Friday, May 21, 2010

Rally in last half hour saves stocks

Markets tried to rally in the AM & then pulled back to break even. But buying the last 30 minutes (maybe shorts covering their positions) brought the averages back up to midday highs. The Dow managed a 125 gain, advancers were ahead of decliners 2-1 & NAZ was up 25. Bank stocks found buyers as the Financial Index bounced off levels last seen 9 months ago.


% Change

The Alerian MLP Index had a gain of 4½ to the 279s (down 7 YTD). The REIT index gained 3½ to the 191s. Junk bond funds rallied on the order of 2%. The VIX, sometimes called the fear index, fell 4½ off yesterday's highs to the 41s, but it still had a sharp gain from the 30+ at the start of the week.

Alerian MLP Index --- YTD

Dow Jones REIT Index -- YTD

VIX --- 1 week

Oil broke back thru the 70 floor again. A trader at lunchtime said the fundamentals do not look good, i.e. stronger demand is not there so he's looking for lower prices. Gold continues weak, maybe traders are worried about a lack of demand from slow economic global growth

CLN10.NYM..Crude Oil Jul 10..69.68 ..Down 1.12

GCK10.CMX..Gold May 10..1,177.00 ..Down 11.40

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Treasuries retreated in the PM after their enormous gains this week. That's called profit taking. The yield on the 10-year Treasury bond dropped 24 basis points this week to 3.20%, enormous in this world! Frightened money was selling all securities to buy Treasuries (including those with long terms to run). The forces of growing fears could be with us for some time & a big driving force for that thinking is the financial mess in Europe which is not going away anytime soon.

10-Year Treasury Yield Index - 1 year

Goldman Sachs was the darling of Wall street, thought of as the most highly regarded investment firm because "they knew what they were doing" & used that knowledge to make huge profits. That is being questioned after the goings on in recent weeks. The chart looks very ugly over the last 5 weeks but the stock rebounded 4½ to the 140s today. Their troubles aren't over & they bleed thru to other stocks.

Goldman Sachs --- 2 months

Markets had a horrible week with the financial mess & confusion behind much of the disarray. The € worked its way back up to $1.26 today (actually just under). The $1T bailout European package didn't solve problems this week. It's difficult to imagine what other silver bullets they can come up with. Markets should continue under pressure, & a key short term test will be to see if Dow can hold 10K. It's fragile.

Dow Jones Industrials -- YTD

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1 comment:

Stocks on Wall Street said...

Thank god for the last half hour rally or it would have been a bad weekend.