VerySmartInvesting: Dow extends December gains

Wednesday, December 29, 2010

Dow extends December gains

Dow traded in the black all day, but pulled back into the close. Dow was up 9, advancers over decliners 2-1 & NAZ gained 4. Bank stocks as market leaders were also lower.

S&P 500 FINANCIALS INDEX

Value	215.08
Change	-0.63 (-0.3%)

The MLP index was up 1¼ to 361 & wants to finish the year nearer its record in the 366s. The REIT index rose ½ to the 224s, far below its record levels above 300 when most company dividends were higher. Junk bond funds inched up. Buyers returned to Treasuries in a big way in the PM. The yield on the 10 year Treasury bond fell a very large 14 basis points to 3.34%. Given thin trading in the markets, it's difficult to attribute any meaning to this move.

Treasury yields:

U.S. 3-month		0.12%
U.S. 2-year		0.63%
U.S. 10-year		3.34%

Alerian MLP Index --- 1 year

Dow Jones REIT Index --- 1 year

10-Year Treasury Yield Index --- 1 year

Oil slipped back, but remains near its 26 month high & bulls expect to see $100 soon. Gold is concluding another outstanding year. It started the year near $1100 & has had a nice run to record levels while the Dow is still almost 20% below its record in Oct 2007.

CLG11.NYM

...Crude Oil Feb 11...

91.13

....

0.36

(0.4%)

GCZ10.CMX

...Gold Dec 10

.....1,413.10

...

7.90

(0.6%)

+++ Gold Super Cycle +++

Click Here

The blizzard that swept through the northeast delayed $1B in retail spending, according to ShopperTrak. But, it says that won't derail a holiday shopping season expected to be the best since 2007. The effect won't be as bad as last year's pre-Christmas snowstorm that similarly paralyzed parts of the East Coast costing retailers an estimated $2B. About $10B in retail sales usually occurs Dec 26-27 & bad weather likely delayed about 10% of that. ShopperTrak's still estimating for a 4% gain over last year in revenue for Nov 1-Dec 31. Retailers are hoping to see much of the spending when shoppers return to stores as streets are cleared & transportation restored. This year's storm cost retailers 11.2% of their foot traffic Sun & 13.9% on Mon. Dec 26 should rank 10th-busiest day of the holiday shopping season. Last year, it was 2nd-busiest behind Black Friday. Stores will report results next week & Dec auto sales are also due.

Winter storms delay $1 billion in retail spending- AP

Constellation Energy Partners (CEP) is an MLP which has been left behind in the enormous MLP rally over the last 2 years. But it's still alive. The borrowing base just reestablished by lenders was $195M. CEP has $26½M available under the line & the company had $18.2M cash on hand in early Dec. In addition CEP acquired, from a private seller, non-operated oil properties in northern Kansas & southern Nebraska for approximately $5.9M. The properties currently produce approximately 126 barrels of oil equivalent per day from 36 wells with proved reserves estimated to be 170K barrels of oil equivalent. 81% is classified as proved developed producing. The transaction closed Dec 21, 2010 & was purchased with cash on hand. Risk takers who are willing to wait for the company to resume distributions might be interested in CEP at less than $3.

Constellation Energy Partners Borrowing Base Set At $195 MillionBusiness Wire

Constellation Energy Partners Acquires Mid-Continent Oil AssetsBusiness Wire

Constellation Energy --- 2 years

Volume was slow again at only 0.5B on the NYSE floor. As a frame of reference, 1B shares is generally considered low. Low yields have driven investors to higher yielding stocks in Dec. But they have not been buying junk funds & have only been buying REITs to a limited degree. MLPs have had a modest advance. Old fashioned stocks have done the best as reflected in the Dow which has risen 5¼%. It's hard to believe, but volume could be even slower tomorrow.

Dow Jones Industrials --- 1 year