, while the Transports and Utilities took a tumble:

Treasuries were higher, and yields came back down:
6-month: 1.96%    2-yr: 2.42%    5-yr: 3.14%    10-yr: 3.90%    30-yr: 4.53%.

Internals moved back over the negative side of the fence, but volume pulled back from yesterday’s levels. Advances/declines were 1 to 2 on the NYSE and 8 to 11 on the Nasdaq, with up/down volume 3 to 8 on the NYSE and just below flat on the Nasdaq. And we went right back to more new lows than new highs, with highs/lows at 32/42 on the NYSE and 48/67 on the Nasdaq.

Those seemingly all-important financials stocks stumbled today, and led the losers’ list: banks (-6.4%), brokers (-5.4%), REITs (-2.7%), utilities (-2.2%), hospitals (-1.7%) and retail (-1.4%). Though commodities themselves remained weak, the metals stocks bounced up off their lows to lead the winners: gold and silver stocks (+3.1%) and metals and mining (+1.6%).

Energy prices continue to edge lower. Crude dropped another dollar to $113.01/barrel, gasoline dropped 3 cents to $2.84/gallon, and natural gas lost a penny to $8.34/mmBTU. The dollar advance finally slowed, pulling the dollar index back to 76.16. The precious metals lost ground overnight, but held there throughout the day today, with spot gold at $811/ounce and silver at $14.47/ounce.

BMB Note:   A fairly unimpressive performance for stocks, but nothing’s changed in the commodities as they continue to leak lower.

Not much happened today to change my view on things, but the weakness in the financials and the break in the railroad stocks are certainly worthy of attention.

BMB has some errands to run this afternoon, so the wrap will be a late one today. The market’s been pretty listless most of the day so far…

A pretty shaky start for stocks yesterday, picking up on yesterday’s afternoon weakness. Indices are mostly lower, A/D lines in the red as well. Leading the decline are the banks, brokers, REITs and utilities, while metals and mining, airlines, gold and silver stocks and natural gas stocks lead the winners.

One item of note can be found in the Transports. Even though oil prices aren’t moving much, the Dow Transports are lower by nearly 3 percent, and it looks like the big contributing factor is a breakdown in the railroad stocks. Certainly something to keep an eye on.

Treasuries are higher, yields a little lower. Energy prices are near flat. The dollar index is a bit higher, gold is slightly lower, and silver is a bit higher.

Paul Farrell says the US needs a ‘good depression’ to avoid having the next Great Depression.

Wall Street, Washington and Corporate America are a one-trick pony with one narrow-minded strategy: Economic g-r-o-w-t-h, bull markets, megabonuses. In good times they tout “free markets.” But when greed bombs, these big babies throw free market “principles” under the “Reagan Revolution” bus as their lobbyists go whining to Congress for megabillion taxpayer bailouts and access at the Fed casino’s discount window to siphon off more taxpayer money. What hypocritical wimps!

Wall Street and its co-conspirators are doing such a miserable job, America needs a new strategy: Stop all the short-term “hole-plugging.” Let go and let an old-fashioned “Good Depression” do the job that our happy-talking leaders refuse to do. Let it clean house and reawaken America to basic values. Otherwise a “Good Depression” will turn into a new “Great Depression.”

I don’t know if what we need is a ‘good depression’ or not, but I do agree that we need something to break the cycle of bubble-blowing we’ve been in for quite a few years now.