Higher markets are nearing 2009 highs

Dow began the day up & continued pretty much in a flat pattern all day, ending with a 68 gain, advancers ahead of decliners 3-2 & NAZ was up 7. Not an impressive day, but pretty good considering how soggy markets have been lately. Financials were the weakest sector but their losses were limited. Citigroup (C) & its possible sale of stock was the major drag for financials today.

S&P 500 FINANCIALS INDEX

Value 191.81

Change -0.39

% Change -0.2%

The Alerian MLP Index shot up 3 on a good but not great day for stocks. It's in the 273s, getting so close to 276 for a 100 point gain this year. Meanwhile REITs were off a fraction, the index is 8 points below the high reached 2 months ago. Junk bond funds keep creeping up to or near yearly highs with yields in the 10-12% area. The yield on the 10-year Treasury bond rose 6 basis points to 3.48% after sluggish demand at today's auction for the 30 year bond.

Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months





Oil remains on defense (75 has returned to being a ceiling) but gold is trying to mount a rally for another leg up.

CLF10.NYM

..Crude Oil Jan 10

..70.49

.. 0.18 ......(0.3%)

GCZ09.CMX

..Gold Dec 09

..1,131.60

.. 11.20 .......(1.0%)

Today's $13B auction of 30 year Treasury bonds was rated as mediocre. The bid-to-cover ratio at was 2.45X compared with an average of 2.38X at the last 10 auctions. Indirect bidders, a class including foreign central banks, bought 40.2% of today’s auction after purchasing 44% at the Nov sale. When foreign investors don’t step into the bidding process, US investors are not able to absorb the debt. The yield on this issue rose 7 basis points to 4.49% bringing a 373 basis point spread over the 2 year note (the widest spread in 29 years). The implications are for yields on longer term debt to creep up next year. Meanwhile short term rates are low. The yield on the 90 day bill remains essentially zero, literally 0.02% annualized.

•Treasury Yield Curve Widens to Most Since 1980 After $13 Billion Auction



Caterpillar (CAT) is a Dow stock I watch closely. It has more than doubled from the greatly depressed low earlier in the year. Their US business has been sluggish for some time. But foreign business, especially in China, has been doing well, allowing them to bend the rules a bit & hold the div at 42¢. In the last 2 months, the stock has been digesting its enormous gains from the lows. This is still a good long term play because of its global business model. CAT was up 76¢ to 56.94 (off its yearly high of 61).

•Caterpillar declares cash dividend of 42 cents

Caterpillar --- 1 year





Time Warner (TWX) finally spun off AOL (AOL) in what has to be considered the worst merger in history. TWX has done well this year & may be ready for more buyers as long as their business continues strong. AOL is available for these who like to gamble on their turnaround. TWX was up 1.23 to 30.45 (10% under its yearly high).

Time Warner --- 1 year




Tax loss selling, there must be plenty taking place, has not been bothering markets. Even after choppy trading of the last 2 weeks, Dow only needs another 100 points for a new 2009 high, NAZ is even closer to its yearly high.

Dow Jones Industrials --- 2 months




Nasdaq --- 2 weeks