S&P call lifts stocks

Stocks recovered nicely after the S&P call about seeing the light at the end of the tunnel. After being down 200 in the AM, Dow rose 300 points ending with a gain of 35, advancers ahead of decliners almost 3-2 & NAZ up 20. The S&P call was focused on sub-prime mortgages, not other financial debts such as Alt-A loans which have also caused major problems. It should be kept in mind that S&P's track record on calls in recent weeks has not been very good.

A technical guy evaluating charts said he is focused on a support level of 1270 for the S&P 500, same number somebody used last week. The S&P is 1315 after having held at 1270 a few days ago. He thinks that buyers aided by weak shorts who panic easily caused the move up in stocks suggesting S&P 500 will test 1270 & fail, sending the markets even lower.

Gold flirts with 1000, oil is 110 however the Treasury bond fell today sending the yield up to 3.53%. Bear Stearns (BSC), fell 4.58 & down as much as 10 at midday, as vulchers are circling. One analyst said yesterday said the FED couldn't let them go under because it would bring on a worse mess. Junk bonds offer very high yields. For example, a GM bond yields 13%. Risk is there but that should whet some appetites. Muni yields have shot up from 4% to 5% in recent weeks. The Alerian MLP index pulled back 2 to 279 another 12 month low.

S&P call send stocks higher

S&P in the AM said we can see "the light at the end of the tunnel" regarding the massive write-downs at financials. The Dow rallied 300 points from down 200 to up 75 presently.

Down down 216

Dow tumbles again, down 216, decliners lead advancers 5-1 and NAZ is down 41. First thing this morning, I saw on Bloomberg TV that Dow futures were trading down 153 following the lead of Asian & then European stocks. There is growing recognition that quick fixes do not help with the mess that financial markets are trying to deal with. Meanwhile, gold is at the magic 1000 level, oil is 110 & the Treasury bond yield is down to 3.41% (flight to safety).

Investors were told by Treasury Secretary Henry Paulson of a plan to provide stronger regulatory oversight of mortgage lenders. Lax standards are blamed for today's credit mess. Such changes appear to be like shutting the door after the cows are already out of the barn. A gov report showed retail sales fell in February 0.6% rather than increasing as had been expected. The number of homes facing foreclosure rose 60% in Feb. Carlyle Capital Corp. said it expects creditors to seize all of the fund's remaining assets after missing margin calls last week on its $22B portfolio of residential-mortgage-backed bonds. There are fears that more ugly news will be coming from depressed mortgage-backed securities. The markets do not look very pretty & this could keep dragging on.

Stocks fall in Asia

Stocks in Asia continue the decline starting in the US, most markets are down 1-2%. Shanghai is 4030, down 1%, was over 6K just a few months ago. China has worries about inflation, recession in the US & dealing with the worst winter in half a century. Japan's market is down 2% reacting to the sharp appreciation in the Yen. $1 buys 101 Yen (or ¥), a 12 year high against the $. Dow futures are down 50, Thurs is shaping up as another rough day in the US.

Markets fall in late day selloff

Markets sold after after the first couple of hours. At the high Dow was up over 100, then it sold off 200 to finish down 46. Decliners were ahead of advancers 2-1 & NAZ was down 12. Yesterday featured strong volume, today was only average as reality kicked in. Banks led the charge down. Bank of America (BAC), a new member of the Dow, was down 69¢ along with the rest of the group. Wachovia (WB) was down 1.73 as it defended it's purchase of a Cal mortgage lender. Even Thornburg (TMA) pulled back 40¢ from it's midday price. The volatility index remains in very high territory, gaining .86 to 27.22. The Alerian MLP index dropped back to 281, the low level from a couple of days ago & very near the low end of it's trading range over the last 8 months. Meanwhile NY oil closed at 109.95 & gold was 978.80. The long Treasury bond had an excellent day gaining almost one point bringing it's yield down to 3.48%.

Dow strong again

Markets continued yesterday's rally. Dow is up 74, advancers ahead of decliners 2-1 & NAZ up 13 (stocks pulled back a little in the last few mins). Buyers were encouraged by the FED's move to add liquidity to the securities markets & oil pulled back to "only" 108. Just a couple of weeks ago they were trying to figure if 105 oil was possible. The volatility index pulled back 1 to 25 (above 20 is considered very high).

Last night Caterpillar (CAT), a Dow stock, up $3.09, said they expect growth of 5-15% this year. UPS (UPS), down 40¢, said they may miss Q1 forecast. This is an important company since they feel overall economic activity. Thornburg Mortgage (TMA) doubled today to $3.25, getting them away from death's door. Billions are at risk if they fail. Alerian MLP index pulled back a point to 282 erasing yesterday's a modest gain. I'm a little attached to these companies & their pipelines. But once again, they are at the heart of the economy although high oil & gas prices may get factored into today's decline.

Asian markets surge

Asian markets are following the lead from higher markets in NY. Their focus is Wall Street's biggest gain in over 5 years, most gapped up initially with gains around 3%. They are also talking about reducing expectations of a rate cut by the FED next week for "only" 50 basis points (vs 75 assumed before). However, markets already open have started to pull back.

Dow's biggest gain in 5 years

Dow had it's biggest gain in 5 years, up 417. Gainers outnumbered advancers 10-1, an eye popping event. NAZ was up a whopping 86. The rally followed the FED's announcement that they would accept mortgage backed securities as collateral. This is technical & tough to understand, I'm still struggling to figure it out. It's not open ended, only AAA, etc securities can be used. Markets took this as a huge plus aimed at helping relieve the credit mess the US & world are in. Around midday, when the Dow was up 135, it took off & didn't stop rising until the close. Steady buying is considered very nice but also worrisome. A one day rally conjures up amateurs piling on, driven by emotion.

Just yesterday evening, I saw a money manager talk about the short term future (roughly 6 months) for financials as being uncertain with a strong bias on the ugly side. He said problem loans will get worse & high yields on bank kind of securities are suggesting more div cuts are coming. Bear Stearns (BSX), up ONLY 61¢ on a very strong day, remains under a cloud which first appeared last Aug. Meanwhile, Asian markets will be open in a couple of hours & should follow thru on the gains in US markets.