VerySmartInvesting: Markets rise to 28 month highs

Monday, January 3, 2011

Markets rise to 28 month highs

Stocks began the new year higher & remained on the triple digit plateau until mild selling in the closing minutes. Dow added 93, advancers ahead of decliners almost 3-1 & NAZ was up 38 ( a good day of gains although the breadth could have been better). Banks & oils were among the many groups rising. The Financial Index had a big day, up 5.

S&P 500 FINANCIALS INDEX

Value	219.71
Change	4.94 (2.3%)

MLPs fell back in the PM, the index had to settle for a gain of "only" 2 to the 365s (a hair below the Nov record closing high). The REIT index rose 4½ to the 228s, needing another 5 to top its high in 2010. Junk bond funds rose around 1% to trim their already moderate yields, a good day for them. There was buying of Treasuries in the PM (probably by the Federal Reserve), limiting the gains for the yield on the 10 year Treasury bond to 4 basis points.

Treasury yields:

U.S. 3-month		0.12%
U.S. 2-year		0.60%
U.S. 10-year		3.34%

Alerian MLP Index --- 1 year

DowJones REIT Index --- 1 year

10-Year Treasury Index --- 1 year

Cold weather in the north will keep oil prices high although the futures slipped below $92 reached in early trading. Higher gold prices are somewhat counter to higher stock markets, that market met with profit taking. But its future remains bright & the main question is guessing when it will reach $1500.

CLG11.NYM

...Crude Oil Feb 11

..91.79

...

0.41 (0.5%)

GCF11.CMX

...Gold Jan 11

......1,414.60

...

6.50

(0.5%)

$$ Gold Super Cycle $$$

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The number of US consumers who filed for bankruptcy protection rose 9% in 2010 & that number could increase in 2011 because of high debt loads & stagnant income growth. The number of filings was more than 1.53M last year, up from 1.41M in the prior year, according to the American Bankruptcy Institute, citing data from the National Bankruptcy Research Center.

U.S. Consumer Bankruptcies Rose 9% in 2010 to 1.5 Million, Institute Says

Manufacturing in U.S. Increases to Seven-Month High

Photo: Bloomberg

US manufacturing expanded in Dec at the fastest pace in 7 months, reinforcing signs the expansion is gaining momentum. The Institute for Supply Management index climbed to 57 last month from 56.6 in Nov (a reading greater than 50 points to expansion). However, there still may be a call for a 3rd round of quantitative easing is unlikely. Ughh!!

U.S. Manufacturing Increases to a 7-Month High

The markets are extremely overbought, a condition that can bring a sudden & violent decline. Dow has risen steadily from 10K at the start of Sep with only one mild setback in the month of Nov. Otherwise it has been going straight up. Beginning with the big gain on Dec 1, it has risen almost 700 with gains on most days. MLPs had been lumbering along on a near record plateau, losing a little after setting its record in early Nov. Buying in the last 2 weeks has brought the index to a new record intra day high today. The CES (Consumer Electronics) show on Thurs will probably overwhelm the weekly jobless data & then comes the big jobs report for Dec on Fri. This should be an exiting week in the markets.

Dow Jones Industrials --- 1 year