Final hour rally limits losses

Dow fell 64, decliners over advancers better than 3-1 & NAZ dropped 10. Buyers came back in the last hour, limiting losses. Banks were weak, no other way to describe it. The growing supply of new bank stock for sale is affecting markets. They have been market leaders, weakness is serious.

S&P 500 FINANCIALS INDEX

Value 160.88

Change -2.44

% Change -1.5%

The Alerian MLP Index was down 5½ for the day. Buyers returning in the last hour reduced losses for the index. They may have been hurt by weak oil prices. REITs & junk bond funds were soft while the VIX, volatility index, popped almost 2 to the 31s (remaining near lows for the year). The REITs are featured below in the chart. While other high yield sectors have done well, surpassing the Dow's gains, REITs continue to bump along in a trading range. I think this price pattern better describes what's happening with high yield securities. This is another way of saying MLPs & junk bond funds may have gotten ahead of themselves when looking down the road 6-9 months.


Dow Jones REIT Index --- 3 months




Treasury yields have calmed down in the last few days. Of course, that could be because the Federal Reserve is buying bonds which helps prices. Today the 10 year Treasury rose bringing the yield down 9 basis points to 3.55%. However, it remains high which impacts a housing industry that needs a lot of help.

10-Year Treasury Yld Index -- 3 months




Oil took a big tumble. The catalyst was the weekly report saying inventories rose almost 3M barrels, taking it 20% above prior year's levels. Now there's a feeling that the rapid increase in oil prices may have been too much, too fast.

CLN09.NYM

..Crude Oil Jul 09

..66.12

.. 2.43 ......(3.5%)

• Energy prices slump on surplus of oil in storage- AP

GM & Chrysler have to justify to congress about why they want to close weak dealers. This is the same gov that said they do not want to get involved running auto (bank, etc.) companies. Can you spell, "Duhh?" I think the idea is gov will not interfere until you step on its toes. This is what happens when the gov becomes a stockholder, especially the largest.

• GM, Chrysler defend slashing dealerships- AP

Dow continues below its staring level for 2009. That is becoming a more significant ceiling which it has to crack if it wants to get above 9K. Bulls will be happy with the rally in the last hour which cut losses in half

Dow Jones Industrials --- YTD