Monday, September 27, 2010

Late day selling drags down markets

Stocks were under water for most of the day, not straying far from break-even until the last hour when selling occurred. Dow was off 48, decliners ahead of advancers almost 3-2 & NAZ fell 11. Banks declined, taking the Financial Index down more than 2 The Financial Index remains in the low end of its trading range over the last year.

S&P 500 FINANCIALS INDEX

Value	194.39
Change	-2.33 (-1.2%)

The Alerian MLP Index rose ½ to 333 while the REIT index fell back 2½ to 211. Junk bond funds edged higher & the VIX was up a fraction to 22 where it's has been for the last 3 months. The € remained near its 5 month high of $1.35.

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD

VIX --- YTD

10-Year Treasury Yld Index --- YTD

Oil just treaded water on this quiet day of trading. Gold rose for a 4th straight session on speculation that slumping currencies will boost demand for precious metals as alternative investments. But it continues to hover just under 1300.

CLX10.NYM

...Crude Oil Nov 10

...76.32

...

0.17

(0.2%)

GCU10.CMX

...Gold Sep 10

...1,296.70

...

0.70

(0.1%)

$$$ Gold Super Cycle $$$ Click Here

The Treasury auction of $36B in 2-year notes drew the highest demand in 3 years. Traders are speculating the Federal Reserve (FED) will buy more gov bonds. The 2-year notes drew a yield of 0.441%, the lowest since the gov began selling the securities 36 years ago. The all-time low for the 2-year note was 0.41% touched Sept. 22. Indirect bidders, including foreign central banks, purchased 39% of the notes, compared with 29.2% on Aug. 24. Direct bidders, placing bids directly with the Treasury, bought 10.8%. The size of the 2-year note offering was the smallest in 2 years. The Treasury will auction $35B in 5-year notes tomorrow & $29B in 7-year debt on Thurs. Earlier Anglo Irish Bank’s senior debt was cut to the lowest investment grade rating by Moody’s, encouraging demand for safety. The 10-year US note yield dropped 9 basis points to 2.52%.

Treasuries Gain as Two-Year Note Auction Draws Highest Demand Since 2007

Treasury yields

U.S. 3-month		0.13%
U.S. 2-year		0.42%
U.S. 10-year		2.52%

Oil resumed flowing in the Michigan pipeline of Enbridge Energy Partenrs (EEP). Enbridge supplies the bulk of Canadian oil imports to the US. The units were up 27¢ today & has a decent chart over the last 3 months (which have a tough time for the company).

Enbridge sees Line 6B oil pipeline starting Mondayat Reuters

Enbridge Energy -- 3 months

Stocks couldn't make up their minds which way to go on light volume (0.9B shares on the floor of NYSE). The vote to extend personal tax cuts looks like it will be postponed until after elections. This is another uncertainty to weigh on the markets. Dow has had a nice run in the last month, but may be getting tired. Of course, month end trading can confound anybody.

Dow Jones Industrials --- YTD