Thursday, May 20, 2010

Dow has fallen 1,000 from its highs last month

Dow plunged at the start & has been sinking even further (followed by a mild recovery). The Dow is down 217, decliners over advancers an enormous 13-1 & NAZ is down 65. Banks are off their session lows, but this is still a very bad day for the Financial Index


% Change

High yielders are selling off big time again! The Alerian MLP Index dropped an eye popping 12+, approaching the very bottom of the spike down 2 weeks ago. Today's drop is one its biggest declines in its 15 year history. The REIT index is down 6+ to the 191s. Junk bond funds dropped another 2-4%. But Treasuries are very hot. They yield on the 10-year Treasury bond plunged another 11 basis points to 3.24% reaching the low end of its range in the last year. VIX is soaring, up 6+ to the 41s, levels not seen since the gloomy days of early last year! Fears are soaring & that money is going into Treasuries.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

10-Year Treasury Yield Index - 1 year

Commodities are selling off like stocks, but gold is hanging in there near break even because of its safe haven characteristics.

CLM10.NYM...Crude Oil Jun 10...67.75 ...Down 2.12

GCK10.CMX...Gold May 10...1,191.80 ...Down 0.80

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Initial jobless claims unexpectedly rose 25K to 471K last week. The graph below shows that this figure has been waffling around that level all year, distributing for those talking about a recovery. The 4-week moving average climbed to 453K from 451K in the prior week. The number continuing to receive jobless benefits fell 40K to 4.63M (still very high). Continuing claims do not include the Americans receiving extended benefits under federal programs. Those who’ve used up their traditional benefits & are now collecting emergency & extended payments decreased by about 73K to 5.34M. These numbers are just plain discouraging.

More Americans Unexpectedly File for Jobless Benefits

Jobless claims - 1 year

Photo: Bloomberg

The big story remains the € sinking to new 4 year lows, now at $1.23+. Germany & France are squabbling, Germany says the € is in trouble while France is talking it up, "The € is a solid and credible currency." Take your pick!! These troubles could drag on for years, not bullish for a rebound in the €. The weak € helps European exports, at the same time hurts US exports to Europe because of a relatively strong dollar.
Europe’s Rescue for Greece Brings Euro to New Normal

An early vote in the Senate to move forward on the bill for increased regulations of banks failed yesterday. Sponsors will keep pushing. Chaos in European finances continues dragging down all stocks. Dow has dropped 1K from its yearly high & is flirting with the unexplained spike down low just 2 weeks ago. Ugly markets will continue as long as they see European leaders solving problems by "making it up as we go along!" High yielding securities are out of favor once again.

Dow Jones Industrials --- 2 weeks

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