Divergent markets - commodities up, new home sales down

Stocks gave mixed signals, a sign that worries. Dow was about even (really up all of 1), advancers ahead of decliners 5-2 & NAZ gained 16 for another excellent day. All 30 in the Dow were little changed. The strength of techs & high yields while others are muddling along is a source of concern. Speaking of muddling along banks continue on their sideways track, the Financial Index just can't break above 190 in a meaningful way.


S&P 500 FINANCIALS INDEX

Value 194.10

Change -0.69

% Change -0.4%

The Alerian MLP Index is hotter than you know what. The index rose 2½ to 285 (up 109 YTD). Now REITs are participating in the rally, the Dow Jones REIT Index shot up 2 to 185, another 2009 high. Junk bond funds advanced again & the VIX continued with only a modest gain to 19¾ (an 18 month low). The 10 year Treasury bond rallied in the AM but lost the gains in the PM. The yield on the 10-year Treasury ended flat at 3.75%, an important worry for the housing industry.


Alerian MLP Index --- 3 months



Dow Jones REIT Index --- 3 months





The dollar was a little weaker bringing buyers back into commodities. Oil had a superb day, it wants to establish 75 as a launch pad for moving up. Gold has had a very rough time in Dec, but found a few buyers today. There is talk that the dollar may weaken early in the new year but should be very strong later in 2010. This could take the € (Euro) down to $1.32 in 12 months & bring the Japanese ¥ to 108 to the dollar.

CLG10.NYM

..Crude Oil Feb 10

..76.50

.. 2.10 ......(2.8%)

GCZ09.CMX

..Gold Dec 09

..1,090.00

.. 4.00 ......(0.4%)

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The S&P 500 Dividend Aristocrats have had an unusually wild year. 10 were dropped from the list while only 2 were added, reducing the size of the group to 43. However, those remaining have even more impressive track records after being able to continue raising yearly divs during the financial meltdown. A few survivors include:

3M (MMM)
Coca Cola (KO)
Eli Lilly (LLY)
Exxon Mobil (XOM)
Kimberley Clark (KMB)
McDonald's (MCD)
Procter & Gamble (PG)
VF Corp (VFC)
Wal-Mart (WMT)
Walgreen (WAG)

Many have been laggards this year as risk has been rewarded following a period when it was shunned. These are the type of companies to be analyzed when choosing long term investments.


The record for the last qtr is clear, Dow just can't break out of its sideways trading pattern (much like the Financial Index). Meanwhile high yielders have done well. MLPs keep rolling along, REITs finally broke into new high territory & junk bond funds are finding more buyers taking their yields even lower. Techs have been almost as hot, NAZ is up almost 700 (45%) YTD. The new year will have new hot players. My old rule of hat is winners will whither with new groups rotating into leadership roles.

Dow Jones Industrials --- 3 months




Nasdaq --- 3 months