Monday, December 22, 2008

Stocks fall, a little

Dow was under pressure all day, down 200 at the low. But a rally in the last hour narrowed the loss to 59, decliners over advancers 3-1 & NAZ dropped 32. Buying in the last hour helped all averages.

S&P 500 FINANCIALS INDEX rebounded 2 off its low:

% Change

The Alerian MLP Index dropped 2½ to 172 (down almost 10 points in 3 days). The index hasn't been able to crack the 185 ceiling & now may be heading back down to test the 160s floor which has held a couple of times. These are low beta securities (easy to forget this year), however are down 50% from the peak reached last year. The Dow Jones REIT Index fell 5, again down 8% in the last 3 days. Its recent low (floor that held) is just under 100. However Lehman High Yield Bond ETF rallied 39¢, over 1%, as buyers are returning the high yield (junk) bond funds. Maybe tax loss selling (they are prime candidates) is largely over for them. The VIX, however, after falling in recent days, had been flattish, but finished up .37 to 44½.

The 2 year Treasury notes fell for a 2nd straight day, in stark contrast to recent strength. They sold $38B in notes at a record low annualized interest rate of 0.922%. But the forecasted rate was lower at 0.912%. The bid to coverage ratio was 2.13X versus 2.25X at recent auctions. A lot of paper has been bought but this market was a little softer. More paper from all maturities will be sold next year to finance the enormous increase in gov spending.

Treasury Two-Year Notes Decline as Sale Draws Higher Yield Than Forecast

Oil sank below the important 40 level on the same fears as stocks markets, global recession.

CLG09.NYM..Crude Oil Feb 09...39.94...Down 2.42

Another indecisive day. The semi-holiday week may continue this sideways pattern (with a downward bias).

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