Markets down, banks up

Stocks had a long weekend to think about Wells Fargo earnings. Traders are expecting a lot from bank earnings this week, but that feeling was not applied to the rest of the markets. Dow is down 106, decliners over advancers 3-2 & NAZ fell 20. But banks are strong. The S&P 500 FINANCIALS INDEX has a gain as it tries to get back to its starting point for 2009.

Value 144.32

Change 1.03

% Change 0.7%

After the best 5 week streak since the depression, stocks pulled back on lower earnings guidance from Chevron (CVX) & Boeing (BA), 2 Dow stocks. In addition, Genworth Financial (GNW), a $2 stock, was denied status as a bank which would have allowed it to tap into gov bailout money.

• Earnings & Summer Stressingat CNBC(Mon 9:31am)

The Alerian MLP Index is up 1, it's pushing on the 200 ceiling. However the REIT index fell 3. Oil dropped 3. Junk bond funds are inching up & VIX, the volatility index, is up 2 into the high 38s. It's near the low end of its trading range this year, but by historical standards (20 was considered high) it remains extremely high .


VIX ----- YTD





Until earnings start coming, not much to do but wait. Prominent banks like JP Morgan (JPM) & Citigroup (C) & sort of a bank General Electric (GE) should report in the next few days.

In the meantime I'd like to make a pitch for REITs for very brave investors. They have been hammered unmercifully in the last 6 months on fears about losing tenants. Annual reports have an optimistic tone as they approach very stormy seas. So far, they haven't been badly affected by the recession. They have been using this time to get their financial houses in order. Employees have been laid off & expenses cut where possible. But the big one is interest. They are renegotiating loans & lining up lines of credit to tide them thru the rough period which is coming. Housing REITs also have Fannie Mae helping to provide credit. Some REITs have astronomical yields. The very venturesome might want to learn more by reading annual reports. If the divs hold or aren't damaged badly, these investments can prove rewarding by locking up very high yields (which are generally partially tax free).


I still have the feeling Dow is very tired after its 25% gain from the low last month. This month it's just been hovering near 8K, can't decide whether to make it a new floor or keep it as the ceiling.


Dow Jones Industrials --- YTD