The large 2 day gains may be coming to an end. Dow is up 11, advancers are barely ahead of decliners while NAZ is getting clobbered, down 26. Financials are starting to return to the world of reality. For example, Bank of America (BAC) is up almost 9 (nearly 50%) in just 2+ days. OK, they were greatly oversold, but this is bringing up the concept of "overbought." Citigroup (C) reported a loss less than feared, it's up 10% to 20 (not bad for a 14 stock a couple of days ago). Merrill Lynch (MER) was down only 1% today after its loss reported yesterday. But techs are less forgiving. While IBM had good earnings, up 3+, Google (GOOG) & Microsoft (MSFT ) are being punished, down 8%, after reporting disappointing earnings. GOOG & MSFT are a big drag on NAZ. Back to financials, Freddie Mac (FRE) may have to raise $10B to boost capital. Freddie (FRE) & Fannie Mae (FNM) are each up again as credit fears have diminished greatly this week.
Oil may be trying to head north again, up 2 into the 131s. This may be a version of bargain hunting in this wild market. I keep thinking about those words last night, any slowdown in demand by the US will be picked up with Asian demand. Ugh!! The Alerian MLP index is down pennies into the 261s, barely reaching a new 52 week low.
Tough times for financials lie ahead with loan worries not to mention inflation, unemployment & a sputtering economy. Last night, Toshiba sent out its ad talking about back to school bargains. This is the beginning of the very important selling season.
During the recent run-up for financials, REITS have barely participated while junk bond funds have been ignored. Junk bonds typically yield over 12% (800+ basis points over the Treasury bond) with no mortgage exposure. Maybe somebody will catch on soon.
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