Strong Dow faces earnings challenges this week

After a 6 week winning streak, markets are overdo for a rest. The last 2 weeks have shown the strain on the markets. During this time, the Dow has only managed to add 114 points. It still has more points to recover before getting back to 8776, starting point for 2009.


Dow Jones Industrials --- 6 months





MLPs have had a winning year, coming off their lows made late last year. In Apr, they have been attempting to change the status of 200 from a ceiling to a floor. Base building in the 190-200 range for much of this year may be paying off if the markets remain strong.


Alerian MLP Index --- 6 months





REITs have found new friends, largely in Apr. This is especially impressive after General Growth Properties (GGWPQ), 2nd largest mall & shopping center REIT, filed for bankruptcy last week. Double digits yields are attracting risk takers (as with MLPs & junk bonds) .


Dow Jones REIT Index --- 6 months




The rising stock market will be tested this week, when many prominent companies report earnings. Of the 52 companies in the S&P 500 issuing earnings reports so far, 2/3 beat expectations while the remainder did not. Dow has risen 24% from its March low, with 22 points coming in the first 4 weeks. More earnings disappointments this week could bring on profit selling, taking the Dow back below 8K.