Early markets gains trimmed by late day selling

Stocks rose out of the gate & continued higher all day, as the Dow was pushing to break 9600. It broke thru but couldn't hold the gains even though it extended its winning streak to 6 days. By day's end, Dow was up 30 to another 2009 high, advancers over decliners 3-2 & NAZ gained 6. All major indices reached new highs for 2009. The Financial Index eked out a new 2009 high. Citigroup (C) after its recent tear fell back 7¢ to 4.75, still a nice run from $1 in Mar.

S&P 500 FINANCIALS INDEX

Value 196.17

Change 2.17

% Change 1.1%

S5FINL:IND




Citigroup --- 6 months






MlPs have been sliding this month. Today the index dropped 2½ to 240 (where it was a month ago on its way up) while the REIT index continued climbing, up 1.83. A 3rd chart is added, comparing the Alerian MLP index with the Dow Jones REIT index (the straight line). For 5 months their moves tracked each other pretty well. But this month, REITs have been moving higher while MLPs have been retrenching, failing to reach new highs. Junk bond funds were flattish today. The VIX, volatility index, was down a fraction in the 24s where it has been for 2 months. In this up market, Treasuries also gained. The yield on the 10-year Treasury fell another 4 basis points to 3.45%.


Alerian MLP index --- YTD




Dow Jones REIT Index --- 6 months




MLPs vs REITs --- 6 months





Oil bumped against $75 resistance (another high for 2009) but failed to break thru. Sellers came in driving down oil prices more than 2. Bulls are in charge of this market but will need a breather before taking prices higher.

CLV09.NYM

..Crude Oil Oct 09

..71.86

.. 2.51 ......(3.4%)

• Oil falls 3 percent after hitting 10-month high- Reuters

Consumer sentiment & expectations rose more than expected in Aug. The Conference Board Consumer Confidence index rose to 54.1 from an upwardly revised 47.4 in Jul. However the index is well below 90, the minimum level associated with a healthy economy. Consumer sentiment has recovered since hitting a record-low of 25.3 in Feb. Consumers' expectations for the economy over the next 6 months rose to 73.5 from 63.4 in Jul, the highest level in almost 2 years (when the recession began). The housing sector also showed signs of life as a national measure of home prices posted its first quarterly increase in 3 years. The S&P/Case-Shiller home-price index increased 2.9% in Q2 from Q1, the first increase since 2006 & the biggest in almost 4 years.

•U.S. Consumer Confidence, Home Prices Exceed Forecasts in Sign of Recovery


There is an abundance of evidence that the economy is repairing, even before today's reports. But the stock markets look like they are using these reports to forecast a substantial recovery for next year. The last time Dow was at its present level was Oct 6. A very overbought market may need time to pause & rest.

Dow Jones Industrials --- 6 months