Wednesday, April 14, 2010

Bank stocks lead markets higher

Dow shot up 103, advancers were ahead of decliners 3-1 & NAZ gained 38 (helped by Intel earnings & Apple reaching another record). But the big story was with the banks. The chart for the Financial Index has been soaring for over 2 months (see chart below) after lagging behind advancing stock markets for 6 months. Even the new bill debated in the Senate for more regulations has not been able to stop this climb. Today's gain, almost 6, was very impressive.


% Change

The Alerian MLP Index rose .57 in the 313s while the REIT inched up pennies in the 210s. Junk bond funds keep marching ahead to prices not seen in many, many months. But the yield on the 10-year Treasury Index went up 4 basis points to 3.86% keeping it in high & worrisome territory.

Alerian MLP Index --- YTD

Dow Jones REIT Index - YTD

10-Year Treasury Yld Index - YTD

Commodities took the hint from the stock markets & went higher. Oil is back above the important 85 level, keeping its positive momentum. Gold is also looking good, it may want to top its record high above 1200.

CLK10.NYM..Crude Oil May 10..85.87 ..Up 1.82

GCJ10.CMX..Gold Apr 10..1,156.50..Up 3.70

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The Federal Reserve's new survey is consistent with chairman Ben Bernanke's view that a modest recovery is unfolding, but it won't be strong enough to quickly drive down the 9.7% unemployment rate. 11 of the 12 FED regions (except for St. Louis) said "economic activity increased somewhat." That was an improvement from the last survey released in early Mar when only 9 regions reported modest economic advances. The St. Louis region said economic conditions had "softened," a downgrade from the previous report when the region reported mixed economic conditions. But trouble spots for the economy remain. The housing market is still fragile & commercial real-estate activity stayed "very weak" in most parts of the country. In addition, job prospects are still bleak for the nation's 15M unemployed.

Fed Says Economy Expanded `Somewhat' in Most of U.S. as Spending Increased

Below are charts for 4 stocks which have been flying pretty high this year. Apple (AAPL), with the 3rd largest market cap, has done well (up 3 to the 245s today) because its business is going full steam. Ambac (ABK), Fannie Mae (FNM) & AIG (AIG) have made a lot of money for short term traders who made good bets on big swings. If AAPL, among others, stumbles, its chart could look more like the rest. Today ABK was up 15%, FNM up 8% while AIG slipped 1%. For a contrast, the chart for Wal-Mart (WMT), Dow stock & Dividend Aristocrat, was added. Even though it has a smaller market cap than APPL, it has been doing well & increased the div in 2010. Maybe it, along with other Dividend Aristocrats, should be getting more respect if this is truly a recovery period for the economy.

Apple --- YTD

Ambac --- YTD

Fannie Mae --- YTD


Wal-Mart --- YTD

After finding it so difficult to break thru, Dow has established 11K as a new floor. Greek debt problems are fading away slowly, the € is up to nearly $1.37 reflecting more optimism about Greek muddling by. But I'm disturbed by has-been stocks like AMK getting so much attention when companies with a history of delivering earnings (& div) growth are largely ignored. For the time being, the bulls are back in charge & most investors are happy.

Dow Jones Industrials - YTD

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