Markets needed a rest

Since Apr 8, Dow has been creeping forward. But without dramatic news today, it took a breather. After sputtering in the AM, it closed at a new 18 month high. Dow gained 21, advancers & decliners were even while NAZ picked up 10. Bank stocks also ran into profit taking. But after the 40+ gain by the Financial Index in the last 2 months (shown in the chart below), bank stock buyers deserved a day off to enjoy their profits.


S&P 500 FINANCIALS INDEX

Value 228.64

Change -1.11

% Change -0.5%

The MLP index was down a fraction in the 312s while the REIT tumbled 5½ following its big rise 2 days ago. Junk bond funds fell fractionally off their 2 year highs. The yield on the 10-year Treasury bond fell 1 basis point to 3.85%. Aside from the REIT fall, not much going on here.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD





This was also a boring days for commodities. Traders have to rethink whether they had taken them too high, too fast.

CLK10.NYM

..Crude Oil May 10

..85.50

.. 0.34 ......(0.4%)

GCJ10.CMX

..Gold Apr 10

..1,159.40

.. 0.40 ......(0.0%)

Ambac (ABK), the troubled bond insurer, has had a wild ride this week, starting below $1 & shooting up to $3 at its highs. Today it dropped only 3¢ to $1.83 with a range of 25¢. Gamblers who made money are very happy. But investors should worry that this type of activity is becoming more common, not a good sign for regular stocks.

Ambac --- 1 year





The S&P 500 is back over 1200 (1211 to be exact), last seen in early Oct 2008. Now bulls are looking for it to reach 1300 by year's end. That would bring it to almost double off the low in Mar 2009, its greatest rise in history. Increased speculation is becoming an important factor with Ambac being a glaring example. Even junk bonds, stocks with high yields, are benefiting from speculative buying. Bulls are still in charge, but there are limits on how far they can take these markets.

Dow Jones Industrials --- YTD




S&P 500 --- 2 years

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