Markets fell on Euro zone worries

Dow fell 76 (110 above its lows), decliners over advancers 5-2 & NAZ dropped 31.  Market leaders, bank stocks, led the way lower but also finished off the lows.

S&P 500 Financials Sector Index

Value	173.90
Change	-3.41   (-1.9%)

Like stocks, the MLP index gave up some of its recent gains & the REIT index slipped a fraction in the 225s.  Junk bond funds inched higher & Treasuries gained.  Oil was lower on concerns about economies in Europe, i.e. Germany.  As investors became more nervous they sought out gold again, bringing it back near the record highs last week.

Alerian MLP Index

Value	355.68
Change	-2.72    (-0.8%)

Get the latest market update below:

Treasury yields:

U.S. 3-month	0.015%
U.S. 2-year	0.183%
U.S. 10-year	2.223%

CLU11.NYM

...Crude Oil Sep 11

...86.76

... 1.12

(1.3%)

Photo:   Yahoo

Home Depot, a Dow stock, raised its fiscal-year profit forecast for the 2nd time in 3 months as timely promotions & a focus on cheaper products helped it gain market share from rival Lowe's (LOW & a Dividend Aristocrat).  Same-store sales rose in all but 3 of its top 40 markets, with particular strength in Midwest & South Atlantic regions, CEO Frank Blake said, adding he was "encouraged that soft housing markets like California, Florida, Arizona and Nevada were positive in the quarter."  HD still expects fiscal-year sales to rise 2.5% & forecasts EPS of $2.34 excluding stock repurchases, up from a prior forecast of $2.24.   In Q2, sales at stores open at least a year, rose 4.3% globally, including a 3.5% rise in US, making it the 9th consecutive qtr that it has outshone its smaller rival (LOW same-store sales fell 0.3%).  Same-store sales thus far into Aug are "quite positive," CFO Carol Tome said.  HD reported a 1.1% rise in the number of customer transactions, while the average ticket rose 3.3% to $54.04.  Q2 EPS rose to 86¢ from 72¢ a year earlier, easily beating expectations of 83¢.  Sales increased 4.2 % to $20.23B, beating estimates of $19.9B.  Demand was strong for building materials & outdoor garden products as HD has shifted focus to cheaper products such as faucets & paint to increase shopper traffic.  The stock rose 1.66.

Home Depot Raises Annual Forecast as Quarterly Profit Beats Estimates

Home Depot, Inc. (The) (HD)

Photo:   Yahoo

France & Germany called for a "new economic government" for Europe, with mandatory balanced budgets enshrined in the constitutions of all euro zone members as a way to overcome the debt crisis that has threatened the common currency.  French President Nicolas Sarkozy & German Chancellor Angela Merkel's push for long-term political solutions instead of immediate financial measures, like a single European bond, sent the € sliding, down half a penny to $1.44.  They also proposed a Europe-wide tax on financial transactions & pledged to harmonize their countries' corp taxes.  But it's unclear how the euro bloc will put in place what its leaders have suggested & how a proposed tax on financial transactions may affect demand for European assets.  Sarkozy & Merkel stressed their commitment to defending the common currency & presented their proposals after meeting amid signs of economic slowdown.  They want a "true European economic government" that would consist of the heads of state & gov of all eurozone nations.  Markets sold off initially because they were hoping that new European bonds would solve Euro problems.

Merkel, Sarkozy to Shun Euro Bonds

Photo:   Bloomeberg

Berkshire Hathaway increased its stake in  Wells Fargo (WFC), building equity holdings amid a markets decline that the Warren Buffett said provided an opportunity for buying stocks “on sale.”  His firm added 9.7M shares of the biggest US home lender in Q2, boosting its holding 2.8%.  “I like buying on sale,” Buffett said. “Last Monday, we spent more money in the stock market buying than any day this year.”  The increase in the WFC cost BRK.A about $277M.  Buffett remains a bullish investor.  BRK.A's high priced stock fell $761 & WFC was down 47¢ in a weak bank sector.

Buffett Increases Wells Fargo Stake

Berkshire Hathaway Inc. (BRK/A)

Wells Fargo & Company (WFC)

Trading today was not that meaningful.  Stocks sold off significantly, especially after the news that there were no dramatic results following the big meeting of the European leaders.  That emotional reaction did not last long, buyers returned to limit losses.  However the upward momentum that had carried the markets in the last few days was lost.  Global economic & financial problems drone on, not good for stock markets.  Dow is up 250 this month but there may be more selling ahead.  Sep (when Congress returns) is statistically the worst month for stocks followed by wild Oct.

Dow Industrials (INDU)

Get your favorite symbols' Trend Analysis TODAY!  

Click Here

Find out what's inside Trend TV!  

Click Here

Quadruple witching brings higher stocks and record gold prices

Dow added 31 (extending its weekly gain), advancers ahead of decliners 2-1 & NAZ was up 11. Quadruple witching days are very unpredictable. Bank stocks gained, pushing the Financial Index towards 200.


S&P 500 FINANCIALS INDEX

Value	199.69
Change	0.91 (0.5%)

MLPS are taking a rest this week after a nice run recently. The index fell a fraction to the 304s, still up 19 YTD. The Dow Jones REIT Index was up ½ to the 207s. Junk bond funds were flattish. The VIX, volatility index, dropped 1½ to the 23s. It's been having a significant retreat while gold is hitting record highs! Treasuries sold off, the yield on the 10-year Treasury bond rose 4 basis points to 3,23% (but remaining in low territory).


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




VIX --- 2 weeks





Oil was essentially flat but gold took off, setting another record going over 1260. Gold is heading for its 10th consecutive annual increase, best performance in 90 years. Gold buying comes from beliefs that debt cutting measures in Europe will slow growth in Europe & the US.

CLN10.NYM

...Crude Oil Jul 10

...76.87

... 0.08 .......(0.1%)

Gold Super Cycle!!
Click Here

52 Week High Friday Rule
Click Here

The European Union will publish the results of tests that check the stability of banks using stress tests. The results were not initially meant to be made public, but after some countries said they would do so to quell rumors of banking problems, the EU agreed to act in unison. The move was seen as a vote of confidence in the financial sector. Asked how the govs would react if the tests revealed shortcomings, Angela Merkel, German Chancellor, said the EU has “taken precautions,” including a €750B ($928B) financial backstop. When the US carried out similar stress tests over a year ago, it pledged to provide capital to banks that couldn’t raise it. The EU still hasn’t disclosed details of its tests, including whether they include a sovereign debt restructuring, raising concerns they may not be stringent enough.

EU Stress Tests Face Investor Questions on Stringency

Photo: Bloomberg


CVS Caremark (CVS) & Walgreen (WAG), WAG is a Dividend Aristocrat, settled a contract dispute that could have prompted thousands of WAG customers to search for a new place to fill prescription drugs. The companies had been negotiating for months & earlier this month said they would end their partnership. That partnership allows people whose prescription drug benefits are handled by Caremark to be reimbursed for prescriptions filled at Walgreen's pharmacies. WAG has more than 7,500 outlets & wanted to be paid more for filling prescriptions. Each stock gained 1+ on the news.

CVS Caremark, Walgreen Agree on Drug Plans


CVS Caremark --- 2 years




Walgreen --- 2 years





The € reached $1.24 but fell back to $1.23½. Strength in the € could be bringing out stock buyers, but that's hard to figure today. Stress tests for European banks are designed to make investors feel better but also add to uncertainty. Congress is enjoying an opportunity to beat up on helpless BP (BP) execs even though this theater is not getting anything done. With 4 kinds of options expiring today, anything is possible. But lately, these option expiration days have not provided a lot of excitement.


Dow Jones Industrials --- 2 weeks

Find out what's inside Trend TV
Click Here

Get your favorite symbols' Trend Analysis TODAY!
Click Here

Stocks jump on hopes of weathering the storm in Europe

Markets kept rising all day bringing them to the best levels in a month. The most favorable reason seems to be that Europe didn't fall apart, it's still in business. Otherwise, there was no dramatic news to suggest markets would have such strong gains. Dow rose 213, advancers over decliners 5-1 & NAZ was up 61. Bank stocks led the charge bringing the Financial Index back to the door of 200 (which has not proven all that significant in recent months).


S&P 500 FINANCIALS INDEX

Value	199.02
Change	4.98 (2.6%)

MLPs continued strong. The Alerian MLP Index rose 3½ to the 304s, the highest level in more than a month. The Dow Jones REIT Index gained almost 5 to the 208s, again the highest in a month. Junk bond funds were up about 1%, but are typically off around 10% from recent highs. The VIX dropped 2¾ to the 25s, lowest level in a month. Treasuries sold off. The yield on the 10-year Treasury bond increased 3½ basis points to 3.31%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 months





Enthusiasm from the stock markets brought out buyers for oil, it closed near 77. But gold also had a strong gain which is basically a bet against improving economies.

CLN10.NYM

..Crude Oil Jul 10

..76.94

.. 1.82 ......(2.4%)

GCM10.CMX

..Gold Jun 10

..1,232.10

.. 9.90 ......(0.8%)

Gold Super Cycle! Click Here

The European Union told Spain & Portugal they need to cut budgets & implement spending cuts to reach their "ambitious" deficit targets for 2011. "The targets are appropriately ambitious and imply substantial fiscal consolidation," the EU said. “Spain and Portugal are expected to specify measures in their 2011 budgets amounting to 1.75% and 1.5% of GDP, respectively, in order to attain the new targets.” These measures will be needed to prevent the Greek debt crisis from spreading to other countries. Spain has pledged to cut its deficit to 9.3% of GDP in 2010 & 6% in 2011. Portugal said it would reduce its budget shortfall to 7.3% of GDP in 2010 & 4.6% in 2011.

Spain, Portugal Must Specify Budget Steps, EU Says

BP (BP) temporarily stopped collecting oil from its leaking well in the Gulf of Mexico after a fire aboard a collecting vessel. The fire was atop the derrick of the Discoverer Enterprise, the drillship that’s been collecting about 15K barrels a day from the well for the past week. There was no damage as a result of the fire & recovery is expected to resume today. This disaster gets worse by the day. BP was up 73¢ on a strong day.


BP Suspends Oil Spill Recovery After Ship Fire

BP --- YTD

American Airlines (AMR) & Delta Airlines (DAL), the largest US carriers, forecast Q2 gains of at least 17% as rising demand buoys fares. Passenger revenue for each seat flown a mile will climb about 20%, Delta said. American parent said revenue on the same basis from its main jet operations would increase at least 17%. Encouraging words about the airline business is helping fuel stock markets gains today. Their stocks gained around 3-4%.

U.S. Airlines See `Dramatic' Business Travel Recovery



The € went up to about $1.23¼. It's still weak, but above the recent lows which sends positive signals to stock markets around the world. Tonight the pres tells the country how to solve the oil mess (after its dragged on for almost 2 months). There will be a call for more regulation of energy companies. He will probably push the financial overhaul regulation that is working its way thru congress. It's difficult to figure why markets were so strong just prior to learning about more gov controls. But Dow & NAZ have had nice rebounds in the last week while junk bonds (stocks with high yields) have only had limited gains & gold has done well. Markets are trying to have it both ways!

Dow Jones Industrials --- 2 months




Nasdaq --- 2 months

Get your favorite symbols' Trend Analysis TODAY!
Click Here

Find out what's inside Trend TV!!
Click Here

Stock markets are higher but very nervous

Dow started lower but bounced back & has been waffling around break even. Dow is up 33, advancers barely ahead of decliners & NAZ gained 11. Bank stocks are showing little reaction to approval by the Senate of a new bank regulation bill. The Financial Index is up, but also little changed from last Sep.

S&P 500 FINANCIALS INDEX

Value 195.64

Change 4.08

% Change 2.1%

The high yield sectors are settling down after going through a brutal week. The MLP index is up 2½ to the 277s (still down 9 YTD). The REIT index has a 1½ rebound. Junk bond funds are flattish to down in what has been a very bad month. Treasuries are strong again! The yield on the 10 year Treasury bond fell 10 basis points to 3.16% (last month it was pushing 4%). Investors are selling higher yielding instruments to lock up 3.1% for 10 years issued by the Treasury which is virtually promising years of $1+T deficits (even more borrowings). Hard to believe & ominous for high yielding securities (like MLPs). The VIX pulled back 2.75 to 43, still astronomical.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index -- 2 weeks




10-Year Treasury Yld Index - 5 years






The oil markets had an unusually wild ride yesterday, dropping to 65. But markets rebounded & calm has returned. However, oil is still barely hanging in above the important 70 support level. Gold is down again which provides better entry points for brave investors. With all the turmoil in European financial markets & greater demand for Treasuries, it should be attracting more buying interest.

CLN10.NYM

...Crude Oil Jul 10

...70.50

... 0.30 .......(0.4%)

GCK10.CMX

...Gold May 10

...1,180.00

... 7.80 .......(0.7%)

Gold Super Cycle!!
Click Here

European Union finance ministers started laying out new & tougher rules for their public finances in the hopes of winning back market confidence & preventing a repeat of the debt crisis that is threatening the €. However, Europe's stock markets remained cautious despite the approval by Germany's lower house of a €750B (US$937B) "shock and awe" package of cash & state guarantees to protect eurozone countries from bankruptcy. The € was up fractionally around $1.25½ coming off a 4-year low against the dollar (down 18% since Dec). Big problems remain. Germany is pushing hard for aid to debt-laden European countries to be coupled with requirements to bring down deficits to compensate for fears that the financial backstop effectively removes the pressure on indebted euro nations to cut debt fast. The Greek (Euro) drama plays on & stock markets are confused!

German Lawmakers Approve Share of $1 Trillion Bailout



The Senate approved a sweeping reform bill for financial firms & must now be merged with a measure approved by the House. A final package will be signed by the president, possibly within a few weeks. Changes proposed threaten to constrain the banking industry & reduce profits.

• Senate approves sweeping Wall St. reform bill- Reuters

Exxon Mobil, #1 company in market cap & a Dividend Aristocrat, is selling barley above its prices 5 years ago. 2 years ago profits exploded on record high oil prices followed by a more than 50% decline last year. Their yield is approaching 3% & they have a P/E of 10X for 2010 & under 9X for next year. The stock is down a couple pennies today at just over $60. Value investors might become interested if the prices fall further pushing the yield over 3%. With the oil spill in the Gulf droning on, there is no need to rush into buying the stock. But this is a quality company to keep on a "to buy" list.


Exxon Mobil --- 5 years





Markets are very oversold which means a buying reaction is coming & probably will be violent. But that can bring sharp reversals giving frustrated stockholders an opportunity bail out at higher levels. Dow is barely above 10K & hoping that support will hold. We'll see.


Dow Jones Industrials -- 2 weeks

Get your favorite symbols' Trend Analysis TODAY!
Click Here

Find out what's inside Trend TV!
Click Here