Friday, October 29, 2010

October gains end with sputtering markets

Stocks hugged break even all day as the 2% GDP growth rate was uninspiring.  Dow added 4, advancers ahead of decliners better than 3-2 & NAZ was up a few pennies.  Banks continue to drift, the Financial Index is still looking for direction.


Value 195.91 One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change -0.237 (-0.121%)

The Alerian MLP Index surged, gaining 2.83 to 253.04, a new all time record!  The index was up 2+ in the last 2 hours of the month, a time when it is difficult to assess what is really happening.  The REIT index rose a fraction in the 219s.  Junk bond funds were mixed, but near yearly high levels. Treasury 10-year bonds gained as a report showing an inflation measure increased less than forecast added to speculation the Federal Reserve (FED) will boost purchases of longer-term assets to spur the economy.  Long bonds pared their biggest monthly decline since Dec after comments from Goldman Sachs that any quantitative easing by the FED would likely include purchases of the securities. The yield on the 10 year bond fell 5 basis points to 2.61% & may be heading back down to the sub 2.40% levels, its yearly lows.

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 fell as the dollar rose against the €, reducing the appeal of raw materials.  Gold rose for its 3rd straight monthly gain on speculation that the Federal Reserve will increase debt purchases, weakening the dollar & boosting the metal’s appeal.

CLZ10.NYM...Crude Oil Dec 10....81.39 ........Down 0.79  (1.0%)

GCX10.CMX...Gold Nov 10......1,357.10 ...Up 15.00  (1.1%)

$$$ Gold Super Cycle $$$ 

Apple (AAPL) has had an excellent run this year, allowing it to become the 2nd largest market cap in the world.  But it peaked with its new product announcements 2 weeks ago, reminding us of the old addage about buy on the rumor & sell on the news.  AAPL is a market leader & in the last 2 weeks the Dow has also been bumping along aimlessly.

Apple   ---   2 months

Citigroup (C) is still a troubled big bank that has been treading water.  But in the summer & fall the Treasury has been selling its shares & turning a profit (with a cost around $3.25 per share). There are a few bulls for Citi saying it is getting its act together which could bring prices more than double (for the very brave) the present level.

If you want to learn more about Citi

Citigroup    ---    YTD

Dow extended its Aug run into Sep but has been sputtering in the last 2 weeks, bumping against the yearly highs reached in late Apr.  It began the month at 10,788 & finished at 11,118 for gain of 330 (3%).  Meanwhile the MLP index gained 15 to a new all time. Barclays Capital High Yield Bond ETF (JNK) began the month at 40.01 & gained 0.87 (2%) to a yearly high, steadily climbing during the month.  To me that's a sign that speculative juices are running high, not favorable implications for the stock market.  Next week brings the midterm elections, FOMC meeting (which will be even more closely watched than usual) & on Fri is the all important Oct jobs report.  It could be more exciting than this sideways week.

Dow Jones Industrials  --  YTD

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