Tuesday, January 5, 2010

Markets take a rest

Stocks are resting after yesterday's big gains. Dow is down 20, advancers ahead of decliners 3-2 & NAZ is up 1. Banks are doing well helped by the Bank of America (BAC) presentation yesterday. The Financial Index is trying to get back to the 200 level which it has hovered around for 5 months while market averages continued their rally


% Change

MLPs continue RED HOT with the index advancing another 2+ to the 196s. The chart below shows its up almost 10% in just the last 10 trading days, & that's after already having its best year in history by a wide margin. In contrast, REITs, another high yield security with tax advantages, started the year on the wrong foot (today it's flat). Concerns about real estate (housing & commercial space) are weighing down the sector. Junk bond funds, like MLPs, are also HOT gaining again to levels not seen since the Lehman collapse. Treasuries are higher, the yield on the 10-year Treasury fell 6 basis points to 3.78%.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

Oil is doing little even following more reports on cold weather. Oil bulls are happy to see it above 80 aiming for new interim heights. Gold is doing well, perhaps the 1100 floor will hold.

CLG10.NYM...Crude Oil Feb 10...81.60 ...Up 0.12

GCF10.CMX...Gold Jan 10...1,123.60 ...Up 5.90

Find out what's inside Trend TV Click Here

Photo: Bloomberg

The National Association of Realtors reported its index of home sales agreements fell 16% from Oct to a Nov reading of 96, the first decline following 9 straight months of gains & the lowest reading since Jun. The drop was far larger than the 2% expected. Consumers are taking their time following the extension of a tax credit deadline.

Pending Sales of Existing Homes in U.S. Fall 16% as Buyers Wait for Credit

Pending home sales index - 1 year

Orders to US factories posted a surprisingly big gain in Nov, reflecting strong demand from steel & industrial machinery to computers & chemicals. The advance was double what had been expected. The Commerce Dept reported that orders rose by 1.1% in Nov. The report on orders showed that demand for durable goods rose by 0.2% in Nov, unchanged from a preliminary estimate after falling 0.7% in Oct. Orders for nondurable goods rose 1.8% after an even stronger 2.2% rise in Oct from strength in demand for petroleum, chemical products & textiles. The 1.1% rise in total orders for Nov was the 7th increase in the past 8 months.

U.S. Factory Orders Rose 1.1% in November, More Than Economists' Forecasts

Constellation Energy (CEP) is an MLP that has not participated in the MLP rally. They had to drop the distribution (after a substantial cut) last year to concentrate on paying down debt. Late in 2009 they refinanced their loan with a larger loan, showing lender faith in the company. The units are kicking around the 4s, but have had a nice move up this week with the MLP rally. Risk takers who see this as a turnaround situation, are buying, With even modest growth in 2010, this is probably a decent bet.

Constellation Energy Partners Announces New Credit FacilityBusiness Wire

Constellation Energy --- 2 weeks

Stocks need time to take a breather. The cold spell is a global phenomenon, China has extremely cold weather & major snows to deal with. It's not hard to see energy prices charge ahead, perhaps MLPs are benefiting from this sentiment. I think their advance has a stronger connection to the rally in junk bonds, both are high yield securities.

Dow Jones Industrials --- 2 weeks

No comments: