Tuesday, April 6, 2010

Dow vacillates, still under 11,000

Dow fell 21 as it struggles to top 11K. Decliners were ahead of advancers almost 3-2 & NAZ dropped 4. Banks are doing very well, today the Financial Index beat its previous intra day high by going over 220. Low borrowing costs & expectations of a strong recovery are bringing out buyers.


% Change

MLPs are taking a well deserved rest. The Alerian MLP Index is up small change in the 311s, not far from the 342 all time record. The Dow Jones REIT Index shot up another 2½ to the 206s, yet another 18 month high. Challenges REITs face with higher vacancy rates & prospects for higher interest rates are being ignored. Junk bond funds were mixed to lower, still not far from recent 2 year highs. Buyers returned to the Treasury markets, taking the yield on the 10-year Treasury bond down 4 basis points to 3.95%. That rate is uncomfortably close to the 4% level which has to be holding back stock buyers.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index - 2 weeks

10-Year Yield Treasury Index - 2 weeks

Commodities are resting after the big gains in recent days. Oil still has following winds behind it while gold is taking its time for its advance. Oil has advanced 24% in the last 2 months, a very nice profit for the risk takers who are betting on a strong economic recovery around the world.

CLK10.NYM...Crude Oil May 10...86.89 ...Up 0.27

GCJ10.CMX...Gold Apr 10...1,134.70 ...Up 1.80

OIL (ETF) --- 2 months

Here is an article about junk bonds & their fabulous run up in the last 17 months. This market is priced to perfection & ignoring the threats of higher rates on Treasury debt (considered free of risk).

`Unloved' Junk Offers Best Bond Returns to Goldman Sachs: Credit Markets

A bailout for Greece is muddling along. The IMF will probably get involved, but its role is unclear. On greater worries about Greek debt, the € has settled back to below $1.34 after reaching $1.36 last week.

Greece Denies Attempt to Rework EU-Aid Agreement to Exclude IMF

With no dramatic news, stocks are just muddling along. A stream of massive gov borrowings is affecting bond traders & to a lesser degree, stock traders. 11K may be an important test for the Dow. If bulls can not take it over that line, it could be in trouble.

Dow Jones Industrials --- 2 weeks

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