Markets rise despite disappointing unemployment data

Stocks did not know what to make of the unsatisfactory unemployment figures.  So they drifted.  Dow finished up 19, advancers almost 2-1 ahead of decliners (breadth improved significantly during the trading session) & NAZ gained 12.  Markets edged higher during the day, closing near their highs.  Bank stocks had a similar story.


S&P 500 FINANCIALS INDEX

Value	203.97
Change	0.60  (0.3%)

The MLP index & REIT index were each up small fractions while everybody is trying to figure out what the unemployment data really means.  Junk bond funds were a smidgen lower.  Treasuries lost ground as the 10 year Treasury bond yield rose another 2 basis points, going over 3%, to a 4 month high. 

Treasury yields:

U.S. 3-month		0.13%
U.S. 2-year		0.47%
U.S. 10-year		3.02%

Alerian MLP Index   ---   YTD



Dow Jones REIT Index   ---   YTD



10-Year Treasury Yield Index   ---   YTD





The dollar tumbled against major currencies, boosting the investment appeal of commodities. Oil rose to a 25-month high & gold topped $1,400 an ounce (flirting with record highs). JPMorgan is forecasting oil will reach $120 within 2 years although others are split on oil's future..

CLF11.NYM

...Crude Oil Jan 11

...89.23

...... 1.23

(1.4%)

GCZ10.CMX

...Gold Dec 10

....1,408.30

... 19.80

(1.4%)

$$$ Gold Super Cycle $$$  

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This has been another excellent year for many stocks.  Below are the charts for a few of the higher yielding Dividend Aristocrats. At best, these have modest gains while others are lower.  Their yields are over 3% (at a time when banks are paying virtually nothing on deposits) & have excellent track records of raising divs over the years including thru the most difficult recession in many years.

Leggett Platt   ---   YTD



Kimberley Clark   ---   YTD



Abbott Labs   ---   YTD



Johnson & Johnson   ---   YTD



Clorox   ---   YTD





The best explanation for the market's performance is that traders did not believe the unemployment statistics.  There is a feeling that related data, such as improvement in the weekly jobless claims, tells the "real" story about the recovery & this is just misinformation which can be ignored.  Time will tell.  The retail holiday season will probably get decent grades if not better. However retail sales could get a jolt in Jan, typically a slow month, when all workers will see reduced paychecks because of higher withholding taxes.  That should be felt by retailers.  European debt problems are fading away once again although the fundamental problems have not been addressed.  Rising interest rates are causing mortgage rates to creep up at a time housing needs all the help it can get.  With higher rates, investors may demand higher rates on competitive yield securities (junk bonds, MLPs & REITs).  For the time being bulls are in charge & the market performance, especially this month, shows they are in command.


Dow Jones Industrials   ---   YTD

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Nerves are calmed, stocks pare morning losses

Stocks climbed back after digging a very big hole at the opening. Dow closed down only 22, decliners ahead of advancers 2-1 (a lot better than earlier) & NAZ was off a modest 2 (be generous & call it even). Rebounding bank stocks were able to take the Financial Index into the black, bouncing off the 186 lows (Feb bottom).

S&P 500 FINANCIALS INDEX

Value 194.398

Change 1.61

% Change 0.8%

The Alerian MLP Index fought its way back from the depths (down 9) to close at off only ½ in the 279s. The REIT index was able to climb out its hole, ending with a gain of 1½ to 192. Junk bond funds were also able to pare deep AM losses (typically over 5%) to only small losses or even tiny gains. Treasuries are still in great demand. The yield on the 10-year Treasury bond dropped another 9 basis points to 3.16%. The last time yields were this low was 1 year ago & now the overhang of endless annual $1T deficits is more vivid that it was than! The VIX, volatility index, has had unusually wild 2 days (shown below). Today it was down 3 to 35 & down about 7 in 2 days! Maybe fears are easing, at least for the time being.

Alerian MLP Index --- 1 month




Dow Jones REIT Index -- 1 month




10-Year Treasury Yld Index - 2 years




VIX --- 2 days






Oil found buyers at 68 & was able to bounce back a dollar to 69. Gold also found buyers, able to take it closer to 1200. The chart below for GLD below shows how well gold held up in very difficult times.

Oil	...68.98	__-1.23	__-1.8%
Gold	...1,199.50	__5.50	__0.5%

Gold Super Cycle
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GLD (ETF) --- 2 months






4 of the biggest companies are compared below over the last month. Exxon Mobil (XOM) & Wal-Mart (WMT) are Dow stocks & Dividend Aristocrats. Apple (AAPL) is one of the hottest stocks in the last couple of years while Citigroup (C) is a has-been & the gov is trying to sell some its vast holdings at a profit (above $3¼). Damage has been wide spread which says a lot about the global economic recovery.


Exxon Mobil --- 1 month




Wal-Mart --- 1 month




Apple --- 1 month




Citigroup --- 1 month






Stock markets were able to rebound, very impressive. But not sure what to make of it with the markets being extremely oversold. Dow held above 10K, an important support line, but the S&P 500 at 1074 is still well below 1100, considered another important support line. The market breadth (2-1 in favor of decliners) is disturbing. Maybe that's not so bad considering it was above 11-1 in the AM. The € is $1.23½, very dreary. More gov officials are showing up in the Gulf region to see what they can do in what is now better understood as a huge disaster. Volatile times are ahead with a bias to the downside in these shaky markets.


Dow Jones Industrials -- 1 month




S&P 500 --- 1 month

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Dow declines again, down over 800 in 2 weeks

Yesterday's extraordinarily wild excitement has died down, but markets continue sliding (with a little selling at the close). Essentially all of the decline for the Dow has come in the last 4 days. Dow fell 140 today, decliners over advancers 2-1 & NAZ was down another 54!



Dow Jones Industrials -- 2 Days





Banks participated in the decline, but their story is nothing exceptional given what was going on.

S&P 500 FINANCIALS INDEX

Value 203.16

Change -2.53

% Change -1.2%

MLPs found buyers giving them traction. The Alerian MLP Index rebounded 5 to the 286s, one of the best performances by any sector! But the index remains down 10% from its recent highs. The REIT index fell 3½ to the 198s, again 10% below recent highs. Bargain hunters were back buying junk bond funds, they have suffered badly this week. Some of that money in the PM came from selling Treasuries. The yield on the 10-year Treasury bond rose 3 basis points to 3.43%, not significant relative to the plunge this week. Volatility has returned to the extraordinary levels in early 2009 when risk averse was the theme for all markets. In the last few weeks, Treasuries & gold (safe havens) have had substantial rallies (where frightened money flows).


Alerian MLP Index -- 3 months




Dow Jones REIT Index -- YTD




VIX --- 10 Days






Oil is at a key support level of 75. If that fails to hold, it could be headed much lower. Gold is doing well. On TV, I saw it above 1200. Whatever, it has been very strong with the European debt problems & wants to take out its recent highs.

CLM10.NYM

..Crude Oil Jun 10

..75.22

.. 1.89 ......(2.5%)

GCK10.CMX

..Gold May 10

..1,194.60

.. 2.30 ......(0.2%)

Gold Super Cycle
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Apple (AAPL), the 3rd largest company by market cap, has taken a beating in the market sell-off & the spike down yesterday is especially scary.

Apple --- 1 month





Below are charts for 3 Dividend Aristocrats I like. They were not punished too badly:


Bemis --- 1 month




Eli Lilly --- 1 month




Kimberley-Clark --- 1 month






One definition of a bear market is a 10% decline. The chart below shows how brutal the sell-off has been especially for the tech sector. NAZ fell 10% just this week. Dow in almost 2 weeks has fallen about 8%. Volume has been running very high while volatility has been thru the roof! European leaders are meeting over the weekend to figure out what to do about the Greek debt problem & they're staring at a May 19 deadline. Next week could be an even wilder time in the stock markets!


Nasdaq --- 1 week




Dow Jones Industrials -- YTD

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Panic Plunge in the markets, making for one ugly day!!

After being selling off from the start of trading, Dow had a PANIC PLUNGE (the onlys word to describe the fall!) of 1K before buying reduced the final damage to "only" 347. All 30 Dow stocks fell! The selling was so bad that even Dow stock Coca Cola (KO) & PepsiCo(PEP), both Dividend Aristocrats, which can go up in times of extreme stress, sold off. Worries are growing rapidly that the Greek debt situation will widen to other countries bringing on another financial meltdown. The 347 loss makes for one Dow's worst days in history. Decliners were over advancers were 10-1 & NAZ dropped 82. Banks have been leading the way up this year, so they led the way down. The Financial Index is about 10% below its recent highs.


S&P 500 FINANCIALS INDEX

Value 205.69

Change -8.82

% Change -4.1%

The Alerian MLP Index plunged (that word is being used a lot today) 14½, taking it down to 282 & 11% below its recent highs only 2 weeks ago. At today's low of 260, the index was down an astounding 36 from last night's close (with a plus in front of that number, what would be a very good year in other times). On its climb up it passed 282 in late Jan. The REIT index dropped 8 to 202, almost 10% off its recent high. Junk bond funds typically dropped 10+%, an enormous drop by their standards! But Treasuries SOARED, taking the yield on the 10-year Treasury bond down 15 basis points to 3.40% (a STUNNING daily move!).


Alerian MLP Index --- 1 week




Dow Jones REIT Index -- 3 months




10-Year Treasury Yld Index - 1 month





Oil sold off big time like stocks, but gold is getting very hot & wants to take out its previous record highs over 1200.

CLM10.NYM

..Crude Oil Jun 10

..76.53

.. 3.44 ......(4.3%)

GCK10.CMX

..Gold May 10

..1,194.20

.. 19.60 ......(1.7%)

Gold Super Cycle
Click Here

The € is a the center of todays sell-off & it's down to another 14 month low at $1.26. Last year when oil was over $100, some were talking about making the € the new international currency. So much for that idea!!

There's not much to say when Dow descends 1K in a day. Much of the plunge happened in a few minutes late in the day after which bargain hunting trimmed losses. While I have been a doubter about how long this rally can last, I certainly was not expecting anything like this. Pundits will give analysis, but the truth is nobody really knows (especially the bulls) what happened. On this kind of day, high yielders were especially hard hit. They have had some of the best runs in the last year without a significant correction (many have forgotten what that word means). Tomorrow is the big jobs report for Apr. How the markets handle that report will give an idea of their inner strength.


Dow Jones Index -- 1 day




Dow Jones Index -- 3 months

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