VerySmartInvesting: Dow recovers 404 as European debt concerns ease

Monday, May 10, 2010

Dow recovers 404 as European debt concerns ease

After surging out of the gate, stocks settled back & day traders cashed in profits. But the AM gains still held & Dow closed with upward momentum. Dow gained 404 for one of its best days, advancers ahead of decliners 10-1 (but below the astronomical levels early in the day) & NAZ rose 109. Banks have been leaders for most this year & led today. The Financial Index did extremely well with a gain over 10. It needs another 6% to top its yearly highs from last month.

S&P 500 FINANCIALS INDEX

Value
214.50

Change
11.34

% Change
5.9%

After the Alerian MLP Index surged to 300 at the opening, it pulled back & pretty much remained flat around 396 or up 9.38 at the close. This was one of its biggest gains in history. The REIT index shot up at the opening & gained during the day, up almost 14 to the 212 (what should be its biggest daily gain). Junk bond funds continued at their highs, up 3-5%. The yield on the 10-year Treasury bond pulled back a little after the the AM gains, closing up 11 basis points to 3.54%. All this was made possible by the major pull back in the VIX, volatility index. After plunging 15 to 26 in early trading, it worked its way back up to almost 29 (still down 12!).

Alerian MLP Index --- 1 month

Dow Jones REIT Index -- 1 month

10-Year Treasury Yld Index - 1 month

VIX - 1 month

Oil was able to recover some of last week's enormous loss while gold held above the important 1200 level.

Oil	_____77.16	...2.05	...2.7%
Gold	___1,200.80	...-9.60	...-0.8%

Below are weekly charts for some of the biggies. Apple (AAPL), with the 3rd largest market cap, has been behind the extreme volatility for the NAZ, along with 3 Dividend Aristocrats: Procter & Gamble (PG) whose volatility on Thurs is under investigation, Exxon Mobil (XOM) & Kimberley-Clark (KMB). This week will not be forgotten soon!

Apple --- 1 week

Procter & Gamble --- 1 week

Exxon Mobil --- 1 week

Kimberley-Clark --- 1 week

Enthusiasm was running very high at at the opening when the Dow surged to a gain taking it over 10,850. While it slipped from those highs (as was the case for most stocks), it still had an excellent day. A great many stockholders are happy with these gains, but others did not take the sudden sell-off & equally sudden reversal so well. Greece should be able to make its May 19 payment deadline. Now it's a matter of waiting for the next country in trouble to request help. The British elections did not produce a winner, but the PM quit today understanding rejection of his leadership. However he will remain in office until a new PM is chosen, probably in Sep. This adds to uncertainty in Europe at a time when economies are trying to emerge from a particularly difficult recession & some also also facing debt repayment deadlines.

Dow Jones Industrials -- 1 month