Friday, December 23, 2011

Dow climbs to 5 month high

Dow rose at the start of trading & never looked back.  It closed up 124 closing at the highs, advancers over decliners a more moderate 2-1 & NAZ added 19.  Bank stocks led the way higher.  The Financial Index has been doing well in the last month, but is still 12 below the its highs 2 months ago.

S&P 500 Financials Sector Index

Value 177.08 One-Year Chart for S&P 500 Financials Sector Index GICS Level 1 (S5FINL:IND)
Change      0.84    (0.5%)

The MLP index rose 3½ to 384, getting nearer to its record high of 390.  The REIT index was up 1 & junk bond funds were higher.  Treasuries fell as reports showing the US economy is strengthening offset concern Europe is struggling to contain its sovereign-debt crisis. Gold has hardly budged this week, but the chart for 2011 shows it has an excellent yearly gain, the 11th straight years of higher prices.

AMZ   Alerian MLP Index

DJR   Dow Jones Equity REIT Index

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CLG12.NYM...Crude Oil Feb 12...99.67 ...Up 0.14  (0.1%)

Live 24 hours gold chart [Kitco Inc.]

  • <p>               This Dec. 20, 2011, shows a new home for sale in Apopka, Fla.  Americans bought slightly more new homes in November, but 2011 will likely end up as the worst year for sales in history. (AP Photo/John Raoux)
Photo:    Yahoo

Americans bought slightly more new homes in Nov, but 2011 will likely end up as the worst year for sales in history.  The Commerce Dept said new-home sales rose 1.6% last month to an annual rate of 315K, less than half the 700K new homes that should be sold to sustain a healthy housing market.  It's also below the 323K homes sold last year, the worst year for sales on records dating back to 1963.  Dec would have to produce its best monthly sales total in 4 years for 2011 to finish ahead of last year's total.  That's grim!  New homes account for less than 10% of the housing market, but they have a big impact on the economy.  Each new home built creates roughly 3 jobs for a year & generates $90K in taxes.  Builders have stopped working on many projects because it's been hard for them to get financing or to compete with cheaper re-sale homes.  In Nov, builders slashed prices to their lowest levels in more than a year.  The median sales price of a new home dropped 4% to $214K.  The market for new single-family homes has all but disappeared over the past year.  Nationwide, just 158,K such homes are now for sale, an all-time low.  This data shows how high unemployment & a housing depression are interwoven.

Sales of New Homes in November Rise

Dow is up 700 YTD, a good showing considering the European debt mess has gone from bad to worse & US fiscal problems are not getting any better.  Everybody is talking about the House approving the 2 month extensions for tax cuts & benefits.  The most important thing to keep in mind is that it only postponed 60 days hard decisions that need to be made.  Neither side wants to give an inch & it could get even uglier in Feb.  But in the short term, this is a holiday season.  The idea is to send goodwill to everybody.

Happy Holidays to all!!!

Dow Jones Industrial Average

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