Late day selling stopped stock market advance

Stocks began the day higher & went up from there. Dow had 11K in its sights. Buyers were encouraged when Ben Bernanke said interest rates would remain low to help the economy. But excitement dimmed during the day. Dow finished up only 5 (still below 10.9K), decliners ahead of advancers 3-2 while NAZ ended with a loss of 1. Banks stocks which had been leading the markets higher, suffered a similar fate. The Financial Index closed 4+ below its intra day high.


S&P 500 FINANCIALS INDEX

Value 215.32

Change 0.92

% Change 0.4%

MLPs have been under performing the stock averages this week, a rarity in recent months. The Alerian MLP Index fell 2+ to the 297s. Its 300 ceiling is proving tough to crack (even though it managed to reach 205 recently). Meanwhile the Dow Jones REIT Index went up a fraction, still in the 201s (good enough for an 18 month high). Junk bonds are HOT as funds are at levels not seen in 2-3 years. In contrast (or maybe it should be expected) Treasuries are selling off (discussed below). Risk fears are evaporating. The VIX, volatility Index, was up a .85 to 18.40 today after being in the 17s (levels not seen in almost 3 years before the financial meltdown).

Alerian MLP Index --- 6 months




Dow Jones REIT Index --- 6 months




VIX --- 6 months





After gains in the AM, oil settled back with a minor loss. Gold found a few supporters but not enough to take it over 1100.

CLK10.NYM

..Crude Oil May 10

..80.55

.. 0.06 ......(0.1%)

GCH10.CMX

..Gold Mar 10

..1,092.70

.. 4.10 ......(0.4%)

Treasuries are not having a good week. They declined again, pushing the yield on 10-year Treasury bond to 3.90% (highest level since Jun) after this week’s record-tying $118B auctions drew lower- than-average demand. Today's 7-year notes tumbled after the $32B auction attracted the lowest bid to cover ratio (2.6X) in 10 months. Indirect bidders, including foreign central banks, purchased 42% compared with an average of 54% over the past 10 auctions, yielding 3.374% (compared with the average forecast of 3.372%). Bill Gross, manager of PIMCO, said on Bloomberg radio, that the almost 3-decade bond market rally may be ending. He’s making an argument for investors to own fewer bonds.

Treasuries Fall as 7-Year Sale Draws Lowest Demand Since May



There is more information about how the gov will sell Citi (C) stock. The gov (that's us) owns 7.7B shares & the cost is figured at $3.25, so it's looking at a nice profit. They will select big brokers to sell huge blocks over a period of time in the coming months. Today Citi rose 12¢ to $4.27.

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Markets took time to pause & rest for a second day. Bulls are happy & can accept this slow period. While the European countries may be figuring out a way to bailout Greece, the Treasury markets here look very soggy. The 10 year Treasury yield is only 10 basis points away from the magic peak of 4.0% reached last year. Bill Gross's thoughts about the long term bond rally ending is beginning to shake even the stock markets.


Dow Jones Industrials --- 6 months




Nasdaq --- 6 months

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