Tuesday, June 14, 2011

Limited recovery for oversold markets

Dow was strong out of the gate & finished with good gains, taking it above 12K. But selling in the last hour limited the advance to 123 (44 below the highs), advancers over decliners 4-1 & NAZ added 39. Bank stocks led the way up & also were hit with late day selling, cutting into the gains for the Financial Index.

S&P 500 Financials

Value	202.29
Change	1.02 (0.5%)

The MLP index was up modestly but is down 2 YTD. The REIT rebounded 3½ to the 236s, recovering a portion of the 10 point drop last week. Junk bond funds had their first up day this month. Treasuries fell, pushing 10-year yields to their highest levels in Jun, as retail sales dropped less than forecasted in May. Oil rose the most in almost 4 weeks on the retail sales data. Gold was also higher.

Alerian MLP Index

Value	361.74
Change	1.28 (0.4%)

Here's looking at how the major markets fared today (below):

Treasury yields:

U.S. 3-month	0.046%
U.S. 2-year	0.436%
U.S. 10-year	3.095%

CLN11.NYM

...Crude Oil Jul 11

...99.23

...

1.93

(2.0%)

Ben Bernanke warned that a failure to lift the $14.3T debt ceiling risks a potentially disastrous loss of confidence in America's creditworthiness. He said in the absence of a quick resolution regarding the debt limit, the US could lose its prized AAA credit rating & the US dollar status as a reserve currency might be damaged. "Even a short suspension of payments on principal or interest on the Treasury's debt obligations could cause severe disruptions in financial markets and the payments system," Bernanke said. Inaction could also "create fundamental doubts about the creditworthiness of the United States, and damage the special role of the dollar and Treasury securities in global markets in the long term," he added. The Treasury has warned the gov will begin defaulting on its obligations if Congress does not increase the limit by Aug 2. Bernanke urged that Congress & the administration to work together to come up with ways to bring down the debt. Sounds good, but the clock on the ticking time bomb keeps ticking.

Bernanke Warns Debt Limit Delay Could End Badly- Reuters

JC Penney named Ron Johnson, who pioneered Apple (AAPL) retail stores, its next CEO & he will succeed Myron Ullman in Nov. During his 11 years at Apple, Johnson has been credited with developing the popular Genius Bar, where customers can get hands-on technical support for their Mac, iPad or other devices. AAPL retail chain has grown to 300 stores in the US & abroad, becoming the gold standard for other retailers looking to make their stores modern & exciting. Johnson joined AAPL after 15 years at Target (TGT), a Dividend Aristocrat, where he was a merchandising executive who led the team that brought designer Michael Graves' products to the "cheap chic" retailer. The stock liked the news, jumping $5.26 (17%) after a dull performance in the last year.

J.C. Penney Names Apple Store Builder as CEO

J.C. Penney Company, Inc. Holding Company (JCP)

The average price of gas at the pump dipped below $3.70 a gallon, a new low in recent weeks.

Source: AAA

The bulls tried to take the markets higher, off oversold levels, but had only limited success. Bank stocks should be leading the way in a broad rally, their performance was only mediocre. Dow is up 500 YTD (4%), far below expectations of the experts going into the new year. Greek debts are still a mess & there is a growing awareness of the importance of dealing with massive deficits in the US. The downward leg for the Dow which began in May has not ended.