Bear Mountain Bull

Ok, now we’ve got yet another telegraphed rally out of the way, this one being the ‘mark-to-market’ Mardi Gras.

The indices gapped up strongly and moved into mid-morning highs, pulled back, retested those highs in the mid-aftenoon, then slipped back on another questionable close, but hung onto strong gains for the day.

The Transports and the Russell ruled the day:

As stocks rallied, Treasuries fell, pushing yields higher:
6-month: 0.39%    2-yr: 0.87%    5-yr: 1.73%    10-yr: 2.74%    30-yr: 3.56%.

Internals were positive, and volume picked up. Advances/declines were 7 to 1 on the NYSE and 15 to 4 on the Nasdaq, with up/down volume better than 9 to 1 on the NYSE and 6 to 1 on the Nasdaq. And finally, a day with more new highs than lows: new highs/lows were 12/2 on the NYSE and 28/7 on the Nasdaq.

Nearly all of the groups were green, with the sagging airlines (+8.6%) flying high today, followed by the steel stocks (+8.2%), transportation (+7.8%), metals and mining (+7.2%), REITs (+7.1%), paper (+6.2%), networking (+6.0%), oil services (+5.6%), homebuilders (+5.2%) and HMOs (+4.5%). The gold and silver stocks (-4.4%) took a dive, the worst on a short list of losers.

Energy prices were higher. Crude oil bounced back up to $52.64/barrel, gasoline to $1.36/gallon, and natural gas to $3.76/mmBTU. The dollar index took a big dive, down to 84.42. Precious metals failed to benefit from the dollar dive, however, as gold fell to $903/ounce and silver to $12.93/ounce.

BMB Note:   The bear market ‘rocket’ rally rolls on. And you know, I’d feel a lot, lot better about it if it wasn’t continually pushed and prodded by news out of our government nearly every single day. Now the accounting rules have been changed to protect the guilty, and the G20 has offered up a few hymns and a prayer. Next, it will be the restoration of the uptick rule — and heaven knows what else — to further punish the innocent. But, there’s not much I can do about that, even though my ‘disgust meter’ is pretty much pegged at the high end (and has been for some time now).

Enjoy it while it lasts. I have a feeling that, like all the rest, this one will eventually end badly. At the very least, I expect the March lows to be retested down the road. Entering new long positions at this point seems risky, as the market remains pretty frothy and overbought. We’ll see if that situation relaxes, but I have a feeling that this rocket ship may just burn itself out instead. Nonetheless, continue to concentrate your trading efforts on the long side, because you don’t want to stand in the way of this freight train until some distribution shows up.

Am I the only one left that hasn’t yet called “the bottom”? And just to put things in perspective, we’re at Dow 8,000, and everyone is ecstatic. Market psychology is a funny thing. Sure, we were at 6500 a month ago — but we were up at 9000 three months ago. The Dow is still down about 10% on the year — that’s after this better-than 23% move up in less than a month.

Monthly jobs report out tomorrow morning. Not that it matters — right now, all news is good news, even if it’s bad news. Did you see those auto sales numbers yesterday?? All of them were down in the 30s and 40s, but that was good news because it wasn’t as bad as expected. Yeesh.