Bear Mountain Bull

So much for that Friday bounce. That didn’t last long, did it?

Stocks got just a puff of air underneath them at the open, but fell back to earth quickly and began selling off, and that selling continued pretty much unabated the rest of the day. The indices all incurred fairly significant losses and went out right near the lows of the day, with the S&P threatening to break those November intra-day lows, and both the Dow and S&P 500 hitting their lowest closing levels since sometime in 1997. Ouch.

Bonds were mixed, near flat:
6-month: 0.48%    2-yr: 0.95%    5-yr: 1.83%    10-yr: 2.78%    30-yr: 3.53%.

Internals were pretty ugly. Volume backed off from Friday’s expiration levels — so today won’t go down as an ‘official’ distribution day, but it sure felt like one. Advances/declines were 1 to 6 on the NYSE and 4 to 15 on the Nasdaq, with up/down volume 1 to 4 on the NYSE and 1 to 6 on the Nasdaq. New lows fell off slightly, back below 800: highs/lows were 2/422 on the NYSE and 4/368 on the Nasdaq.

Nowhere to run, nowhere to hide. The banks and airlines stayed green, but barely. Leading the losers were the steel stock (-10.9%), HMOs (-9.9%), metals and mining (-9.1%), REITs (-7.8%), chemicals (-6.7%), paper (-6.3%), oil services (-6.0%), natgas stocks (-5.3%), commodities (-5.2%), insurance (-5.0%), computer hardware (-5.0%), brokers (-4.8%) and defense (-4.6%).

Energy prices were mixed. Crude oil lost about 50 cents to $38.44/barrel, and gasoline continued its slide, down to $1.04/gallon, but natural gas was higher, up a few cents to $4.09/mmBTU. The dollar bounced back up, moving the dollar index up all the way back up to 87.19. The precious metals took a bit of a pause, as gold was near flat at $994/ounce and silver added 8 cents to $14.49/ounce.

BMB Note:   We’ve been warning that this market was looking quite vulnerable to a selloff. And that’s what we’re getting.

There’s nothing complicated about this — the bear market is growing another set of teeth. All trends are pointing lower, and bear market rules remain in effect.

Forget about ‘buying the dip’ — there’s not much doubt that we’re still in ’sell the rally’ mode. I have a feeling we won’t see an end to this leg down until we see some sort of big ‘washout’ day again.

Protect your capital.