Grim bank reports sink stocks

Banks dominate the news with dreary reports. In the Dow, Citigroup (C) is a $3 stock, Bank of America (BAC) is a $7 stock, American Express (AXP) is a $17 stock while JP Morgan Chase (JPM) is high priced at $25. Dow is down 128, decliners over advancers 6-1 & NAZ is down 20.

Leading the way down are banks. S&P 500 FINANCIALS INDEX is getting punished badly on the sell-off for bank stocks. Just a couple years ago this index was at 500, now is pushing to take out its recent low of 125:

Value 132.19

Change -8.21

% Change -5.8%

Punishment is being spread around, all the indices I follow are down substantially. Oil now has a 35 handle, hmmm!

• Oil tumbles close to $35- AP

The bank story is deteriorating into just a plain UGLY mess! Bank of America is down 25% TODAY to a 17 year low. Besides loan problems, which has become a routine story at big banks, they are trying to back out of taking over Merrill Lynch. They say the losses are too big to deal with but the gov, now a big stockholder, wants the deal to go thru. Remember the former chief exec who was told to take this $150M package & go after they found out he gave them this mess?

•Bank of America Plunges on Concern Company Needs More Aid for Merrill Deal


JPMorgan eaked out a profit in Q4, but the outlook is grim, especially if the economic picture worsens. Earnings were hurt by costs related to the Washington Mutual takeover along with a loan story that was not pretty.

• JPMorgan posts profit, but 'disappointing' one- AP

Major foreign banks are not doing any better. It seems like all European & Asian banks are also posting multi $B losses & looking for help to stay afloat. The European Central Bank (ECB) cut rates again, it probably won't make a big difference. Last week the Bank of England cut its lending rate to the lowest rate in history (it was founded in 1694)!

• ECB cuts rates to 2 percent- AP

On the macro economic front, jobless claims last week jumped to 524K up from a revised 470K in the prior week. This was substantially higher than the 500K expected. More announcements about layoffs are swelling the rolls.

• New jobless claims increase more than expected- AP

Congress is proposing a whopper $825B stimulus package (more spending along with tax cuts) to help the economy. Now there is greater recognition that any plan first, has to be passed by congress, no easy task, & 2nd, money has to reach businesses & individuals. Last year serves as a reminder, the tax rebate passed in mid Feb only reached taxpayers 3-5 months later.

•House's Stimulus Bill Seeks $550 Billion in Spending, $275 Billion Tax Cut


Dow is sinking to 8K. That low may be tested, probably today or tomorrow. If it falls the floor, there is not a lot of support below:

Dow Jones Industrials --- 3 months

Stocks bounce back

Markets are adjusting well to gloomy news. After a weak start, buyers returned carrying the Dow to plus 54. The 8K floor for Dow has been holding pretty well. Just prior to the Columbus Day rally, the Dow dropped to almost 8K & that floor has basically held. We're into tax loss selling season, that hasn't been responsible for additional declines. The bulls would point to this analysis as a positive sign.

Interesting story about Merrill Lynch. After billions & billions of losses, their bonuses will cut (only) 50%. In the first 9 months of 2008, wages were 3% lower than the prior year.

•Merrill Lynch Is Said to Reduce Year-End Bonuses by 50% as Revenue Slumps

One ugly day for financials

Last night, Bloomberg.Asia TV was all about Lehman going under & Merrilll Lynch being bought out. All kinds of experts gave lots of opinions, but they are just guesses. New rules are being written which will change markets & nobody knows how this will play out. Very scary!

Pre-trading Dow was down 300 overnight. This morning in pre-markets, Dow was down about 350 & S&P was down over over 40. Maybe that's not so bad given all the confusion in the markets. After the initial plunge, there has been some recovery (as noted on my widget from Bigcharts on the right). Indices have halved their losses, but Dow is still down 270 as the recovery suffered a setback. Decliners are over advancers 7-1, one rough market. The S&P 500 FINANCIALS INDEX is down 14 to 284, near the morning lows. A big drag is Bank of America down 5 on the Merrill Lynch buyout.

From Bloomberg, here are a ton of articles, this is a very bad day for news, all grim:

•Lehman Files for Record Bankruptcy, Victim of Meltdown Firm Helped Create
•Stocks in U.S. Drop as Lehman Bankruptcy Deepens Turmoil in Credit Markets
•AIG Slumps After Insurer Rejects Buyout Offers, Seeks $40 Billion Fed Loan
•Bank of America Will Buy Merrill for $50 Billion as Credit Crisis Broadens
•Oil, Gasoline Tumble as Lehman Fails, Hurricane Ike Spares U.S. Refineries
•Pimco, Vanguard, Franklin Are Biggest Bond Fund Losers in Lehman Collapse
•Emerging-Market `Panic' Masks Record Profits, May End With 20% Stock Rally
•Houston Struggles to Recover From Hurricane Ike as Midwest Hit by Flooding

The financials continue in center stage as Lehman is history & Merrill Lynch is being bought out by Bank of America (BAC). American International Group (AIG), Dow stock, is officially shaky as its stock plunged into the 6s. They used to be the largest insurance company in the world. Insurance companies own stocks, chances are they may be selling a lot to raise cash. Washington Mutual (WM) is also shaky, heading back down to the low 2's.

Oil is getting clobbered (down 4 to 97 after falling to 95) despite the infrastructure damage in east Texas. Prices at the pumps around the country are spiking up on ugly thoughts about their supplies. That's a punch the economy does not need. The Alerian MLP index, in sympathy to lower oil prices, sold off 5 remaining near levels last seen 3 years ago.

The S&P 500 at 1225, is holding above 1200, a key support level (the July 15 low). If that floor does not hold, look out below! At the FED meeting this week, all of a sudden it is now assumed that they will cut rates again. That's a short term reaction, but may haunt the economy in the longer term. Amidst the chaos, it is best to try to stay cool. Use these trying times to prepare for buying opportunities in oversold stocks.

Markets little changed on a very confusing day

Dow is down only 11, advancers are slightly ahead of decliners & NAZ is essentially even. NYSE volume was low at 1.1B. The 4 biggies in trouble, AIG, MER, WM & LEH, traded 700MM in total volume. S&P 500 FINANCIALS INDEX is soggy, down 3 to 282 as financials try to make sense out of the financial mess out there. Merrill Lynch (MER) & American International Group (AIG), are off sharply again to new multi year lows (MER is at a 12 year low). Washington Mutual (WM) was even at 2.80. AIG is under pressure to announce their turnaround plan prior to Sep 25. With their stock heading for zero, that announcement is desperately needed.

•AIG May Announce Turnaround Plan Before Sept. 25 Deadline as Shares Slump

In this unusually confusing world of big finance, here's more thoughts about LEH & its future:

•Bank of America Leads Talks for Lehman as Paulson Opposes Providing Funds
•Greenspan Says Sale of Lehman Should Be Resolved Without Government Help
•Paulson, Fed Stand Against Lehman Funding Signals Attempt to Draw the Line
•Lehman Is No Bear Stearns as Money Markets Show Little Panic Amid Meltdown

It's amazing all the confusion surrounding LEH & how relatively well the markets are taking it.

Oil was about even (although it dropped one penny below 100 during the day) as IKE approaches the Texas coast. This is quite a change form a couple of months ago when this threat could be worth at least 5 points. The Alerian MLP index is having a relief rally. After being greatly oversold, it's up 5 points to 250. Many of the big name players are up 1+ from oversold conditions. However, this is the region it traded at 3 years ago.

I just returned from a meeting with top financials execs. They were guessing about what will happen to LEH, down to 3½, probably this weekend. Their stock is probably history & preferred may also lose out. The problem is making the bond holders whole. Hopefully the gov can stay on the sidelines. A takeover or bailout should bring a stock market relief rally, but bigger problems with financials are not going away soon. Just ask stockholders of AIG, MER & WM.

Fannie Mae & Freddie Mac stories are not over. They still have trillions in debts which have to be be made whole. That's where gov help may be needed, costing taxpayers billions.

Markets weak but hanging in there

Lehman (LEH), Merrill Lynch (MER), Washington Mutual (WM) & American International Group (AIG), all huge financials in various degrees of shakiness, have not been able to rattle markets seriously. The aftermath of the gov bailout for Fannie Mae/Freddie Mac is still not clear, but, again, markets are digesting this fairly well. Dow is down 67, decliners over advancers 2-1 and NAZ is down 14. The S&P 500 FINANCIALS INDEX is down only 3 to 283 in what qualifies as a very mild reaction to what is going on in the financial world.

Oil is up pennies in the 101s, again not too bad considering a couple of months ago hurricane fears could have sent oil up 5+. The Alerian MLP index which lately tags along with movements in oil prices even though they have little influence on their business, is up 4 to 248. This is probably an oversold rally, the index remains near its 3 year low.

Lehman still is on the front burner. Last night in Asian markets, they were discussing about how LEH might be bailed out & if the Federal Reserve should get involved. The truth is nobody knows but there was a feeling that an announcement might be made over the weekend. After all, they're running out of time. There was a general agreement that gov involvement should be minimal, preferably none. Today LEH stock sunk below 4. All kinds of speculation is going on about LEH, but nobody really knows what's going on, including those on the inside.

• Lehman Shares Fall Amid Race to Find Buyer- AP

•Lehman's Fuld Pursues Talks Amid Signals Fed, Treasury Won't Fund Takeover

Speaking of the shaky group, AIG is down again, this time 3+ to 14. Much of yesterday's late day rally which recovered morning losses, evaporated today. AIG, a Dow stock & the largest insurer in the world, has clearly gotten in over its head, and, looks like it may need its own bailout. Meanwhile Merill Lynch (MER) is down 1½ on more wild speculation.

•AIG Slides, Bond Risk Rises to Record on Speculation Insurer Lacks Capital

Washington Mutual (WM) will need to sell off assets to stay alive, down fractionally to 2.74.

•Washington Mutual May Be Forced to Sell Deposits, Branches to Stay Afloat

Macro economic news continues & it's generally not pretty:

• Wholesale Prices Plunge 0.9 Percent in August- AP
• Retail Sales Unexpectedly Drop in August- AP
• Consumer Mood Hits 8-month High in September- Reuters
• Foreclosure Filings Increase, but at Slower Rate- AP

The decline in wholesale prices was double the rate expected. Retail sales in Aug were disappointing. Excluding autos, sales declined 0.7% as back-to-school season was dreary. Consumer sentiment rose again due to lower fuel prices & expectations of more moderate inflation for the next year. The news on lower foreclosure filings was welcome but the inventory of unsold home will continue to be a drag on the housing industry

For the bullish argument, markets are taking ugly news & thoughts very well.

Markets up after late day rally

General Motors (GM), Caterpillar (CAT), JP Morgan Chase (JPM) & Microsoft (MSFT) led the Dow higher, up 164. Also helping, American International Group (AIG) recovered its almost 4 point loss earlier in the day, fighting its way back to a tiny gain. NYSE volume was a decent 1½B. But decliners were ahead of advancers 5-4 and NAZ was up 29. S&P 500 FINANCIALS INDEX rose 4 to 286 (up 16 from the low earlier in the day). Hope springs eternal for Lehman (LEH), however financials were selling off in after hours trading:

Bankers Say Lehman Approaching Rivals for Lifeline- AP

Congress is getting into the act of saving Fannie Mae (FNM)/Freddie Mac (FRE). Maybe that's why financials are selling off after hours:

•Fannie Mae, Freddie Mac Should Freeze Mortgage Foreclosures, Senators Say

Even though financials recovered, Merrill Lynch (MER) dropped almost 4 on nervousness. Washington Mutual (WM) was up about 50¢ to 2.83 (more than a point above its earlier low) as buyers rushed back into the stock, but, after hours, that gain vanished.

Financials Hit As Worries Spread Beyond Lehman

Confusion reigns in financials. Enormous mistakes & bad investments have been made, now they're coming home to roost. Try not to panic, it's better to remain cool on the sidelines & let day traders sort out the current mess.

Oil fell almost 2 to just over 100, even on worries about Ike hitting Texas. This is oil's lowest price in about 5 months as it continues playing defense. The Alerian MLP index is in its own bear market falling another 5 to 244 (shown in the Yahoo widget on the right). This brings it 98 points below the peak reached in the middle of last year (after a very pretty 9 month run).

A story just breaking, will leave today's post on an optimistic note:

BofA in Talks to Buy Lehman: WSJ Citing Source- Reuters

Stay tuned!

Stocks down on higher unemployment

Dow dropped 105 to 11082 getting close to the 10962 low close of Jul 15. This is testing time, I think the support will not hold. Decliners are over advancers 4-1 and NAZ is down 28. The S&P 500 FINANCIALS INDEX is down 2 to 279. After the 5 day relief rally following July 15 low, it had risen to 277. Oils are down 2% & the Alerian MLP index dropped 5 to 259. This selling is testing the 2 year low, 258, reached a few weeks ago.

There is plenty of gloomy news about the economy. The Labor Dept reported the jobless rate rose to 6.1% as 84K jobs were lost in Aug (vs forecasts of 75K).

•Payrolls in U.S. Fall More Than Forecast; Jobless Rate at Five-Year High

The foreclosure rate in Q2 rose to 1.19%, highest rate in 29 years. The mortgage mess will continue bringing additional significant mortgage writedowns in Q3 & Q4.

•Mortgage Foreclosures in U.S. Rise at Fastest Pace in Almost Three Decades

Merrill Lynch (MER), down 72¢, the largest brokerage firm, was downgraded to "sell" by Goldman Sachs. They were "battered by more than $40 billion of credit market writedowns" which summarizes thinking for the sell recommendation.

Merrill Lynch Cut to `Sell' at Goldman; Credit-Market Writedowns May Rise


Seekingalpha just published my article on, check it out:

Why Buy MLPs?

http://seekingalpha.com/article/94022-why-buy-mlps

Stocks after recovering from losses, end little changed

Dow was up 12, decliners over advancers 1¼ to 1 while NAZ pulled back 9. Volume continues quiet at 0.9B, just one of those summer days. Today oil made headline news. Oil surged over 5 to 121 on growing tensions between the US & Russia with the possible threat Russia (world's 2nd largest oil producer) could cut off oil supplies. Problems with Georgia continue plus Russia is worried about the defense system the US will install in Poland. The last 2 days are first in a month that headlines news impacted oil prices causing them to rise. Oil stocks rose nicely on this news helping the Dow. The Alerian MLP index went up 1½ to 268.32, getting a little further away from the 260s, its 52 week low area.

S&P 500 FINANCIALS INDEX pulled back 2.90 to 268.74 (near the important 267 monthly low) as worries about the financials drone on. After being down on more deary news, Lehman (LEH) rose 1 point ending at break even. An analyst recommended buying LEH on the hopes they could be the subject of a hostile takeover. Sure! Even if it happens, difficult to imagine a significant premium given all the confusion over what financials are really worth.

American Intl Group (AIG), a Dow stock & billed as the largest insurance company in the world, pulled back under 20 (down 1.02 to 19.78), lowest price since 1996. Merrill Lynch (MER), down pennies, will announce a deal with NY Attorney General about a settlement in auction-rate securities sales. It will not be pretty & cost them plenty, money & reputation. This is another case where big financial boys who are supposed to be professionals knowing what they were doing, really weren't. Now their shareholders & all shareholders, among others, are paying. Expect more enormous size problems for financials, even in this quiet late Aug period.

Airlines fly high!!!

Markets had a big rally day, recovering yesterday's large loss. Dow was up a big 266, advancers over decliners 3-1 (a little tepid) while NAZ rose 55. Volume on NYSE was 1.4B, good but not great. Airlines & banks led the broad advance. American Airlines (AMR) was up 19%, an airline leader but typical of the group. Of course it's easier for a low priced stock to achieve such a gain. Banks roared ahead (courtesy of Bloomberg):

S&P 500 FINANCIALS INDEX

Value 287.37......Change 20.03.....Change +7.5%

This index may be heading back for last week's 302 interim high.

Other stocks participated in the rally. US Steel (X), a former Dow stock, gained over 20 on record profits. Colgate-Palmolive (CL) rose 5½ on a very good earnings report. Oversold REITs did very well. Even junk bond funds "leaped" maybe 1% from their depths, still yielding 12%.

The largest single factor in the gains was the price of oil dropping another 2½ to 122:

CLU08.NYM......Crude Oil Sep 08......$122.20.....down--2.53 (2.03%)

This is the lowest price in almost 2 months. Oil stocks in anticipation of excellent earnings inched up a little. However, the Alerian MLP index dropped 2 to 266 hovering near the 262 resistance level. MLPs continue as another group finding it tough to get respect.

This was a very confusing day for me. Merrill Lynch (MER) reported ugly news on its finances & Citigroup (C) is getting ready for another big write-off. Each was rewarded with nice gains, MER up 2 & C up 1+. That's the kind of the day it was. More macro economic reports are expected later this week along with earnings from the major oil companies.

Relief rally

Dow rose 127, advancers ahead of decliners better than 3-2 & NAZ was up 46. Reasoning for the gains seems fuzzy, maybe they're glad the sky didn't fall. Consumer Confidence rose to 51.9 (a little above many estimates), up 0.9. That still sounds grim. The original number for the prior month was 49, the lowest level since 1992. An analyst says Citigroup (C) will write-off $8B in Q3 related to its CDOs (collateralized debt obligations), the stock is little changed today. They have $22½B in CDOs & will sell these loans for 22¢ on the dollar. Merrill Lynch (MER), is down more than a dollar after announcing its large write-offs & the need for more financing. They have credibility problems following all those recent statements about not needing more capital. Believe it or not, most banks are higher, maybe this is a kind of a relief rally. For example, Bank of America,(BAC) is up over 1 dollar to above 29 after its recent sell-off from the interim high of 34.

Oil fell over 1 to the 123s on worries about a global slowdown in demand. There is a lot more discussion of that concept, especially from Asian markets. Energy companies have just started reporting earnings, & they are expected to be very good. Exxon (XOM) should report in a couple of days. The Alerian MLP index is down 2+ at 265, hovering just over the 262 low which has held. Keep in mind that last year 282 held but did not last.

For the bulls, enjoy today!

No let-up in selling

Markets continue to slide in Asia/Australia. Each market is down 2-3%, very bleak. The announcement by Merrill Lynch after hours about needing more capital (after selling their Bloomberg stake for $4B a couple of days ago) & many prior announcements that they would not need more capital is being questioned in Asia trading. Merrill Lynch is taking another big write-off & will seek an additional $8½B. The end of the credit crisis does not look to be near.

2 day rally sputters

The large 2 day gains may be coming to an end. Dow is up 11, advancers are barely ahead of decliners while NAZ is getting clobbered, down 26. Financials are starting to return to the world of reality. For example, Bank of America (BAC) is up almost 9 (nearly 50%) in just 2+ days. OK, they were greatly oversold, but this is bringing up the concept of "overbought." Citigroup (C) reported a loss less than feared, it's up 10% to 20 (not bad for a 14 stock a couple of days ago). Merrill Lynch (MER) was down only 1% today after its loss reported yesterday. But techs are less forgiving. While IBM had good earnings, up 3+, Google (GOOG) & Microsoft (MSFT ) are being punished, down 8%, after reporting disappointing earnings. GOOG & MSFT are a big drag on NAZ. Back to financials, Freddie Mac (FRE) may have to raise $10B to boost capital. Freddie (FRE) & Fannie Mae (FNM) are each up again as credit fears have diminished greatly this week.

Oil may be trying to head north again, up 2 into the 131s. This may be a version of bargain hunting in this wild market. I keep thinking about those words last night, any slowdown in demand by the US will be picked up with Asian demand. Ugh!! The Alerian MLP index is down pennies into the 261s, barely reaching a new 52 week low.

Tough times for financials lie ahead with loan worries not to mention inflation, unemployment & a sputtering economy. Last night, Toshiba sent out its ad talking about back to school bargains. This is the beginning of the very important selling season.

During the recent run-up for financials, REITS have barely participated while junk bond funds have been ignored. Junk bonds typically yield over 12% (800+ basis points over the Treasury bond) with no mortgage exposure. Maybe somebody will catch on soon.

Impressive rally

Just after my last post, stocks took off gaining 200 & extending their recovery to 2 days led by a major rebound in beaten up financials & sharply lower oil prices. Dow was up 207 extending the 2 day gain to almost 500, advancers ahead of decliners 5-2 & NAZ was up a more modest 27. Volume was much higher at 1.97B, noticeably high. The VIX (volatility index) was essentially even at 25.01, still at a very high level. There is thinking that the (pretty much) record rebound in financials is related to tightening on shorts. With naked shorts for financials not allowed, there may have been a rush by those affected, among others, to buy back. Plus there was a sigh of relief for the financial community. Even heavily hammered FNM, FRE & LEH came roaring back. The market rebound was also encouraged by what they call fairly "good" earnings reports by Dow Stocks: JPM, KO & UTX, although I view them as not so great.

With all the excitement in recovery for financials, the sharp fall in oil prices has been less noticed than otherwise would have been the case. Oil fell from 145s to under 130 in just 3 days.

CLQ08.NYM" CLQ08.NYM Crude Oil Aug 08 129.84 3:56pm ET
down 4.76 (3.54%)

With the decline in oil prices, not to mention oil & related stocks, MLPs have pulled back to a new 52 week low.

Alerian MLP index:






The close today was 262.01, a new low by pennies. This weak performance does not bode well for the short term.

There were a number of of biggies reporting after hours. Google (GOOG), I love them, now down 40 (8%) on slowing "click" growth. IBM (IBM), a big Dow stock, reported favorable earnings, down 84¢ after hours. Merrill Lynch (MER) report a 4.97 EPS loss (worse than imaginable), down 3 or 10% after hours. They have a lot to explain in the conference call. Microsoft (MSFT), another Dow stock, reported favorable sales but earnings 1¢ shy of forecasts, down 1½ after hours. The general tone of these biggies seems negative, let's see how it plays tomorrow.

Markets mostly muddled

Markets are mostly muddled. Dow is down 30, decliners over advancers 3-2 and NAZ down 6. On the economy, housing, inflation, unemployment fronts, etc., things look bleak. Yesterday's 2 big sells in the Dow, GM & Citi, are selling at multi year lows (11 & 17 respectively). CNBC reports that GM's market value of $7B is about equal to that of Mattel (MAT) & ½ that of Avon (AVP). Oil is trading at a new record, 142. There are calls for the price to go to 150, 170, 200, whatever. Consumer confidence fell to a 28 year low of 56.4 for the usual reasons. Merrill Lynch (MER) and American International Group (AIG), a Dow stock, are getting ready to report more ugly write-offs. KB Homes (KBH) posts a larger loss, but nobody seems to care these days. The Alerian MLP index is also down over 2 to 278, looks like it's headed for a test at 262.

Markets are greatly oversold, i.e. the sellers will just give up & shorts will start buying back. A relief rally is to be expected (probably this PM), but the outlook remains dreary. S&P 500 is the most closely watched index and the 1270 line is considered very important. Next week, it could be tested.

Witches sink stocks

Quadruple witching was too much for the markets. Dow tumbled 220, decliners over advancers 5-2 while NAZ pulled back 56. Dow is solidly below 12K, next step is testing the lows from a few months ago. S&P500 at 1317 is nearing the magic 1270 support line. Both of these may be visited next week. Volume was a little stronger at 1½B. Bigcharts.com gives a slightly different number than Yahoo for new lows, they're showing 173 new lows vs 36 new highs on NYSE. Banks are still struggling to cope with negative comments yesterday, pulled back. REITs & just about everything else was weak. The Alerian MLP index pulled back 1 to 285, another index that may have to test lows from earlier this year. Oil settled up 2.69 to 134.62 on more supply worries, what's new?

Ford warned about soft sales for cars, no surprise. Moody's cut the outlook for their ratings to negative. Merrill Lynch after issuing the negative forecast about banks yesterday fell 1.74 on fears they may have to take more write-offs relating to bad loans they have. Reuters has a story about bank analysts cutting forecasts for bank earnings. It looks like the witches carried the day today. Next week, markets will be starting on defense!

Ugly day for markets

This was another ugly day for the markets. A rally in the last hour reduced losses, but this was still a down day. Dow was down 134, decliners over advancers 2-1 & NAZ had an especially tough day, down 31. The biggest negative news, among many negatives, was the S&P downgrade of major financials including: Merrill Lynch (MER), Morgan Stanley (MS), Lehman(LEH) along with banks such as JP Morgan (JPM) & Bank of America (BAC). After a period of massive write-offs, S&P is not convinced the worst is over (i.e. more losses are ahead). All of these sold off 1-2%. In addition Washington Mutual (WM) & Wachovia (WB) after having very rough years dismissed their CEO's. The Sec of Commerce, Henry Paulson, in a speech given in Asia said it may be months before the (credit mess) turmoil ends. On the upside, MLPs did well, up 2. They benefited from favorable speculation at the beginning of hurricane season (which already produced it's first tropical storm closing 2 refineries in Mexico).

Oil was hanging around 128, at one point nearing 129 but closing at 127.64 up 29¢. These are times to test the best of investors. But they know this time should be used to study companies in preparation for future buying opportunities!

Higher stocks on optimism about US economy

Stocks had a broad based advance based on increasing optimism about the US economy. Dow was up 190, advancers ahead of decliners better than 2-1 & NAZ was very strong, up 68. Averages closed at or near their highs with Dow breaking the important 13K level & S&P500 closing solidly above 1400. The breadth of the market was good, but still not as good as those days with ratios of 5+ to 1. Volume continues at so-so levels, today at 1.4B. The Kuwait Sovereign Fund (with a lot of oil money) gave a solid vote of confidence to the US economy by buying additional shares in Citigroup (C), up 1.04, & Merrill Lynch (MER), up 2.56. Also, little noticed, the Bank of England announced they felt the worst of the credit crisis was over. Banks (up 4%) & technology did quite well in today's broad based advance. This advance was fueled by investors taking money out of commodities to invest in stocks. Oil is back down to 112.52 (from 120 last week) while gold slipped to 850 (remember 1000?). The dollar has been very strong in the last couple of weeks, i.e. the Euro fell from a recent high of 1.60 to 1.54.

On the tech front, Research in Motion (RIMM), Apple (AAPL) & Google (GOOG) each had an excellent day. But after the close Sun (JAVA), 4th largest computer maker, reported a loss. They were up 67¢ during trading hours, but pulled back 1.77 after hours. Now that Dow & S&P500 reached important levels, bulls will have to decide if they can carry the averages higher or take time for a pause.

Stocks mixed (up) again

Stocks were mixed (up) again. The averages hardly changed & advancers equaled decliners, a very neutral day. After another 6B in writedowns, Merrill Lynch (MER) reported their 3rd straight quarterly loss. The loss was 2.19 per share vs 1.99 forecasted by analysts. Moodys said they might have to cut MER debt ratings. MER was up 1.82, most of the other big name financials were also up. I dunno! After hours, Google (GOOG) reported higher earnings for Q1, 4.12 vs 3.18 last year. The markets liked this report, sending the stock up 74 after hours (after declining 5 in regular trading). GOOG tweaked their online business (whatever that means) plus were aided by strong overseas growth. This should give NAZ & maybe the Dow a nice start tomorrow, although Asian markets are down a little as of this writing.

Gas prices keep going up, passing 3.40 to 3.42 on their march towards $4 at the pump. Doesn't sound good. Oil continues trading just under 115. Tomorrow we'll see if optimism on company reports will trump dreary economic news.