Indecisive markets are looking for direction

Dow, after rising 1000 in 2 weeks, has been trading sideways (with a downward bias). Dow fell 26, decliners over advancers almost 2-1 & NAZ was down 7. After topping 9K 4 days ago, Dow is literally even over that period. Banks have also been trading sideways, remaining near the high levels of the 3 month trading range.


S&P 500 FINANCIALS INDEX

Value 168.88

Change -0.43

% Change -0.3%

MLPs recovered a bit in the PM, but still fell a very big 5.77 to the 243s. REITs slipped & junk bond funds were a little higher, reaching their best levels of 2009. The VIX, volatility or fear index, rose .60 to the 25.61 & up from the 23s last week.

Alerian MLP Index --- YTD




VIX ---- 2 months





Oil plunged over $4, one of its biggest losses this year. Driving in the US is down in response to higher prices & lower levels of consumer confidence. Inventories of crude oil & gasoline have been rising, not what the bulls like to see. More Q2 reports are coming from the major oil companies this week which should give their thoughts about future demand for oil in the recession.

• Energy prices slide as unused crude piles up- AP

CLU09.NYM

..Crude Oil Sep 09

..62.79

.. 4.44 ......(6.6%)

$39B in 5-year notes yielded 2.689% at auction today, above the 2.635% forecasted. Yesterday investors demanded higher yields on $42B of 2-year notes. The investor class including foreign central banks share declined at each auction from last month. Bond buyers are pulling back from the market signaling a shift in central bank buying.

The yield on existing 5-year notes rose 6 basis points to 2.66%. The 10-year note yield fell 3 basis points to 3.66% after earlier rising as much as 5 basis points. Indirect bidders (including foreign central banks) bought 36.7% of the 5-year notes, down from 62.8% at the Jun sale (the highest since Dec 2004). The bid-to-cover ratio was only 1.92X at today's auction. Demand for the notes is strong, but supply may be growing even stronger. The concept of saturation is becoming a worry to dealers. China has been a leading buyer of US debt & could be losing some enthusiasm for buying even more.

•Treasuries Fall as $39 Billion Five-Year Sale Yields Higher Than Expected


The one week chart for the Dow is about as flat as it has ever been coming after an enormous 2 week rally. Markets are looking for direction. Chinese have been meeting with US officials this week, so far no significant announcements. The sharp sell-off in the Chinese stocks markets may be dimming their interest in US equities.

Dow Jones Industrials --- 1 week