Tuesday, March 23, 2010

Markets meander after dismal housing numbers

Dow began the day higher but is giving up some off those gains. Dow is up 14, advancers over decliners 4-3 & NAZ slipped 3. Banks also started on an up note, but the Financial Index has been slowly losing ground.


% Change

MLPs have had a wild swing lately. The Alerian MLP Index dropped 9 in a couple of days followed by a rebound. Witching on Fri makes it difficult to analyze that move but bulls have lost the initiative. Today the index is up a fraction, still in the 299s & the 300 ceiling is becoming more meaningful. The Dow Jones REIT Index fell 1+ to the 199s. Junk bond funds were firmer on continued demand for high yield bonds. The yield on the 10-year Treasury bond inched up a fraction of a basis point to almost 3.67%.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

Oil & gold are firmer while not straying far from their recent trading levels (80 & 100 respectively).

CLK10.NYM...Crude Oil May 10...82.11 ...Up 0.51


Purchases of homes dropped 0.6% in Feb to a 5.02M annual rate, the lowest level in 8 months & the median price decreased 1.8% from last Feb. The charts below show dreary the housing market. The number of previously-owned homes on the market jumped 9.5% to 3.59M implying it would take 8.6 months to sell those houses compared with 7.8 months a month earlier. Extending & expansion of the federal tax credit thru next month has not sparked sales this year.

Existing U.S. Home Sales Fall for Third Month as Job Concerns Deter Buyers

Home purchases - 1 year

Change in median price - 1 year

KB Home (KBH), the 5th-largest homebuilder, reported home orders increased 5% to 1,913 in Q1 compared with the prior year & the number of buyers canceling contracts fell to 22% from 28% in the prior year. The company predicted it will become profitable later this year. KBH lost 71¢ per share in Q1 ending Feb 28 compared to a loss of 75¢ last year & much worse then an expected loss of 42¢. Revenue dropped 14% to $264M, below forecasted revenues of $277M. The stock fell 44¢ to $17.

KB Home --- 2 years

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Markets want to go higher but it looks like they are straining as the health care rally ended. They will have to rely on economic news, which is dismal. The Greek debt problem is not going away, the European countries can't find a solution. The talk is the € could sink another 10¢ to $1.25, not good for financial stability. US housing remains stuck in the mud. Dow went over 10.8K this AM but is huffing & puffing trying to hold that level

Dow Jones Industrials --- 2 weeks

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