Mild week in the stock market

After extreme volatility in the last few months, markets quieted down in Dec. The chart below shows Dow Jones has been near 8½K especially in the last semi-holiday week. The VIX, volatility index, has settled back to the low 40s, closing the week at 44. The Dow Jones REIT Index, after recovery from the lows under 100, has been near the 145 level all last week.


Dow Jones Industrials --- 2 weeks




High yield (junk) bonds, however, have finally found friends. The chart for the Lehman High Yield Bond ETF (JNK) took off in the last 7 trading days as did other junk bond funds. Now the yield on JNK has been reduced to "only" 14% with many traditional junk bond funds still sporting yields of 20-25%.


Lehman High Yield Bond ETF --- 2 weeks




MLPs have lost ground remaining near the sub 160 lows made in Q4. There were 2 major developments 2 weeks ago. Kinder Morgan (KMP) announced it raised $900M selling units (equity for them) and debt. They're the largest MLP, this move gives a positive signal that expansion projects, necessary for their projects, will keep going forward. But Constellation Energy Partners (CEP) gave a dismal outlook for next year & slashed the distribution to a 52¢ annualized rate. Even now, it still offers a 20+% yield! More (weaker) MLPs are selling in single digits, the market is looking for more cuts. This dark cloud is significant & may overhang MLPs for the next month at least.


Alerian MLP Index --- 2 weeks




Next week is expected to be another mild, semi holiday week. In the absence of major news announcements, there should not be a lot of price movement in markets. At least tax loss selling season has ended.