Friday, December 5, 2008

Strong rally day

This was another one of those "go figga" kind of days. Dow started the day on a stream of negative news by dropping 250 (as shown on the Bigcharts widgit on the right). Then buyers arrived around lunchtime, boosting the Dow (& all markets) over 500 from the lows. Dow ended up 261, advancers over decliners 2-1 & NAZ was up 64 while the 10 year Treasury yield climbed 9 basis points to 2.66% (on lower bond prices). In the Dow, Wal-Mart (WMT) led the gainers. Financials & defensive stocks, Johnson & Johnson (JNJ) & Kraft (KFT), also had nice gains.

News stories on the unemployment & problem mortgages were discounted as buyers threw caution to the wind. S&P 500 FINANCIALS INDEX rose nicely off their depressed levels (but not too far from the 125 lows recorded a couple of weeks ago):

% Change

The Alerian MLP Index recovered from down 8 to essentially even at 168. The Dow Jones REIT Index was up all day, ending with a very strong 13 point gain to 135. SPDR Lehman High Yield Bond ETF (JNK), an ETF for high yield bonds, recovered a few pennies from the lows but couldn't hold the gains, down 17¢.

Given all that's going on, hard to believe lower price oil made a difference to the stock markets:

CLF09.NYM...Crude Oil Jan 09 ....41.31 ..Down 2.36

The way markets keep shrugging off bad news is impressive, Dow has managed to hold the 8K line well. Some form of auto bailout is coming, enough to keep them alive at least for a year or 2. My best guess is the markets were smelling an auto bailout package during the day even though the autos didn't directly benefit from the rally.

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