Thursday, July 29, 2010

Markets hesitate after indecisive economic news

The Dow began the day higher, fell to a 100 point loss, climbed back into the black but finished in the red. After those gyrations, stocks remained on the fence. Dow fell 30, advancers over decliners 5-4 & NAZ was off 12. Bank stocks were also fluctuating but the Financial Index finished with a modest gain.


Value197.97One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change0.65 (0.3%)

The Alerian MLP Index fell 2½ to the 323s (off 11 from its highs earlier this week). It was overextended after a stellar 2 month run & the Enbridge Energy (EEP) oil leak is not helping. The REIT was down 1¾ to 205 while junk bond funds inched their way higher. The VIX fell a fraction in the 24s near its 3 month lows. The yield on the 10 year Treasury bond dropped 2 basis points to just under 3.0%. These very low yields are troubling because they won't go away. The € rose to $1.31, a 3 month high.

Alerian MLP Index --- 3 months

Dow Jones REIT Index --- 3 months

VIX --- 3 months

10-Year Treasury Yld Index --- 3 months

Oil rose, primarily because of the weaker dollar (against the €). Oil is up 4% in Jul. Gold was also helped by the weaker dollar after it had fallen to a 3 month low.

CLU10.NYM..Crude Oil Sep 10..78.39 ..Up 1.40 ......(1.8%)

GCQ10.CMX..Gold Aug 10..1,168.00 ..Up 7.60 ......(0.7%)

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Enbridge Energy (EEP), the MLP that owns the ruptured Michigan oil pipeline, has seen unprecedented selling in its units during the last 3 days, down over 10% from its highs, after news of its oil spill into the Kalamazoo River & Lake Michigan. The Environmental Protection Agency estimated last that the oil spill may have now surpassed 1M gallons. Political criticism is rising but the EPA said that the agency & EEP are doing everything possible to contain the oil spill. The 30" pipeline was built in 1969 & carries about 8M gallons of oil daily. The leak occurred near the Marshall, Mich, pump station. "This is our responsibility," Patrick D. Daniel, EEP CEO, said. "This is our mess. We're going to clean it up." EEP will hold a press briefing later today. The units fell $3.77 (8%) to 53.03, what must be a record daily decline for a low beta security.

Enbridge Selling Intensifies on Michigan Oil Spillat
TODAY: Enbridge Energy Partners to Hold Media Briefing on Enbridge Oil Spill

Enbridge Partners --- 1 week

Earnings season continues. The big oil stocks reported good earnings which brought only limited buying. The threat from the oil spill in the Gulf is easing but investors remain cautious towards the industry. The new spill in Lake Michigan is getting attention, hopefully that will be contained quickly. Bigger picture, a dreary picture of the economic recovery is not going away. Unemployment has not gotten better during this year. The Jul jobs report will be reported next Fri, more dismal numbers are expected. Technically it was important for Dow to plow thru the 10½K ceiling, but it stammered & stalled. Tomorrow could be another quiet Fri, deciding little. Traders will wait for the new month.

Dow Jones Industrials --- 3 months

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