Bear Mountain Bull

Has anyone ever seen Obama without Joe Biden? They seem like they’re joined at the hip — I don’t ever remember seeing the Pres. and Vice P. together so often. Maybe it’s just still that honeymoon phase.

One other thing — since the Big O has been on television giving speeches every single day since he’s taken office, I’ve gotten the chance to see that as he gives the speech, he looks like he’s watching a tennis match. His head moves from teleprompter-right, to teleprompter-left, and back to teleprompter-right, back to teleprompter-left. It must be at least a little frustrating to be in the audience, since he never looks at you at all.

They say he’s a great orator. Well, maybe he sounds good — if you don’t have to watch him. With the sound off, all I get is the visual, and that’s what I see.

More comparisons of the current bear market to bears of the past, courtesy of The Big Picture:

Smarter than all, the market is.

Here’s Gary Kaltbaum:

Throughout this bear market, I have taken pains to teach you that it is not the news, it is not what the pundits say or think, it is not what the politicians say or think and it certainly not what the corporate chieftains say or think, it is what the market thinks. Why? The market is smarter than all of them…and very simply, my success in this most brutal of bear markets comes from simply reading the markets. Bear markets leave bread crumbs, leave footprints and have identifying marks. This one has been classic in every way. I continue to find it amazing that even after a 50% drop, many continue to fight the markets. How many bottoms have been called? (BOOYAH!) How many calls of cheap and value have been called? Too many. This is an object lesson of my #1 rule. WATCH THE MARKET! It has all the clues you need to tell you where to go.

For future reference, here are some rules to never ever forget.

In bear markets, the groups that lead the market down will go down farther than anyone could imagine. In 2000, it was TECH and INTERNET. In this bear market, it is HOUSING and FINANCIALS. Back in ‘07, I stated that FINANCIALS were going to be crushed, names like CITI and WAMU were going single digits with a few FINANCIALS going out of business. Recently, there has been many thrilled with the fact insiders were buying into the FINANCIALS. I laughed at this as these insiders were buying all the way down.

In bear markets, the market forces the hand and ignores all opinions. Bear Stearns? The market knew the problems and forced it out of business. Lehman? Forced out by the market that knew. AIG? Forced out by the market that knew. FNM and FRE? Forced out by the market that knew…and on and on. Now the news is about whether CITI and BAC will be nationalized. Many are predicting what will happen. I have news for all of them. As usual, the market is dictating policy. CITI is a goner in one form or another…and BAC is close. Never argue with the market. I can’t tell you how badly the value managers have done in the past year because of fighting the market. And on a final note on this rule, this administration had better wake up to the fact that markets matter and are smart. They can fool 3 Republicans into signing off on a laughable stimulus bill but notice how they cannot fool the markets.

Companies that lose money will be the biggest losers. Very simply, in bear markets, the curtain comes down on those stocks that do not have earnings…and it does not matter who they are, what their name is, what they sell…

Wall Street lingo will not change. No matter what the market does, Wall Street will tell you:

“Don’t worry! Everything is okay. It is a great company. It will come back”

“If you sell now, you will miss the upside!”

“If you miss the ten best days of the year, you will ruin your returns!”

“Cheap, value, cheap, value, cheap, value!”

“It’s the bottom. No…it is the bottom. For real, it is the bottom. The bottom bottom bottom bottom bottom bottom bottom bottom bottom bottom bottom bottom.”

“Capitulation…no, it’s capitulation. Capitulation capitulation capitulation capitulation capitulation capitulation.”

Wall street will continue to parade charlatan after charlatan in front of you. It will not matter how poorly they have done in the past, they will just continue to tell you what to do. Since I am in a good mood today, I will not mention names but one specific banking analyst was paraded out this week to tell you BAC was the financial buy of the century. This same person said the same thing about the stock in the 30s…as well as all the financials at much higher prices. Moral of this story: know who you are listening to.

The final ingredient of a bear market…and especially of a bear market like we are going through now is…and read carefully …WHEN A BEAR MARKET LIKE WHAT WE ARE SEEING ENDS, NO ONE WILL BE CALLING A BOTTOM. NO ONE WILL BELIEVE IT. NO ONE WILL WANT IN. Maybe, just maybe we are starting to get into that phase where everyone who has not sold, is now starting to give up as the news is so bad, the losses are so large and most importantly, the hope has all but been drained. As a market watcher, I am starting to see and feel the emotion of hopelessness in the stock market.

Shorter term, markets are oversold…but the big picture has not changed. Major indices are now stretched and extended to the downside so we have to believe a bounce could be imminent. But don’t get crazy. The overall condition remains a horror show with very little in the way of leadership. Bounces are bounces. It is the major trend that counts…and the major trend both here and abroad remains down. The DOW remains weakest and is in dire need of a few replacements as GM, C, and BAC may need to come out. I will give you a little bit of good news that bears watching. While the DOW is at new lows, there is only about one third of the new lows that there were back in November, the last time the DOW was here. This means fewer stocks are participating in the downside. This in itself is not a big deal until the market finds some accumulation. But it is these positive divergences that have to be followed as they do eventually telegraph a turn…but not yet.

About the only strong group here is GOLD…but that is now getting too noisy as everyone is now yapping about it after a move up. And I need to make note GOLD stocks continue to underperform the metal.

I don’t talk about the DOLLAR much but do want to make mention here that I think the DOLLAR is getting close to topping off its recent strong move.

Lastly, unfortunately, expect a ton of yapping out of Washington, a ton of more government interference and nauseating reactions both up and down in the stock market…that used to be free. It’s going to be another tough week to play as I expect some government moves on the financial industry starting with CITI…and most likely BAC.

But finding very little.

Schaeffer’s Monday Morning Outlook adds to what we’ve pointed out recently here at BMB — though the market indices are tickling their lows from a few months ago, sentiment indicators are nowhere near as negative as they were at that time. And that’s not a good thing:

When comparing the current sentiment landscape with the one from 3 months prior, it could be argued that the market is currently in worse shape, despite the SPX trading at similar levels. Why? Because there is less fear in the market than there was just 3 months ago. In late November 2008, we saw short-term pessimism creep into the market. This negativity was eventually unwound, as investors pushed the market higher in anticipation of positive changes from the incoming Obama administration. Now, some of the sentiment measures that we track are either on par with or not as pessimistic as those taken during the November bottom. Moreover, unlike late 2008, investors have little to look forward to in terms of anticipating positive news, other than comments late last week in which the White House sought to counter rumors of “bank nationalization.”

In fairness, the “low” VIX level could be attributed to retreating historical volatility in the SPX. For example, when the VIX hit 80.86 on Nov. 20, the 20-day historical volatility on the SPX was at 72.29. With the VIX coming into this week at 49.38, the 20-day historical volatility is at 32.47, indicating that those seeking portfolio protection are paying much higher prices relative to the SPX’s historical volatility. That being said, the small upside move in the VIX, as compared to the huge swift move lower in the market, is something to think about.

Whereas the VIX surged in November amid market weakness, a concern would be for those who sought portfolio protection via the purchase of VIX calls. To the extent that this hedge is not working out as anticipated due to a relatively muted advance in the VIX, investors who “thought” they had portfolio protection with the VIX calls are not being compensated. Therefore, they may be feeling more pain now than in the past. This could result in an increased incentive to reduce long exposure or ante up on more portfolio protection, thereby pressuring stocks.

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The past 2 market bottoms were marked by peaks in pessimism, as measured by the bull/bear percentage readings from the Investors Intelligence poll. We are now near the market lows that were reached in November 2008, but pessimism has not reached a corresponding peak. As such, we should remain cautious on the market. I would like to see market lows met with peaks in pessimism, and will certainly be keeping an eye on these readings in relation to market action.

Ahhh, yes. What would a morning be these days without even more meddling in the financial system by the government? Now they say they’ll help prop up even those banks that fail their yet-to-be-determined ’stress test’, and it sounds like you’re going to own an even larger chunk of Citi, whether you like it or not.

The futures are meekly higher as we enter the day’s trading. I’m not getting my hopes up.

As we all do, Barry wonders why we keep pouring more and more money into Citigroup:

On the side of more of the same, bad decision making, regulatory capture, worshiping sacred cows, and a hard-to-understand goal of saving the banks rather than the financial system, is the utterly absurd proposal to somehow spend 10X the market cap of Citigroup for a 40% stake in the apparently insolvent firm.

This is an accounting maneuver, a convertible preferred that greatly dilutes the common shares, and adds no new capital. Put on paper, it allows the leverage to look less egregious.

One can imagine an incredulous junior Treasury staffer — one who hasn’t been captured by the big banks, and is capable of basic arithmetic — saying the following:

“Explain this to me again: We put in many times the value of this company — we have already given them $45 billion dollars, and guaranteed almost $300 billion dollars worth of bad paper — and we get less than 50%? WTF? How the hell does THAT work? “

Its apparent that this sleight of hand doesn’t work to just about everyone except Tim Geithner (and a few others).

That’s the question one MarketWatch commenter on this story asked:

Secretary of State Hillary Clinton wrapped up a state visit to China Sunday by urging her hosts to continue to invest in U.S. Treasury instruments and underscoring the two countries’ interdependence, according to published reports.

“It would not be in China’s interest if we were unable to get our economy moving again,” Clinton said in an interview with a Chinese television journalist, according to reports.

“So by continuing to support American Treasury instruments, the Chinese are recognizing our interconnection. We are truly going to rise or fall together,” she said.

When they’re ready, they’ll let us down slowly — and we’ll have never seen it coming.

The latest edition of the new ‘blog style’ ChartWatchers Newsletter is available at StockCharts.com. This week’s topics include the value of technical analysis, markets at critical junctures, recent weakness in tech and the ultra ETFs.

Notes on the latest moves in the industry groups:

• About the only group still pointed up is the gold and silver stocks. The big question is whether or not they can hang on if the market continues to come under pressure, or if the high-flying metals themselves enter into a pullback.
• For the most part, the past couple of weeks have been pretty rough. Even some of the groups that had been holding up have taken a dive, like the health care areas and computer hardware.
• If you take a browse through the charts — set #1 — set #2 — set #3 — set #4 — you’ll see that a lot of groups have turned and headed south. That needs to change.
• For a more detailed breakdown of group movement over various time periods, try Prophet.net’s Industry Rankings page., or the Industry Group Tracker at WSJ Online.

John Mauldin spends the first part of his column this week talking about the problems in Eastern Europe, which are really the ‘next wave’ of the global financial crisis.

Here are just a few excerpts, but there’s really too much info there to grab the story in excerpts. I highly recommend you go read the whole thing to get an idea of what might be responsible for the ‘next leg down’:

Eastern Europe has borrowed an estimated $1.7 trillion, primarily from Western European banks. And much of Eastern Europe is already in a deep recession bordering on depression. A great deal of that $1.7 trillion is at risk, especially the portion that is in Swiss francs. It is a story that could easily be as big as the US subprime problem.

In Poland, as an example, 60% of mortgages are in Swiss francs. When times are good and currencies are stable, it is nice to have a low-interest Swiss mortgage. And as a requirement for joining the euro currency union, Poland has been required to keep its currency stable against the euro. This gave borrowers comfort that they could borrow at low interest in francs or euros, rather than at much higher local rates.

But in an echo of teaser-rate subprimes here in the US, there is a problem. Along came the synchronized global recession and large Polish current-account trade deficits, which were three times those of the US in terms of GDP, just to give us some perspective. Of course, if you are not a reserve currency this is going to bring some pressure to bear. And it did. The Polish zloty has basically dropped in half compared to the Swiss franc. That means if you are a mortgage holder, your house payment just doubled. That same story is repeated all over the Baltics and Eastern Europe.

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“The sums needed are beyond the limits of the IMF, which has already bailed out Hungary, Ukraine, Latvia, Belarus, Iceland, and Pakistan — and Turkey next — and is fast exhausting its own $200bn (€155bn) reserve. We are nearing the point where the IMF may have to print money for the world, using arcane powers to issue Special Drawing Rights. Its $16bn rescue of Ukraine has unravelled. The country — facing a 12% contraction in GDP after the collapse of steel prices — is hurtling towards default, leaving Unicredit, Raffeisen and ING in the lurch. Pakistan wants another $7.6bn. Latvia’s central bank governor has declared his economy “clinically dead” after it shrank 10.5% in the fourth quarter. Protesters have smashed the treasury and stormed parliament.

“‘This is much worse than the East Asia crisis in the 1990s,’ said Lars Christensen, at Danske Bank. ‘There are accidents waiting to happen across the region, but the EU institutions don’t have any framework for dealing with this. The day they decide not to save one of these one countries will be the trigger for a massive crisis with contagion spreading into the EU.’ Europe is already in deeper trouble than the ECB or EU leaders ever expected. Germany contracted at an annual rate of 8.4% in the fourth quarter. If Deutsche Bank is correct, the economy will have shrunk by nearly 9% before the end of this year. This is the sort of level that stokes popular revolt.

“The implications are obvious. Berlin is not going to rescue Ireland, Spain, Greece and Portugal as the collapse of their credit bubbles leads to rising defaults, or rescue Italy by accepting plans for EU “union bonds” should the debt markets take fright at the rocketing trajectory of Italy’s public debt (hitting 112pc of GDP next year, just revised up from 101pc — big change), or rescue Austria from its Habsburg adventurism. So we watch and wait as the lethal brush fires move closer. If one spark jumps across the eurozone line, we will have global systemic crisis within days. Are the firemen ready?”

A technical look at the current retest of the market lows from Carl Swenlin (click here for column with charts):

The long-awaited retest of the November lows has finally arrived. The S&P 500 is still slightly above that support, but the Dow has penetrated it. Even though every rally since November has been greeted with intense hope of a new advance that would end the bear market, the market gradually rolled over into a declining trend after the January top.

The November bottom was also a 9-Month Cycle bottom. In a bull market we would expect the market to rally for several months. The fact that the rally failed so quickly, is a very bearish sign.

The longer-term view shows that the 2002 bear market lows are also being tested again, so the market is at a very critical point. Many people who are still holding equities (at a 50% loss) are counting on being bailed out by a big rally. If prices fall significantly below long-term support, we are likely to see another selling stampede.

The long-term condition of the market is deeply oversold, as demonstrated by the Percent of Stocks Above Their 200-EMA. This indicator has never been at these low levels for such an extended period of time. Normally, a rally is in the cards as soon as these levels are reached, but the market is flat on its back, and it is hard to say when it will recover. It is important not to get too anxious to get back in. We are in a bear market, and negative outcomes are much more likely than positive ones.

Also, remember that oversold conditions in a bear market are extremely dangerous. If the current support zone fails, a market crash could quickly follow.

The medium-term condition of the market is neutral. Note that the ITBM and ITVM charts below are mid-range and falling. This is not a level from which we would expect a powerful rally to be launched.

Bottom Line: The market is in the midst of a retest of very important support. Since we are in a bear market, I expect that the support will fail.

A pretty lousy week for the market in general, not helping the charts of the SPDRs at all:

The numbers as the indices toy with new low ground:

Charts courtesy of StockCharts.com

Just one this week, it looks like:

Silver Falls Bank, Silverton, OR

Apparently, Rick Santelli touched a nerve at the White House with his rant yesterday:

The White House lashed back today at CNBC’S Rick Santelli, a CNBC personality who assailed President Obama’s housing rescue plan Thursday on the floor of the Chicago Mercantile Exchange.

“I’m not entirely sure where Mr. Santelli lives or in what house he lives,” said White House press secretary Robert Gibbs during a press briefing. “But the American people are struggling every day to meet their mortgage, stay in their job, pay their bills, to send their kids to school, and to hope that they don’t get sick or that somebody they care for gets sick and sends them into bankruptcy. I think we left a few months ago the — the adage that, if it was good for a derivatives trader, that it was good for Main Street. I think the verdict is in on that.”

“Mr Santelli doesn’t know what he’s. talking about,” Gibbs said a little later. He was responding to a question about public anger at the fact that some people who acted irresponsibly may benefit from the president’s plan, a question which mentioned “that cable rant on the floor of the exchange.”

Geez, these guys seem a little edgy. I guess BMB needs to be careful about what he says…

Update:  Santelli responds to the White House ripping…”an unprecedented White House assault”, in Larry Kudlow’s words.

In the Dow, we’ve still got ‘five under ten’. I guess the ‘good’ news is that these stocks are already so far down that even if they go to zero, they can’t drag the Dow down much farther by themselves.

The refiners, after being beaten up horribly last summer, had been bouncing smartly off their lows. Not no more:

Charts courtesy of StockCharts.com

Ahh. Nothing like a Friday with options expiration and some back-and-forth news to bounce things around.

The market was in a fairly nasty swoon much of the day — CNBC was blaming it on Senator Dodd and some bank nationalization comments. Well, mid-afternoon things turned around and bounced the indices all the way back up into the green — this time CNBC credited the White House with ‘calming fears’ of bank nationalization. But that move smacked of some quick short covering as things leaked lower again into the close.

What the truth is on the banks, I have no idea. All I know is that it was another pretty poor day in the market — it just wasn’t quite as bad as it could have been.

The indices finished mixed mostly red, with the big techs still holding the Nasdaq indices up:

Bonds were higher, pushing yields down:
6-month: 0.47%    2-yr: 0.93%    5-yr: 1.81%    10-yr: 2.78%    30-yr: 3.57%.

Internals were mostly negative with some bizarreness on the Nasdaq side, and volume was heavy, typical of an expiration day. Advances/declines were 1 to 3 on the NYSE and 3 to 7 on the Nasdaq, with up/down volume 1 to 3 on the NYSE but a positive 5 to 4 on the Nasdaq. New lows ramped up to over 1000, with new highs/lows at 3/590 on the NYSE and 7/429 on the Nasdaq.

Despite the afternoon pick-me-up[, only a couple of groups finished with decent gains, those being the REITs (+6.5%) and the gold/silver stocks (+3.7%). There were plenty of losers, led by the airlines (-3.9%), natgas stocks (-3.2%), HMOs (-3.0%), defense (-2.7%), oil stocks (-2.7%), utilities (-2.5%) and oil services (-2.4%). The financials had been very weak early, but were the main beneficiaries of the late ’save’.

Energy prices were lower. Crude oil closed out the March contract at $38.94/barrel, gasoline gave back a couple of cents to $1.07, and natural gas fell back to $4.01/mmBTU. The dollar was slammed, pushing the dollar index down nearly a full point, to 86.49. The precious metals were rolling, with gold sneaking back above the $1000 mark before pulling back to $993/ounce. Silver moved right back up after yesterday’s fall, to $14.41/ounce.

BMB Note:   Well, here we are, at the end of a pretty lousy week in the market. Hopefully you’ve been able to sidestep the damage.

We’ve watched as group after group has broken down, and now the indices are really starting to show the effects. The Dow has pretty convincingly taken out the November lows. The bulls are still clinging to the fact that the S&P and Nasdaq have yet to take out their lows, but today’s late bounce aside — if something doesn’t change soon, they too will follow. New lows today expanded to more than 1000 — the indices will not hold up well under those conditions.

The only safe haven — for the moment — is gold and silver. The metals are zooming, and the stocks are holding up well. But the metals are pretty extended, and are ripe for a correction. I would expect that the stocks would pull back as well when that occurs. ‘Normal’ pullbacks may provide good entries on the long side there.

Trader Dave Landry comments on the proposed trader tax, which was discussed previously here at BMB:

I’m getting a quite few requests to opine on HR 1068, a bill that would tax trading to pay for the bailout.

Stepping up on my soapbox:

I think this would crush the market. The market dropped 40% after they attempted to restrict shorting. Yes, I realize that you can’t blame this slide entirely on legislation but it does show what can happen when you mess with free markets. This created less liquidity and reduced covering rallies. I do strongly believe that more legislation would have a similar negative effect. In fact, it would be much worse.

ANYTHING that hinders free markets is harmful. Although I’m not a super active trader, I think if you weed out those who are, liquidity would dry up. And, that hurts EVERYONE. The market would then fall on its own weight. It’s a shame that the government is looking for a scapegoat AND someone to pay for all this.

If you agree with me then contact your legislators.

Here’s a link that does this for you. Thanks to those of you who have shared this with me.

http://www.rallycongress.com/no2tradertax/1536/tell-congres-to-block-trader-tax/

Anyway, that’s my opinion, I could be wrong.

He’s probably NOT wrong.

…of the week — failing to have a stop-loss point.

Maybe you’re investing because you believe that stocks are “on sale,” or perhaps it’s because you believe in the long-term prospects for recovery. Perhaps you hold stocks that have been good to you in the past, or which you’ve been in so long that you don’t want to go through the headache of calculating your capital gains.

Or you could be trading for a quick profit, or following the discipline of dollar-cost averaging.

Whatever the reason, if you haven’t come up with a stop-loss point — either a real trigger to get out of an investment if it falls too far or an emotional point where you would sell — you’re making the Stupid Investment of the Week.

Stupid Investment of the Week typically highlights conditions and characteristics that make a security less than ideal for average consumers, focusing on one example to showcase common pitfalls.

This week, however, the trait under review belongs to the investor and not the investment. Specifically it’s about people who buy or hold a stock in a trader’s market without having a concrete exit strategy.

“The hardest thing investors have to do is to determine when they can make money in this kind of market, and when they have to preserve capital, because those things are often at odds with each other,” said Richard Geist, head of the Institute on the Psychology of Investing.

In any kind of market, always keep in mind the preservation of your capital. Never lose big.

Another fairly ugly morning — the market weakness is starting to catch up with the indices. Dow has cracked through those November lows, and the NYSE Comp. is sagging by nearly 2 percent.

A/D lines pretty deep in the red again, new lows around the 700 mark so far. Today’s losers are being led by the airlines, financials, HMOs and oil stocks (COP being one of those on the new low list).

Larry McMillan’s weekly take on the market (click here to view column with charts):

Sometimes the most important indicator is the only one you need to know about. The most important indicator, of course, is price. And this is one of those times. The technical indicators are mixed, but once $SPX broke down below the support area at 805-810 this week, the bearish pressure has been mounting. It certainly appears that the November lows will be tested — and likely broken. The Dow Jones Industrials have already made new closing and intraday lows. At its current price of 779, $SPX is still well above its lows (closing low 752; intraday low 741).

The equity-only put-call ratios have inexplicably remained bullish throughout this week. That is, they continue to decline. Since these ratios are trend-following indicators, it is extremely unusual to see such action. Put activity peaked almost two weeks ago and hasn’t surged since, while call volume has remained relatively stable.

Market breadth has been poor this week, and breadth indicators are officially in deeply oversold territory. Thus, sharp but short-lived rallies are possible at any time. However, it should be noted that some of the worst declines in history have occurred while the market is oversold, so do not interpret an oversold reading as a buy signal.

Volatility indices ($VIX and $VXO) have been surprisingly docile this week. True, they started from a high level, but except for a brief foray above 50 by $VIX on Tuesday, $VIX has not risen as the market has fallen. What specifically is causing this is that the implied volatility of $SPX options has not risen ($VIX is computed from the prices of $SPX options). This is true for all the expiration months, but especially for the near-term March expiration. $VIX itself remains trapped in a trading range between 38 and 50; it has not broken out as $SPX has.

In summary, the major trend is down. Oversold conditions might produce sharp, but short-lived rallies towards resistance at 805-810 and 830-840, but until there is some capitulation among complacent volatility measures, we don’t foresee a bottom to this decline.

Everybody’s got their hand out. If it’s happening in Italy, it’ll probably happen here:

Italy’s fashion industry is calling for government help as the global crisis cuts into demand for designer clothes and accessories and the sector’s first credit crunch casualty goes into special administration.

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In a senate hearing this week, the head of Sistema Moda Italia, which represents the textile and clothing industry, warned of risks for the sector and called for government help.

“The Italian clothing and textile sector risks falling to pieces under the weight of the international economic crisis,” Michele Tronconi, was quoted by Italian media as saying.

“We don’t want someone to pedal for us. We know how to ride a bicycle well but at this time a push is necessary.”

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Italy’s National Chamber of Fashion, which has already said fashion businesses were shocked that their sector had not been taken into consideration, added weight to the call for aid on Wednesday.

Chairman Mario Boselli told reporters it was understandable aid was aimed at the auto and domestic appliances sectors but questioned furniture being helped over fashion.

Shocked!! Shocked, I tell you! And furniture over fashion? Who could even imagine such a thing?

Big breaks in the school stocks today — looks like their run is done.

Heads up from Gary K. on his radio show…

	One of the things that leads me to believe that, if it breaks, this market could go much lower is the current lack of fear. As the Dow reaches down and touches the November lows…
	…the VIX hasn’t even begun to spike upward yet, and even finished lower today.

Another Dow component breaks down today, and also weighs on the computer hardware stocks.

Disk drives and housing stocks break support…

…and the banking stocks sink to new lows.

Charts courtesy of StockCharts.com

Another day, and more leakage. A bump up at the open was short-lived, and things oozed lower over the course of the day again.

The indices hit their lows for the day with about a half-hour to go, and the Dow violated the November lows by just a couple of points. The Utilities managed to stay green:

Bonds fell, pushing yields higher:
6-month: 0.50%    2-yr: 0.98%    5-yr: 1.88%    10-yr: 2.85%    30-yr: 3.67%.

Internals were negative, with volume right around yesterday’s levels. Advances/declines were 3 to 7 on the NYSE and 1 to 2 on the Nasdaq, with up/down volume 1 to 3 on the NYSE and 1 to 4 on the Nasdaq. New lows are still up there, with new highs/lows at 2/299 on the NYSE and 6/269 on the Nasdaq.

Only a couple of groups in the green again today — oil services (+2.1%) and telecom (+1.1%). But there were plenty of big numbers on the red side of the page: banks (-6.8%), homebuilders (-5.8%), semiconductors (-5.2%), disk drives (-5.3%), computer hardware (-5.0%), gold/silver stocks (-4.6%), REITs (-4.5%), computer tech (-3.4%) and the brokers (-3.2%).

Energy prices were mixed. Crude oil bounced higher, gaining almost 5 bucks to $39.48/barrel, gasoline gained a couple of cents to $1.09, but natural gas slid again, down to $4.08/mmBTU. The dollar index fell for a change, dropping back to 87.46. The precious metals pulled back, with gold slipping to $974/ounce and silver falling back to $13.98/ounce.

BMB Note:   About the only good thing I can say about things at this point is that volume has been fairly light the last couple of days. The problem is, if volume returns, will it be on the buying side — or the selling side?

If the sellers come back in earnest, we could see that eruption we were talking about yesterday. And it won’t be pretty.

Tomorrow is options expiration — I’m not sure if that means anything or not.

Rick Santelli on Squawk Box — “Chicago Tea Party in July” (you gotta love the applause and boos from the guys on the floor around him):

Hat tip to Calculated Risk.

Update:   Looks like Rick got the attention of the White House.