Monday, August 30, 2010

Friday's rally did not last

Stocks began the day lower & continued sinking throughout the session. Dow dropped 140 pretty much wiping out Friday's gain, decliners over advancers 3-1 & NAZ fell 33. Volume was low (0.8B shares on NYSE floor), so too much shouldn't be read into the move. Banks sold off with the Financial Index sinking to 180, matching its yearly lows.


Value 180.61 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change -4.10 (-2.2%)

The MLP Index fell 3+ to the 319s while the REIT index dropped 2+ to 200+. But junk bond funds edged higher. The big story once again is Treasuries. Yields plunged with the yield on the 10 year Treasury bond falling a very big 11 basis points to 2.54+% & near the sub 2.50% 17 month lows reached last week. Falling Treasury yields spell trouble for the stock markets. However gold was flat at 1239.

Treasury Securities

U.S. 3-month
U.S. 2-year
U.S. 10-year

Alerian MLP Index --- 1 month

Dow Jones REIT Index --- 1 month

10-Year Treasury Yld Index -- 1 month

Dow has returned to just a shade above 10K & holding on for dear life. Markets sank all day & closed at the lows. In all fairness, anything can happen when trading is slow during a semi-holiday week like this one. But the monthly chart below looks grim.

Dow Jones Industrials --- 1 month

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