Thursday, March 3, 2011

Strong market advance on favorable economic data

Dow cllimbed 191 on increased optimism about the US recovery, advancers over decliners almost 4-1 & NAZ was up 50 (propelled by a 7+ advance for Apple after showing off its new iPad yesterday).  Bank stocks had an excellent day, giving the Financial Index a major gain.


Value225.10One-Year Chart for S&P 500 FINANCIALS INDEX (S5FINL:IND)
Change  4.73  (2.1%)

The Alerian MLP Index gained 1+ to 381, just short of setting another record high.  The REIT index was up 3½ to the 235s.  Junk bond funds were higher while Treasuries had a huge selloff.  The yield on the 10 year Treasury bond shot up 11 basis points to 3.57%, clearly above the 3.40% plateau it had been on for a few months.

Treasury yields:

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

Alerian MLP Index   ---   3 months

Dow Jones REIT Index   ---   3 months

10-Year Treasury Yield Index   ---   3 months

While oil slipped, it still has a very bullish chart suggesting higher prices are ahead.  Gold fell the most in 6 weeks after Venezuela offered to mediate a resolution to the crisis in Libya.  I find it difficult to bet on anything from Venezuela.

CLJ11.NYM...Crude Oil Apr 11...101.91 ......Down 0.32  (0.3%)

GCH11.CMX...Gold Mar 11...,,,1,416.00 ...Down 21.20 (1.58%)

+++ Gold Super Cycle +++ 

CLJ11  (oil contract)  --  YTD

Shoppers gave retailers surprisingly strong sales gains in Feb, extending the momentum from a strong holiday season.  Worries are growing, however, that rising gas prices could sap shoppers' spending in the spring.  Among major retailers reporting, Limited Brands (LTD), JC Penney (JCP). & Macy's (M). had gains that beat expectations. Luxury retailers including Saks (SKS) saw sales surge as the affluent kept spending but Target (TGT) announced an increase slightly below projections & Gap (GPS) reported a bigger-than-expected drop.  The ICSC said that its index of 28 retailers rose 4.2% for Feb compared with the same month last year, well above projections for a 2½-3% increase. The gain follows a revised 4.7% increase for Jan, after the best holiday season since 2006.  The figures are based on revenue at stores open at least a year, considered a key indicator of a retailer's health.  The stocks were mixed, SKS led the pack rising 4%.

February Retail Sales Beat Estimates, Led by Macy’s, Penney

Limited Brands   ---   1 year

JC Penney   ---   1 year

Macy's   ---   1 year

Saks   ---   1 year

Target   ---   1 year

The Gap   ---   1 year

The average price at the pump was $3.43 yesterday, climbing toward the record $4.11 set in 2008

State's Graph
Source:   AAA

The advance was so strong today, it asks the question, "What is left to do tomorrow after a good employment report?"  The spike up in Treasury yields & plunge for gold prices coordinate with the rise in the stock markets.  But higher rates bring higher mortgage rates (along with other business borrowings).  International tensions remain quite high while the military is evaluating options reagrding Libya (along with other countries in the area).  Higher inflation from increased gasoline & food prices are major threats to the economy.  But currently, stock markets are not concerned so stock prices should continue to rise.

Dow Jones Industrials   ---   3 weeks

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