Wednesday, October 13, 2010

Markets rise on optimism about global recovery

Stocks exploded out of the gate, remaining higher until profit taking in the latter part of the session.  Dow added 75 & is looking to top its 11.2K high for 2010, advancers ahead of decliners almost 4-1 & NAZ added 23.  Bank stocks lost their early gains bringing the Financial Index back to even.


Value199.90One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change-0.01 (-0.0%)

The Alerian MLP Index rose 2+ to the 351s, setting another new record (like gold & Apple).  The Dow Jones REIT Index shot up 3+ to 200, a new yearly high although still down 30% from its record highs 3 years ago.  Junk bond funds were up to new interim highs while Treasuries settled back but not too much.  The yield on the 10 year Treasury bond was up only 1 basis point to 2.43%.

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 Yield Index   ---   YTD

Oil rose for the first time in 3 days as China reported record crude imports in Sep, & the International Energy Agency raised its global demand forecast. If the global economy is improving, the idea is everybody will consume more including gold.  Gold bulls now have 1400 in sight after breaking thru 1300 just 2 weeks ago.

CLX10.NYM...Crude Oil Nov 10...83.06 ....Up 1.39  (1.7%)

GCV10.CMX...Gold Oct 10.......1,371.50 ....Up 25.80  (1.9%)

** Gold Super Cycle ** 

50 states & the District of Columbia have launched a joint investigation into allegations that mortgage companies mishandled documents & broke laws in foreclosing on thousands of homeowners.  They will examine whether mortgage companies made false statements or prepared documents improperly.  This has become a nationwide scandal that's called into question the accuracy & legitimacy of documents that lenders relied on to evict people from the homes. Employees of 4 large lenders have acknowledged in depositions that they signed off on foreclosure documents without reading them!  The allegations raise the possibility that foreclosure proceedings nationwide could be subject to legal challenge & some could be overturned. More than 2½M homes have been lost to foreclosure since the recession started in Dec 2007.

Attorneys General in 50 States Join Foreclosure Probe

Apple (AAPL), with the 2nd largest market cap in the world, set another record, up 1½ to close at 300.  AAPL plans to hold a 'Mac Event' next Wed that will include a preview of the next version of the Mac operating system according to CNBC.  Some are calling for targets above 400.  OK, but I've heard that kind of talk before.  The chart shows its record thru the recession & fabulous run in the last year.

Apple   ---   3 years

Dow is challenging its yearly peak.  The reception of earnings reports will drive it to new heights or not.  The foreclosure mess is growing day by day & that could be a major obstacle for banks which are supposed to be market leaders.  JPMorgan (JPM) lost 56¢ after its earnings report which got only so-so reviews after reflection.  With midterm elections approaching, politicos will be eager to jump all over lenders.  I see this dark cloud overhead getting much darker.

Dow Jones Industrials   ---   YTD

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