Monday, December 14, 2009

Dow only edges up to new 2009 high

The Dow began the day higher but could not get any traction, hardly budging from up 25 for the balance of the day. It ended up 29, advancers ahead of decliners almost 3-1 & NAZ was up 21. Dow had no major gainers but Exxon (XOM), down 3.14 on its big purchase, was a major drag. Banks also had a so-so kind of day with the Financial Index managing to record a modest gain. The massive stock sale announced by Citigroup (C), down 25¢ or 6%, had to be felt by all bank stocks.

% Change

MLPs slipped a little in the PM. But the index was still up 2½ into the 277s, maintaining the 100+ gain in 2009. The Dow Jones REIT Index shot up 3+ to the 179s, taking it within 2 of its yearly high (finally). Junk bond funds had good gains, bringing their yields lower to the 10-12% area. The yield on the 10-year Treasury bond remained the same as in the AM, up 1 basis point to 3.55%.

Alerian MLP Index --- 2 months

Dow Jones REIT Index --- 2 months

Oil is sticking close to 70 after declining for 9 straight days. Crude supplies in the US have risen 6 out of the past 10 weeks because refiners that convert it into crude have been cutting back on production. There are also reports of a growing amount of oil stored at sea in tankers. Some exporting countries & large investors choose to keep oil off the markets until prices improve. Demand for fuel in the US has barely changed from last year, when there were fears of a full-blown depression. Meanwhile gold looks to be forming a base around 1120, a more positive sign for its bulls.

CLF10.NYM..Crude Oil Jan 10..69.55 ..Down 0.33

GCZ09.CMX..Gold Dec 09..1,125.00..Up 5.60

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The president held a meeting with the CEOs of the biggest banks, trying arm twisting to get them to lend more. He said because businesses are having difficulty in getting loans & the gov bailouts of financial companies, “we expect them to explore every responsible way to help get our economy moving again.” Part of the problem is that the bulk of their loans are for real estate & those are the loans responsible for much of the financial meltdown. Banks also have to make tough decisions about lending to start up companies, since many won't survive.

Obama Says Banks Must Help Speed Recovery Following Crisis of `Own Making'

It's surprising the Dow lagged the underlying strength in the stock markets, don't see that too often. The big purchase by Exxon is encouraging for market bulls but nagging questions about retail sales in the holiday season & related high unemployment rates which drag on are keeping the markets from more substantial advances. Dow & NAZ managed to edge up to new yearly gains, but, especially for the Dow, not with a lot of conviction. Dow barely made it to 10½K, another 2009 high.

Dow Jones Industrials --- 2 months

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