Meager energy, not Lehman, rally

Dow finally rallied, but not on Lehman announcements, instead on a technical rally for energy group. Financials did not lead or even participate in the gains. Dow rose 37 (earlier gains of 100+ points were lost in the last hour), advancers were about 20% ahead of decliners & NAZ was up 19. NYSE volume was basically medium, almost 1.6B. Financials were lower as Lehman news (or confusion) was not taken well:

S&P 500 FINANCIALS INDEX

Value ... 281.39 __Change ..(2.02) % __Change...(0.7%)

Lehman (LEH) was down 59¢ to 7.20 on confusion about their complicated restructuring plans. This confusion overhanging the markets (especially financials) will keep away buyers for some time:

• Lehman Tries to Soothe Wall Street With Asset Sale- AP

Not helping the financial index, the cost of protecting against bank credit default has risen after all the recent, very ugly news. Washington Mutual (WM), the largest S&L, is now a $2 stock:

•Washington Mutual, Lehman Lead Increase in Bank Bond Risk to 6-Month High

On the plus side, gains were led by energy despite lower oil prices. Chevron (CVX) & Exxon-Mobil (XOM), Dow stocks, were each up 3% in a technical or overdo rally (from being oversold). As shown in the Yahoo financial badge on the right, The Alerian MLP index was down pennies at its roughly 3 year low. Oil was down pennies in the 102s. Oil, as with all commodities, is clearly on defense, trying to hold off the wave of recent selling. The concept of Demand Destruction, talked about by foreign analysts, is taking control of these markets. Also the stronger dollar is making matters worse for commodity bulls. The Euro has fallen to $1.40, down about 20¢, in the last few weeks.

In my focus on MLPs, I have been ignoring REITs & junk bond funds which I also like. REITs had a minor rally in recent days, but very little & off very depressed levels. Junk bonds continue in the dumps with yields over 12%, more than triple those available on Treasury bonds. Historically, this is one of the widest spreads ever seen. While REITs have mortgage exposure, they're the borrowers not lenders. Their yields are 4-6% for some leaders & higher (even into double digits) for other quality companies. Both groups deserve more respect as these high yields will make taking the sideways (if not lower) markets easier to take.