Thursday, July 8, 2010

Early market advances are slipping away

After opening strong, stocks are losing steam Dow is up 42, advancers over decliners 3-2 NAZ gained only 1. As with the general markets, the Financial Index has fallen 2 from its earlier highs.


Value 191.32 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change 0.04 (0.0%)

The Alerian MLP Index was up a fraction to 315 & up 15 (5%) in less than a week. The REIT index gained up 1 to 190 after a big day yesterday. Junk bond funds were a little soft, maybe a negative indicator about yesterday's rally. The VIX, volatility index, was up a tad, to almost 27. There was more selling in Treasuries as the yield on the 10-year Treasury bond rose 5 basis points to 3.03%.

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

VIX --- 2 weeks

10-Year Treasury Yld Index --- 2 weeks

Oil is doing well, back over 75 while while gold has lost its appeal for the time being.

CLQ10.NYM...Crude Oil Aug 10...75.75 ...Up 1.68

GCN10.CMX...Gold Jul 10...1,191.40 ...Down 7.20

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New claims for unemployment benefits dropped sharply last week, a sign that layoffs could be slowing. However, hundreds of thousands are losing jobless aid because legislation to extend benefits was not passed by Congress. First-time jobless claims dropped 21K to 454K, taking claims to their lowest level since early May. But claims have fluctuated wildly in recent weeks & have not dropped below Jan levels. The number of unemployed Americans receiving benefits is also dropping sharply because aid is ending. About 350K saw their benefits cut in the week of June 19. The Labor Dept estimates that about 1.7M have lost benefits as of last week, after extended unemployment insurance expired in May. Those numbers could reach 3.3M by the end of the month if Congress doesn't pass an extension. The 4-week average of claims dropped slightly to 466K. In a healthy economic recovery with rapid hiring, claims usually fall below 400,000. The tally of people continuing to claim benefits plunged by 224K to 4.4M. But that doesn't include another 4.6M who received extended benefits paid for by the federal gov. The jobless picture remains murky, the graph below shows a sluggish recovery.

Jobless Claims in U.S. Decreased More Than Estimated Last Week to 454,000

4 week avg jobless claims - 1 year

One-Year Chart for 4 Week Moving Avg (INJCJC4:IND)

June retail sales were only so-so for many retailers. The lackluster performance compares with a weak June in 2009. The International Council of Shopping Centers' index of June retail sales saw a 3% increase, the low end of its growth forecast that ranged from 3-4% but it compares with a 5.1% decline in the year-ago period. Figures are based on revenue at stores open at least a year & are a key indicator of retailers' health. Tepid describes the results, raising concerns about the back-to-school shopping season starting in a couple of weeks.

Retail Sales Rise in June as Warm Weather, Bargains Spur Buying

USB started a leveraged long account for the Alerian MLP Index (symbol MLPL). It doubles fluctuations in the main index, so that a 10% change should be doubled to 20% if the managers know what they are doing. It has bigger rewards which carry bigger risks. The problem is that a big gain followed by a comparable loss can bring strange results. Be careful when looking for long term gains investing in this fund. However AMJ tracks the Alerian MLP Index & that should track properly.

UBS AG-2x Leveraged Long E-TRACS for Alerian MLP Infrastructure Index 2040 (MLPL)
Comprehensive Quote:
07/08/10 10:29 AM EDT
% Change

Mortgages rates are falling in reaction to the low yields on the 10-year Treasury bond. But that's doing little for the troubled housing market. The € is above $1.26½ but that could be hit with selling if the stress tests for European banks do not give satisfactory results. Jobless claims & retail sales point to the US recovery just lumbering along. PM trading will tell us if the rally has legs.

Dow Jones Industrials --- 2 weeks

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