Thursday, December 26, 2013

Dow and the S&P 500 reach new record highs

Dow surged 122 to yet another record, but advancers were over decliners only 5-4 & NAZ gained 6.  The MLP index was up 1+ to the 454s & the REIT index rose pennies in the 266s.  Junk bond funds were mixed & Treasuries pulled back with the 10 year yield just under 3%.  Oil rose to a 2 month high after a report showing that fewer Americans than projected filed applications for unemployment benefits.  Gold edged higher, holding above 1200.

AMJ (Alerian MLP Index tracking fund)

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Treasury yields:

U.S. 3-month


U.S. 2-year


U.S. 10-year


CLG14.NYM....Crude Oil Feb 14....99.45 Up ...0.23 (0.2%)

Live 24 hours gold chart [Kitco Inc.]

Retail sales in the US rose 3.5% during the holiday season, helped by deep discounts at malls & purchases of children’s apparel & jewelry, MasterCard Advisors SpendingPulse said.  Sales of holiday-related categories, such as clothing, electronics & luxury goods, rose 2.3% from Nov 1 thru Dec 24 compared with a year earlier, the firm said today.  SpendingPulse tracks total US sales at stores & via all payment forms.  Falling store traffic in recent weeks & uneven demand, especially for apparel, spurred chains to risk earnings by pouring on the discounts to generate sales.  Some retailers were keeping stores open around the clock starting Dec. 20.  “You are seeing, ‘It’s OK for me to go out and spend,’” Sarah Quinlan, a senior VP at MasterCard Advisors, said.  “That being said, they are still being cautious, and they are picking their retailers. It is not hot 2006-2007 spending we are seeing.”  Sales were strongest in jewelry & children’s apparel, while sales of electronics & luxury items excluding jewelry were about the same as last year, SpendingPulse said.  Sales of women’s & men’s apparel fell from last year.

The SpendingPulse data largely tracked researchers’ expectations for the holiday season.  The National Retail Federation reiterated on Dec 12 its prediction that total sales will rise 3.9% in Nov-Dec, more than the 3.5% gain a year ago.  ShopperTrak has said holiday purchases will rise 2.4%, the smallest gain since 2009.  The International Council of Shopping Centers said Dec 24 that sales at retailers’ stores open at least a year climbed 2.7% in the week ending Dec 21 from last year & it maintained its projection that retailers will report comparable-store sales increases of 3-4% for Dec when they issue their monthly reports.  Store visits plummeted 21% & retail sales dropped 3.1% in the week thru Dec 21, data compiled by ShopperTrak.  At best, retailers will get a grade of C for holiday spending.

U.S. Holiday Sales Rise 3.5%, SpendingPulse Says

UPS Freighter Jets
Photo:   Bloomberg

The failure of UPS & FedEx to deliver packages in time for Christmas has exposed the perils of retailers promising to get last-minute gifts to customers.  Retail chains offered gift cards & refunds after angry shoppers took to social media to vent their frustrations at the missed shipments.  On its website, UPS said the volume of last-minute air packages exceeded its capacity to process them.  Merchants battling for market share during a ho-hum holiday season have been trying to outdo each other with deep discounts & promises that shoppers can wait as long as they want to order gifts online.  While shipping snafu are unlikely to make Americans abandon online shopping, they say parcel-delivery companies will have to boost capacity & retailers may need to seek alternatives to prevent a recurrence.  UPS is conducting an analysis of what caused the delayed air shipments.  FDX said it had shipped 99% of its ground deliveries on time & didn’t specify a percentage for its air shipments.   Putting further pressure on the shipping companies, retailers trying to compensate for a “mediocre” shopping season extended their order cutoff so customers could receive their purchases on Dec 24.  UPS was up 21¢ & FDX jumped 1.30.

United Parcel Service (UPS)

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FedEx (FDX)

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As predicted, with the bears nowhere to be seen stocks advanced once again.  However the breadth was not good as has been the case recently.  It's difficult to forecast how the averages can have another stellar year in 2014 especially without strong economic data to back it up.  Meanwhile, enjoy the good times.

Dow Jones Industrials

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