Friday, May 27, 2011

Higher stocks on low volume

Dow had a good rise on a largely non event day going into a long holiday weekend. It finished up 38, advancers ahead of decliners 3-1 & NAZ rose 13. Bank stocks, usually market leaders, finally had a good day but the chart below shows the Financial Index is still down in the dumps longer term.

S&P 500 FINANCIALS INDEX

Value	210.92
Change	1.57 (0.7%)

The Aleiran MLP Index was up a fraction & has gone nowhere this week after a big pop off its 350 low last last week. The REIT had a better week. It's up a fraction to 246 today & up 3 this week. Junk bond funds inched higher in a good week for them, Treasuries were strong on European debt problems & a growing awareness that the economic recovery is slowing. The yield on the 10 year Treasury bond fell 8 basis points to under 3.1%, a key support level. Oil has been mostly sideways, above $100, while gold rose $35 this week & is near its record high of $1577.

ALERIAN MLP INDEX

Value	366.77
Change	0.57 (0.2%)

Treasury yields:

U.S. 3-month	0.041%
U.S. 2-year	0.476%
U.S. 10-year	3.074%

CLN11.NYM

...Crude Oil Jul 11

...100.42

...

0.19 (0.2%)

Johnson & Johnson, a Dow stock & Dividend Aristocrat, rose as analysts increased price target for its stock a day after a positive update on its prescription drug business. JNJ told analysts that the company is on pace to have nearly 20 new drugs approved between 2009 & 2015. Productivity is up & generic competition is subsiding. JNJ will seek approval of 11 new drugs by 2015, after getting 6 new medicines approved since 2009 & 2 others could get approved very soon. Potential blockbusters under review or in final-stage testing include Xarelto, for preventing strokes & other dangerous blood clots, a new diabetes pill called canagliflozin & bapineuzumab, which could be the first Alzheimer's disease drug to slow mental decline. Its stock has been under pressure after its revenue & reputation have repeatedly taken hits over nearly 2 dozen product recalls since Sep 2009, mostly in its consumer health division. The stock is up $9 in the last 2 months after years of a lethargic performance (up $1.26 today).

J&J shares climb after upbeat update on its drugs AP

Johnson & Johnson (JNJ)

Greece's Prime Minister George Papandreou

George Papandreou
Photo: Bloomberg

George Papandreou, Greece's prime minister, has ruled out early elections after opposition leaders rejected his new plea for cross-party agreement on new austerity measures. Papandreou pledges to get Greece out of its acute debt crisis, "with or without broader political consensus." The country has been kept solvent for the past year through gradual release of a €110B ($157B) intl bailout. But a first batch of austerity measures failed to ease market concerns that the economy can be salvaged, & Greece's creditors are urging new cutbacks & extensive privatizations. The main opposition conservative party rejected a gov plea for cross-party agreement on new austerity measures, drawing swift criticism from the European Union. Its leader, Antonis Samaras, said he could not endorse a program that would "flatten the Greek economy and destroy Greek society" -- rejecting the call for cooperation during strong pressure from the EU & investor worries about a default. This Greek drama plays & could get ugly, affecting other countries as it did last year.

Greece’s Papandreou Vows to Press Ahead With Austerity Measures to Win Aid

Apple, with the 2nd largest market cap in the world, has a soggy stock this year after many analysts posted target prices of $400-$450. The iPhone & iPad are leaders in growing global markets markets, but AAPL is facing tons of competition. That can lead to slowing growth rates & lower profit margins. The chart suggests the the stock market is catching on although it rose $2.41 today.

Apple Inc. (AAPL)

The price for gas slipped a fraction of a penny yesterday. With oil above $100, that may be the end of its slide.

	Regular	Mid	Premium	Diesel	85	**E85 MPG/BTU adjusted price
Current Avg.	$3.809	$3.952	$4.078	$4.025	$3.247	$4.273
Yesterday Avg.	$3.813	$3.952	$4.080	$4.032	$3.257	$4.287
Week Ago Avg.	$3.886	$4.029	$4.157	$4.080	$3.287	$4.325
Month Ago Avg.	$3.879	$4.017	$4.148	$4.140	$3.274	$4.308
Year Ago Avg.	$2.759	$2.929	$3.035	$3.024	$2.210	$2.908

Source: AAA

This must have been the lightest volume day this week with NYSE floor volume of 0.7B shares (one of the slowest days in recent years). Very little was decided, but on balance the buyers were in command. Dow is down about 370 in May with major problems looming (Greek debts, the budget deficit in the US, a slowing economic recovery in the US & China trying to slow the rapid expansion of its economy). One more day of trading in May. This will be a down month for the markets, but less bad than last year. However, this time Greece did not gotten a bailout & the US economy is sputtering. Next week will bring auto retail sales for May & the big jobs report on Fri. Have a good weekend!