VerySmartInvesting: Markets hang on to some of early gains

Monday, November 2, 2009

Markets hang on to some of early gains

Dow had been up 100, pulled back & a late day rally brought the gain back to 76. Breadth slipped as decliners & advancers were about equal while NAZ was up 4. None of the Dow stocks managed a $1 gain. Banks started strong followed by selling. Late day buying took the Financial Index back into the black (green), away from the red, with a decent advance.

S&P 500 FINANCIALS INDEX

Value
190.61

Change
1.58

% Change
0.8%

High yields were mixed. The Alerian MLP Index was off ½ to the 253s, an acceptable retreat but still off 12 from its recent high. The REIT index firmed, up fractionally. Junk bond funds found buyers. After pulling back early in the day the VIX slipped .91, ending just under 30 (worriers are back in the market). The yield on the 10-year Treasury bond rose 3 basis points to 3.42%. Treasuries represent safety for investors with worries.

Alerian MLP Index --- 3 months

Dow Jones REIT Index --- 3 weeks

Gains in the AM were reduced, but oil & gold still had a nice day.

CLZ09.NYM

..Crude Oil Dec 09

..77.94

0.94
......(1.2%)

GCX09.CMX

..Gold Nov 09

..1,053.40

13.70
......(1.3%)

The price for gas at the pump reached a new yearly high on Fri but then backed off a fraction of a penny over the weekend. Gas prices climbed 23¢ in Oct, another headache a recovering economy would rather do without.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$2.691	$2.858	$2.960	$2.835	$2.250	$2.961
Yesterday Avg.	$2.693	$2.859	$2.962	$2.836	$2.233	$2.938
Week Ago Avg.	$2.671	$2.837	$2.938	$2.812	$2.192	$2.884
Month Ago Avg.	$2.461	$2.613	$2.706	$2.625	$1.995	$2.625
Year Ago Avg.	$2.436	$2.541	$2.617	$3.265	$2.274	$2.993

Source: AAA

The Federal Reserve will hold its policy meeting in the next 2 days. With the recovery being so fragile, it is virtually certain interest rates will be kept at the present low levels near zero. But they will have to start thinking about how & when to announce increases. Can you spell "debate?" On Fri the important monthly unemployment report will be issued & the main question is whether the rate will hit 10%.

Fed to hold rates at record-low, but cracks emerge- AP

Auto sales for Oct are coming (probably tomorrow) & they should be dreary with the cash for clunkers program finished. The only excitement from the FED meeting will be what they have to say about raising interest rates along with their assessment of the economic recovery. Markets remained on defense today despite the "gains.".

Dow Jones Industrials --- 3 weeks