Tuesday, July 21, 2009

Dow higher for 7 consecutive days

Dow advanced to another 2009 high on the gains of 18. Dow rose 67, going over 8.9K, advancers were slightly ahead of decliners & NAZ was up 6. The 1+ gainers in the Dow were: Caterpillar (CAT), Merck (MRK) & Exxon Mobil (XOM) while Coca Cola (KO) & United Tech (UTX) were the big losers. Volume was on the light side.

Banks, while off today, are still in the higher end of their trading range for the last 3 months. Below are charts for 3 major banks over the last 3 months.

S&P 500 FINANCIALS INDEX

Value
163.42
Change
-1.31
% Change
-0.8%


Value for S5FINL:IND




Bank of America --- 3 months




JPMorgan --- 3 months




Citigroup --- 3 months





Profit taking finally hit the MLPs, down 1 to 240. They benefit from the pursuit of risk for high yields. Meanwhile REITs can't break out of trench war, going nowhere. Junk bonds are finding new friends, as the Barclay High Yield Bond ETF reached another 2009 high, with a yield falling to 13½%. The VIX, volatility index, went just below 24, another 2009 low. Treasuries found buyers, the 10 year Treasury bond rose more than 1 point ($10.55 per $1000 bond) reducing the yield 11 basis points to 3.48%. This yield is at the low end of the trading range for last 2 months.

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




10-Year Treasury Index -- 2 months




Oil has been working its way higher for the last 6 trading days.

CLQ09.NYM..Crude Oil Aug 09..64.72 ..Up 0.74
......(1.2%)



California worked out a tentative deal to close the whopping $26B gap in its budget. California would slash spending for schools, public works & welfare programs in the longest recession since the 1930s. The agreement will also siphon money from municipalities, force companies & individuals to pay income taxes sooner, making it more difficult to receive state aid. They expect to vote on the new budget by Thurs. However, cities & counties said they would sue to block any attempt to siphon local gas & redevelopment agencies’ monies. Consider this proposal a "work in progress."

California Budget Deal Reached By Legislators, Schwarzenegger


Investors pursue risk, pushing stocks higher & higher. Thoughts of the recession ending followed by a "V" shape recovery are bringing out buyers. Stocks are in overbought territory, a day of reckoning is approaching.

Dow Jones Industrials --- YTF

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