Monday, September 20, 2010

The September rally continues

Stocks jumped out of the gate & continue strong. Dow is up 105 to a new post May high, advancers ahead of decliners almost 5-1 & NAZ gained 25. As usual with market moves, bank stocks were leaders. The Financial Index still has 200 has its goal (which it has been not above since early Aug).


Value 198.87 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change 2.34 (1.2%)

The Alerian MLP Index rose 1.79 to over 330, its highest level in almost 2 months. The REIT index was up almost 4 to the 217s, only 2 below its yearly high. When stocks rise, junk bond funds are not far behind, remaining near yearly highs. The VIX was down only a fraction, still in the 21s. The € was up a fraction of a penny to almost $1.31. Treasuries slipped in the strong stock market. The yield on the 10 year Treasury bond rose 2 basis points to 2.75% nearing its 2.80%+ yearly high.

Treasury Securities

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

Alerian MLP Index --- 2 weeks

Dow Jones REIT Index --- 2 weeks

VIX --- 2 weeks

10-Year Treasury Yld Index --- 2 weeks

Rising stock markets bring out bullish sentiment for oil. Gold rose to a record for a 3rd day as a weaker dollar & concern that the recovery may be faltering boosted demand as a protection of wealth.

CLV10.NYM...Crude Oil Oct 10...74.69 ...Up 1.03

GCU10.CMX...Gold Sep 10...1,282.00 ...Up 6.40

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Lennar (LEN), 4th largest US homebuilder, reported a better-than-estimated Q3 profit as margins on house sales improved & orders fell less than projected. EPS for the qtr ended Aug 31 was 16¢ compared with a loss of 97¢ last year earlier, beating estimates of 3¢. LEN has been cutting costs & expanding its distressed investing operations as demand for houses slumps after expiration of a tax credit for homebuyers. Orders fell 15% in Q3, a smaller decline than estimated. Q3 revenue increased 14% to $825M as home completions rose 10% to 2,950. But orders fell to 2,624 homes from 3,104 last year. The Rialto Investments unit, which focuses on managing & restructuring distressed real estate, contributed $7.7M in operating profit during the period. Rialto’s role expanded after Feb, when LEN bought a 40% stake in a $3B portfolio of loans auctioned by the Federal Deposit Insurance Corp. This showing gets a "good enough" rating. The stock gained 89¢ to 14.88.

Lennar Reports Third-Quarter Profit as Margins Widen

Lennar --- 2 years

However housing remains mired in the dumps. The National Association of Home Builders/Wells Fargo confidence index remained unchanged at 13, matching the lowest reading since Mar 2009. Projections were for a rise to 14. The housing market continues depressed following the expiration of a tax credit on Apr 30

Homebuilders confidence index - 1 year

One-Year Chart for Market (USHBMIDX:IND)

IBM to Buy Netezza for $1.7 Billion to Gain Analytics

Photo: Bloomberg

IBM (IBM), a Dow stock, will buy Netezza (NZ) for about $1.7B to gain analytics technology. NZ shareholders will receive $27 a share in cash, but the stock is 57¢ above that price hoping for an even better offer. NZ integrates hardware with programs that store & analyze data. The acquisition is set to close by Dec 31.

IBM Plans to Acquire Netezza for $1.7 Billion to Gain Analytics Technology

Netezza --- 1 year

IBM --- 2 years

We're back to all news is good news, what the bulls like to hear. The € was strong on word that European sovereign debt problems are fading (for the time being). Problems still exist with the slow economic recovery & a muddled picture about extending personal tax cuts into next year.

Dow Jones Industrials --- 2 weeks

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