Bear Mountain Bull

Stocks failed to follow-through on the holiday rally during the first ‘real’ trading session of the year, but didn’t suffer a great deal of damage either. The indices bouncing up off their lows during the final hour to finish with slight losses, but advance/decline lines remained green:

As we suspected they would sooner rather than later, those long-term Treasuries are showing some cracks, and yields are moving higher on that end of the curve:
6-month: 0.28%    2-yr: 0.77%    5-yr: 1.68%    10-yr: 2.46%    30-yr: 3.01%.

Internals remained positive, with volume still on the light side, even though the holiday is over. Advances/declines were 2 to 1 on the NYSE and 10 to 9 on the Nasdaq, with up/down volume 5 to 4 on the NYSE and just above flat on the Nasdaq. New highs haven’t grown much, but new lows have been shrinking — highs/lows were 10/2 on the NYSE and 14/9 on the Nasdaq.

The groups fell on both sides of the flat line. Leading the winners were metals and mining (+4.0%), homebuilders (+3.8%), oil services (+3.7%) , natural gas stocks (+3.4%), retailers (+1.3%), defense (+1.2%) and computer hardware (+1.1%), while gold/silver stocks (-3.8%), banks (-3.7%) paper (-2.6%), transportation (-2.4%), REITs (-2.3%), drugs (-1.4%), hospitals (-1.1%) and health care products (-1.1%) went to the back of the line.

Energy prices were higher. Crude oil was up a couple of bucks to $48.81/barrel, gasoline zoomed to $1.18/gallon, and natural gas added a dime to $6.07/mmBTU. The dollar index held most of an overnight boost, moving up to 82.63. Gold dropped 20 bucks to $856/ounce and silver fell to $11.18/ounce.

BMB Note:   Well, we know that stocks can’t go up every single day, and they’d been getting a little bit ahead of themselves lately, so a little pullback or ‘backing and filling’ here is not only expected, it’s probably necessary if things are to move higher without burning out too quickly. And today’s action wasn’t as bad as the indices like the Dow might make it look – the NYSE advance/decline line finished easily on the green side of the fence.

We’ll be watching to see if this pullback provides any interesting buying opportunities for a trade or two.