Wednesday, September 22, 2010

Wobbly markets on increased investor nervousness

Stocks lacked conviction to go higher & didn't make gains that would have been important technically. Dow slid 21, decliners over advancers almost 2-1 & NAZ was off 14. Banks fell on worries about bank profits. The Financial Index has not had a good week, pulling back from 200+ on Mon.


Value195.26One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change-3.19 (-1.6%)

The Alerian MLP Index charged ahead another 1¼ to the 332s needing just 4 more points to reach a new high for 2010 & a few more above that for an all time record. However, the comparable index including reinvested income is soaring to record highs routinely. The REIT index fell another 2½ to the 213s & off from 219 reached on Mon (matching its yearly highs). Junk bond funds generally were a little lower but still near their yearly highs. The VIX was flattish & has not moved a lot in recent weeks. The weak dollar took the € almost 1½¢ higher to nearly $1.34. Investors want Treasuries. The yield on the 10 year Treasury bond fell 5 baisis points to $2.54% & near its recent 19 month lows while the 2 year Treasury yield is at a record low level.

Treasury Yields

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

Alerian MLP Index --- YTD

Dow Jones REIT Index --- YTD


10-Year Treasury Yld Index --- YTD

Oil declined for a 2nd day after an Energy Dept report showed that US oil & gas inventories unexpectedly increased. For commodities, there's always a reason after the fact to explain price movements. Gold has been in demand as anxieties about global economies & their recoveries are in doubt. GLD began the year at 107 & closed today at 126 representing a new record! During this time popular averages have been struggling to eke out a gain YTD & are nowhere near record levels.

CLX10.NYM..Crude Oil Nov 10..74.70 ..Down 0.27

GCU10.CMX..Gold Sep 10..1,290.00 ..Up 17.60

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Michael Dell, Dell (DELL) CEO, said the company is on track to bring in more than $60B in revenue in 2010 & showed off the DELL's newest 7" tablet. He said the DELL's revenue has grown 20% in the past 2 quarters, & "it looks like we'll probably do that again this quarter as well." Expectations are for DELL to post revenue of $62.4B for the current fiscal year, ending in Jan. The new 5" Streak tablet will be available at Best Buy (BBY) stores next month & is currently available through Dell's online store. He also showed off a new 7" tablet, but provided no other details. It appears to run on Google's (GOOG) Android software. Tablet sales should top 40M units in 2011, hurting notebook & netbook sales. The stock fell 22¢.

Dell --- 2 years

Markets should be extending recent gains which have been impressive. But they aren't. Dow should be heading for 11K to take out the May high but it's not. On the margin that money is going into gold & Treasuries. The next few days could be critical to see if the markets are serious about going higher. The continued mess in Congress about extending current taxes & high levels of unemployment which looks like they will continue for the foreseeable future do not argue in favor of higher stock market prices.

Dow Jones Industrials --- YTD

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