Dow surges past 9000

Markets shot out of the gate with strong gains in the first 2 hours & remained at those levels for the rest of the day. Dow closed up 188 at 9069, advancers over decliners almost 5-1 & NAZ gained 47. The only losers in the Dow were McDonald's (MCD) & Wal-Mart (WMT), 2 defensive stocks. Volume was not exceptional, on the floor it was a little over 1.4B.

Banks are at the highest level they've been at in the last 3 months (aside from reaching 175 on May 8).

S&P 500 FINANCIALS INDEX

Value 168.02

Change 4.84

% Change 3.0%

Value for S5FINL:IND





Below is a 2 year view of the Alerian MLP Index. 2 years ago, they had just come off their record high at 342. This year they've had a huge rally, already making 2009 the best year in a 14 year history. REITs are a similar high yield type, but have had a less successful recovery in recent months. Treasuries are in a different world, but largely the mirror of high yields. The yield on the 10 year Treasury is near where it was before the Lehman collapse. With a record $115B in 4 auctions coming next week, the yield may rise even beyond the 4% high of a couple of weeks ago. Risk is welcome, the VIX, volatility or fear index, has returned to pre-Lehman collapse levels.

Today, the MLP Index popped another 1.84 to 242.95 (pulling back in the last hour), the REIT index was up 5 to the high reaches of its 3 month sideways band & junk bond funds are back to Oct levels. VIX was flat at 23½. Treasuries sold off badly. The yield on the 10 year Treasury bond soared 16 basis points to 3.71% (up from under 3.30% earlier this month).

Alerian MLP Index --- 2 years




Dow Jones REIT Index --- 2 years




10-Year Treasury Yield Index - 2 years




VIX ---- 2 years




Commodities were not left behind. Oil has returned to its level at the start of Jul & may challenge its 73 high from last month.

CLU09.NYM

..Crude Oil Sep 09

..67.22 3

.. 1.82 ......(2.8%)

California lawmakers plan to vote today on the revised plan for a $26B budget reduction. The free spending state has proposed major cutbacks. Later on we'll find out if they have the backbone to make these cuts. This is the kind of news which stock markets like to hear.

California Lawmakers Set to Begin Deliberations on Deficit Plan


Dow has charged ahead an amazing 921 (11%) in just 9 trading days, one of its greatest rallies in history. This has been based on earnings that were better than "just plain awful." It looks like a California disaster has been avoided, although dealing with large cutbacks in their spending will be painful to many both in & out of state. We were reminded today that unemployment keeps muddling along at dreary levels. Caution is being thrown to the wind, accepting risk for future rewards is the driving force. Don't know how long that will last.

Dow Jones Industrials --- 2 years