Monday, August 8, 2011

Dow tumbles 634

What is there to say? This was an awful day! Dow plunged 634 to below 11K, decliners over advancers 15-1 (a rare event!) & NAZ fell 174. The Financial Index, dropping 10%, fell to a 12 year low made in the middle of 2009.

S&P 500 Financials Sector Index

Value	162.74
Change	-18.05 (-9.9%)

MLPs had their worst day in history!. The index is low beta, a swing of 1-2% is very big. Today it fell a whopping 24 (7%) to 316 (74 off its highs earlier this year). The REIT index fell 19 to 195, down over 20% from its 2011 high reached last month. Junk bond funds dropped 5-9%, taking us back to the horrible days of late 2008. Treasuries defy logic & continue to be considered a safe haven investment, especially for foreigners. Oil fell after the US credit rating downgrade stoked concern an economic slowdown will worsen & cut fuel demand. Gold is flying, even its short term chart looks stellar, up $200 in just one month!

JPMorgan Chase Capital XVI (AMJ)

Get the latest market update below:

Treasury yields:

U.S. 3-month	0.020%
U.S. 2-year	0.260%
U.S. 10-year	2.363%

CLU11.NYM

...Crude Oil Sep 11

...81.73

....

5.15 (5.9%)

Below are 3 of the top banks in the country with charts for the last 6 months that can only be described as horrible. I am very big on Citi (C) as a turnaround situation, but glad I didn't buy in the 40s. Their fundamentals are good but they also face big unknowns & obstacles. The new banking regulations are just beginning to play out, European & other foreign debts are iffy, lawsuits are flying all over the place & probable rate hikes could play havoc with their business models. BAC dropped 1.66 (20%), Citi $5.49 (16%) & JPM, the most highly regarded big bank, fell $3.54 (9+%). This is clearly a time to watch from the sidelines with cash.

Bank of America Corporation (BAC)

Citigroup Inc. (C)

J P Morgan Chase & Co (JPM)

Fear is flying to new heights. The VIX, volatility or fear index, which had been in the teens, shot up 16 to 48 today. What the bulls wanted to see today, was a big sell-off in the first hour to clean out the weaklings. Then buyers would come in with a strong rally, maybe even bringing the averages into the black. That didn't happen! Sellers were in command all day & the averages closed at their lows! Fundamentals revolving around the downgrade are becoming worse. Dems & REPs are blaming each other, that spells gridlock, enormous financial problems will not get resolved. S&P gave plenty of warnings about a downgrade & the extremely SLOPPY way the debt ceiling was raised at the last minute showed that the careless way gov spending is handled has not changed! Sellers were not cleaned out this AM & markets remain on defense.