Sideways stocks slip lower

After Dow's big rally on Mon, it has been going nowhere for the rest of the week. Today Dow lost 24, decliners over advancers almost 2-1 & NAZ was off 19 largely related to so-so earnings news & guidance from Cisco (CSCO). Banks sold off in the PM, but that's coming off an exceptional run in the last month (shown in the graph below).

S&P 500 FINANCIALS INDEX

Value 188.06

Change -1.31

% Change -0.7%

Value for S5FINL:IND




MLPs continue weak this week, but no great harm to the overall upward trend. The index dropped 4+ to the 241s. The Dow Jones REIT Index settled back (after an advance of 5 to 162 during the day) to down 1+. Junk bond funds were also lower, off their recent yearly highs. The VIX, volatility index, was up .77 in the 25s & has been fluctuating around 25 for almost a month. The yield on the 10-year Treasury bond ended up 2 basis points to 3.75%.

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD





Oil prices, after trading lower, ending down only 2 pennies, near 72, keeping close to its 2009 highs.

CLU09.NYM

..Crude Oil Sep 09

..71.95

.. 0.02 ......(0.0%)

High unemployment along with the depression for housing & autos are the big drags on the economy, &, in turn, the stock markets. Weekly layoffs are slowing, but that only tells half the story. What is more important now, with layoffs slowing, is rehiring. Rehiring in a major way will have to wait until next year, the critical factor to bring down unemployment. Tomorrow's dreaded unemployment number for Jul is forecasted to show a rise to 9.7% on its way to 10+%.

Housing really looks to be in bad shape. Weekly & monthly numbers about housing ticking up a couple of percent, don't really mean a lot. That business is selling roughly .4M units. In the "good old days" (not too long ago) that number was 1M higher, that's down 70%. The high inventory of unsold housing will be a severe drag on the industry for some time. Autos are in their version of a depression. The cash for clunkers is only a temporary fix, not made to solve fundamental problems. Worse for the US economy is that autos from foreign manufacturers with more fuel efficient cars are getting much of the business. In the mean time, the gov has to keep borrowing more & more. There are indications that foreigners (i.e. Chinese) are questioning the need for unlimited borrowing.

Markets have had an extraordinary run, especially in recent weeks. They need time to pause & figure out where to go next.

Dow Jones Industrials --- YTD