Stocks remain undecided

After a soggy start which took the Dow below 8000, buyers returned in the PM. Banks led the rally. However, the 2 oils, Chevron (CVX) & Exxon Mobil (XOM), were down about 1½ each along with a similar loss at Boeing (BA). Dow broke into the black at day's end but couldn't hold those gains into the close. Dow fell 25, advancers over decliners 3-2 & NAZ was about even.

Banks had another excellent day anticipating great earnings reports. Earnings & assets (bad loans) should be the major focus, but the markets are only looking at earnings. Banks are able to lend with a cost of funds near zero. If they can't earn money now, they never will be able to. But bad loans aren't going away anytime soon. The index has had a major climb from its 81 low in early Mar. To give a flavor of how much banks have come back, Bank of America (BAC) now has a handle of 11 (with a 4¢ div).


S&P 500 FINANCIALS INDEX

Value 150.18

Change 6.89

% Change 4.8%

Despite lower oil prices on a gloomy outlook for oil, the Alerian MLP Index rose 2.72 to 201+, bringing it above the 190-200 trading range where it has spent much of this year. Buyers have been coming back to MLPs in recent days:


Alerian MLP Index --- 2 weeks




Thanks to buying in the PM, the Dow Jones REIT index broke into the black, up almost 1. Junk bond funds had a mixed day & VIX rose 1.

Oil had a very bad day. International Energy Agency (IEA) said demand in 2009 could be the lowest in 5 years with factories shutting & car sales tumbling in a deepening global recession. They are forecasting oil demand in 2009 could fall 2.4M barrels to 83.4M barrels (equivalent to Iraq's production).

CLK09.NYM

..Crude Oil May 09

..49.95

.. 2.29 ......(4.4%)

Crude Oil Falls After IEA Cuts Demand Forecast to Five-Year Low


Lost in the news here, Thailand is going thru a major political upheaval. Keep an eye on that story, Asian markets are.

Markets have been trading in sideways for much of the last 2 weeks. This PM Dow managed to close above 8K, at 8057. It looks like banks will give improved earnings & that could bring more buyers back to the markets (boosting the Dow). But all is not well. Banks still have a ton of bad loans to deal with. Quietly, General Motors (GM), still a Dow stock, has been sinking on growing worries about the ticking time bomb they are sitting on. The gov of Mich hinted at lunch that GM would have an "electric car" announcement tomorrow. They'll need more than that.


Dow Jones Industrials --- 2 weeks




General Motors --- 2 weeks