Bears return, selling into the close

After strong gains on Mon, markets have been rethinking economic conditions. Dow started the day strong but retreated to near break even for most of the day. Selling in the final hour gave the Dow a 52 loss, advancers over decliners settled back to a more modest 15% advantage, & NAZ was down 6. The banking index, 2 weeks ago, briefly went over the 169 starting point for this year, but then fell back to sideways trading below that level. Today, banks led the market, this time down. Bank of America (BAC) began with a big 1 point advance on the news about selling stock, but fell back to a 25¢ gain. Most big name banks were lower.


S&P 500 FINANCIALS INDEX

Value 157.46

Change -3.93

% Change -2.4%

The Alerian MLP Index keeps charging forward, up 3.19 to 219 (briefly going over 220), but got caught up in late day selling. Oil hitting 6 month highs may be fueling this buying spree for MLPs.


Alerian MLP Index --- 2 weeks





The REIT index slipped 1. The picture for rents is bleak over the next year. Rents for office space are likely to drop 7.2% this year, rents for industrial space may be down 3.4% while retail properties should decline 2.1%. 2010 will probably have smaller declines, but off a low base. The high unemployment rate (8.9% in Apr) is at the root of this dreary forecast. Vacancy rates for all categories are expected to be well in double digits this year & next. Real estate in a decade is supposed to have 2 good years, 2 bad years & the others are middle kind of years. These 2 (really 3) years are brutal, however the industry should recover. The hard part is keeping the faith during rough times.

US Property Rents, Occupancies Forecast to Drop Through 2010 May


Dow Jones REIT Index --- 1 decade





Junk bond funds were weak after nice gains in recent days. The VIX fell more than 2 taking it into the 26s, but rallied to close at a modest gain, just above 29 as fears picked up. Oil had another big day, bringing it near the 62 technical area many are watching:

CLN09.NYM

..Crude Oil Jul 09

..61.82

.. 1.72 ......(2.9%)

General Motors (GM) has 3 bids on its Opel division in Germany. GM's clock keeps ticking!

General Motors Says Opel Unit Attracted Three Bids


Markets had a big rally on Mon, followed by 2 mushy days. Both days featured selling into the close, not a good sign.


Dow Jones Industrials --- 2 days