Monday, February 1, 2010

New month brings out buyers

Stocks began the day higher, remained strong for the balance of the day & closed near the highs. Dow rose 118 (at the highs for the day), advancers ahead of decliners 3-1 & NAZ was up 23. Favorable economic news & strong gains by the 2 oils in the Dow (Exxon & Chevron) did the trick. Bank stocks finally found friends, taking the Financial Index higher & closed near its highs.


% Change

The Alerian MLP index, along with the energies, had an excellent day, up 5 to the 289s. Traders were happy proposed higher taxes on energy companies did not bleed thru to them. The REIT index gained 3+. Junk bond funds were also bid higher. Treasuries sold off on more favorable thinking about economic recovery. The yield on the 10-year Treasury bond rose 4½ basis points to 3.66%, still close to the levels it has been trading near for weeks.

Alerian MLP Index --- 3 months

Dow Jones REIT Index --- 3 months

Oil & gold had their biggest day in several weeks. A weaker dollar helped all commodities plus oil traders were happy to hear about capital expansion plans in oil by Exxon Mobil (XOM).

CLH10.NYM..Crude Oil Mar 1074.72 ..Up 1.83

GCG10.CMX..Gold Feb 10..1,106.00 ..Up 23.00

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Energy companies found they are facing up to $45B in added costs if budget plans to eliminate oil & gas industry preferences & tax loopholes are adopted.The administration wants to raise $36B from FY 2011 - 2020 by ending tax credits & deductions for domestic oil & gas production. In addition the US would collect $8½B more by revising its so-called dual-capacity policy so that oil companies are prevented from getting credit for taxes they pay overseas. Oil companies are complaining, but considering the amount of money they earn, they will be able to live with these extra fees. In spite of this glum news, oils were strong today after Exxon reported lower but decent earnings.

Energy Companies Face $45 Billion in Costs in Budget

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Nothing like oversold markets, as shown in the charts below, to encourage the bulls. The earnings report from Exxon was well received, up 1.75 (3%) but faded a little in the last hour. Tomorrow a new batch of earnings reports will tell us if the rally can be extended. Jan auto sales should also be reported & the all important jobs report for Jan is due at week's end (markets were already betting that report will be a friendly one). The effects of massive gov deficits for years to come were largely ignored.

Dow Jones Industrials --- 3 months

Nasdaq --- 3 months

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