For every bullish sign, there’s a bearish one.

Bullish: All three major indices turned bullish in August, and each of
their ETFs is a technician’s buy. Bearish: They all did it on relatively low
volume, and September is typically the stock market’s cruelest month.

Bullish: Oil and gas prices are moderating. Bearish: The housing market
continues to deteriorate at an increasing rate, and the auto sector is sliding
into the tank.

Bullish: Long term interest rates and mortgage rates are falling as the
Fed stops raising interest rates. Bearish: The yield curve remains flat to
inverted which is typically a sign of a coming recession.

I love this kind of situation from an analytical perspective because it poses
the most difficult of forecasting challenges. On the other hand, I hate this
kind of situation from an investing perspective because laying down your money
is much more like gambling on a coin toss than speculating carefully in a poker
game.

Let’s see what the post-Labor Day market brings us. A nice run-up to December
would help more than a few money managers get back on the winning side so the
bias is bullish. Just be patient now, and don’t overreach.

This Week’s Market Movers

Rarely are weeks so uneventful in the economic report arena. My bet on the only
major market mover of the week is also the only major report. Productivity for
2006Q2 will be revised on Wednesday — with up being bullish and down bearish.
Productivity is important because increased productivity is the best check on
wage inflation. My own view is that the go-go days of 3+% annual productivity
growth are behind us for a while — and that’s hardly good news.

Portfolio Shorts and Longs

I did my Attila the Hun impression on my portfolio this week, first closing the
last of my
(
EPIXD |
Quote |
Chart |
News |
PowerRating) on some bad news from the FDA. I have no doubt at this
point that some insider trading occurred in the days prior to this bad news as
the stock softened quickly in advance of the news. Sure wish the Feds would
clamp down on this crap.

I also closed my stem cell ASTM position and cut my position in
(
STEM |
Quote |
Chart |
News |
PowerRating) in
half on some news that the latest “good news” about stem cells was likely
overstated. STEM remains technically strong.