VerySmartInvesting: Dow declines again, down over 800 in 2 weeks

Friday, May 7, 2010

Dow declines again, down over 800 in 2 weeks

Yesterday's extraordinarily wild excitement has died down, but markets continue sliding (with a little selling at the close). Essentially all of the decline for the Dow has come in the last 4 days. Dow fell 140 today, decliners over advancers 2-1 & NAZ was down another 54!

Dow Jones Industrials -- 2 Days

Banks participated in the decline, but their story is nothing exceptional given what was going on.

S&P 500 FINANCIALS INDEX

Value
203.16

Change
-2.53

% Change
-1.2%

MLPs found buyers giving them traction. The Alerian MLP Index rebounded 5 to the 286s, one of the best performances by any sector! But the index remains down 10% from its recent highs. The REIT index fell 3½ to the 198s, again 10% below recent highs. Bargain hunters were back buying junk bond funds, they have suffered badly this week. Some of that money in the PM came from selling Treasuries. The yield on the 10-year Treasury bond rose 3 basis points to 3.43%, not significant relative to the plunge this week. Volatility has returned to the extraordinary levels in early 2009 when risk averse was the theme for all markets. In the last few weeks, Treasuries & gold (safe havens) have had substantial rallies (where frightened money flows).

Alerian MLP Index -- 3 months

Dow Jones REIT Index -- YTD

VIX --- 10 Days

Oil is at a key support level of 75. If that fails to hold, it could be headed much lower. Gold is doing well. On TV, I saw it above 1200. Whatever, it has been very strong with the European debt problems & wants to take out its recent highs.

CLM10.NYM

..Crude Oil Jun 10

..75.22

1.89
......(2.5%)

GCK10.CMX

..Gold May 10

..1,194.60

2.30
......(0.2%)

Gold Super Cycle
Click Here

Apple (AAPL), the 3rd largest company by market cap, has taken a beating in the market sell-off & the spike down yesterday is especially scary.

Apple --- 1 month

Below are charts for 3 Dividend Aristocrats I like. They were not punished too badly:

Bemis --- 1 month

Eli Lilly --- 1 month

Kimberley-Clark --- 1 month

One definition of a bear market is a 10% decline. The chart below shows how brutal the sell-off has been especially for the tech sector. NAZ fell 10% just this week. Dow in almost 2 weeks has fallen about 8%. Volume has been running very high while volatility has been thru the roof! European leaders are meeting over the weekend to figure out what to do about the Greek debt problem & they're staring at a May 19 deadline. Next week could be an even wilder time in the stock markets!

Nasdaq --- 1 week