Higher stocks on improved consumer confidence

Dow is up 21, advancers ahead of decliners 3-2 while NAZ is flat on another very quiet for the markets. Banks are flattish, the Financial Index has a tiny gain.

S&P 500 FINANCIALS INDEX

Value 195.32

Change 0.15

% Change 0.1%

The Alerian MLP Index & Dow Jones REIT Index are each down fractionally. Junk bond funds are firmer at their yearly highs. The yield on the 10-year Treasury bond is up 6 basis points to 3.81%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





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Oil & gold are quiet in this semi holiday week.

CLG10.NYM

...Crude Oil Feb 10

...78.88

... 0.11 .......(0.1%)

GCZ09.CMX

...Gold Dec 09

...1,105.20

... 2.00 .......(0.2%)

photo: Bloomberg









Consumers' confidence in the economy rose again in Dec fueled by a long-term outlook on jobs that reached its highest level in 2 years. The Conference Board says its Consumer Confidence Index rose to 52.9, up from a revised 50.6 in Nov. The reading remains far short of 90 that would signify a solid economy. The proportion of people who said jobs are hard to get decreased to 48.6% in Dec from 49.2% in Nov. The gauge of expectations for the next 6 months climbed to 75.6 (the highest since the recession began 2 years ago) from 70.3 in Nov.

•U.S. Consumer Sentiment Gains a Second Month as Job-Market Pessimism Wanes



Volume continues very slooow as markets try to extend their winning streak to 7 days. The uptick on consumer sentiment is another encouraging sign but difficult to deduce much from it. Without major news events, this week should be pretty much a non event for the markets. Money managers adjusting portfolios for year end balance sheets may be the key driver for stock markets.

Dow Jones Industrials --- 2 weeks

Stocks fluctuate but averages reach new 2009 highs

Markets rallied at the close to post modest gains. Dow rose 26, advancers were slightly ahead of decliners & NAZ was up 5. Banks sold off but not badly. The Financial Index can't get far away from the low end of its trading range (190+ area).

S&P 500 FINANCIALS INDEX

Value 195.17

Change -0.60

% Change -0.3%

The Alerian MLP Index slipped back 1+, but in the 286s MLP holders aren't complaining. Some MLPs have more than doubled from their lows earlier this year. The REIT index had a small advance, good enough for a new 2009 high. Junk bond funds were off, profit taking after their best year in history. Treasuries continue weak, the yield on the 10-year Treasury bond rose 6 basis points to 3.81%. It may be trying to take out the yearly high of 4%.

Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD




10-Year Treasury Yield Index - YTD





Oil pulled back in the PM but still would like to make an assault on 80. Gold is sloshing around 1100.

CLG10.NYM

..Crude Oil Feb 10

..78.67

.. 0.62 ......(0.8%)

GCZ09.CMX

..Gold Dec 09

..1,103.80

.. 0.30 ......(0.0%)

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S&P 500 Dividend Aristocrats are still a good source for investment ideas. Despite the large gains for stock markets in 2009, some stocks have been left behind & offer good yields. Consistent dividend increases, especially getting thru 2009, is an impressive credential for any stock. Below are 3 from the list which are not as well known as Coca Cola (KO) & McDonald's (MCD) but are offered for consideration, 2010 can not be expected to continue the enormous gains of 2009.


S&P 500 Dividend Aristocrats

Automatic Data Processing (ADP)_$43_$1.36
Clorox (CLX)____________________$62_$2.00
Emerson Electric (EMR)__________$43_$1.34


Automatic Data Processing --- YTD




Clorox --- YTD




Emerson Electric --- YTD









Little was decided on a very slow day (NYSE floor volume was only .7B). There was a Treasury auction, it went well. The balance of the week should not have major changes as the successful are away enjoying profits & bonuses.

Dow Jones Industrials --- YTD

Markets mixed on mediocre retail sales

Dow was up 16, advancers over decliners by 20% & NAZ gained 6. Banks are pretty much flat.

S&P 500 FINANCIALS INDEX

Value 195.80

Change 0.03

% Change 0.0%

MLPs are resting coming off their best year in history. Their index is off small change, still in the 287s & up 111 YTD. REITs are strong, the Dow Jones REIT Index is up 2+ to another yearly high. Junk bond funds are drifting at their yearly highs. But Treasuries sold off, the yield on the 10-year Treasury bond rose 6 basis points to 3.81%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks









Commodities are modestly up, trading will probably be listless during this slow week. Oil jumped above $79, the highest level in almost 2 months as an extended cold snap triggered buying. Gold is still trying to find a base.

CLG10.NYM

...Crude Oil Feb 10

...78.75

... 0.70 .......(0.9%)

GCZ09.CMX

...Gold Dec 09

...1,105.70

... 1.60 .......(0.1%)

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photo: Yahoo

photo: Bloomberg


Holiday shopping was good enough to give merchants some reason for cheer. Retailers managed to avoid a repeat of last year's disaster despite tight credit & double-digit unemployment. Retail sales rose 3.6% from Nov 1-Dec 24, compared with a 2.3% drop last year. However, adjusting for an extra shopping day between Thanksgiving & Christmas, the number was closer to a 1% gain. The last week surge surge was fairly "good." Online sales were a particular hot spot, up 15½% aided by a big increase the weekend before Christmas. However, they make up less than 10% of total retail sales.

•U.S. Holiday Retail-Sales Increase of 3.6% Exceeds Forecasts on Extra Day


The Bank of Israel raised the interest rate to 1¼%, the third time since the global economy began to recover. Their growth has accelerated & inflation exceeded the gov target range. Norway has also had an increase in interest. These actions are monitored by the Federal Reserve.

•Bank of Israel Raises Benchmark Rate for Third Time as Growth Accelerates

Bank of Israel Interest rate - 1 year





Retail holiday sales were the big news item & they came in fairly decent, but below the numbers in the best years. This is a story repeated during the year, beating lowered estimates is all that is required. Stocks are at yearly highs following one of the best years in history. The rest of the shortened week is difficult to predict with year end adjustments by money managers. But on the margin, following winds should be a help.

Dow Jones Industrials --- 2 week

Stock averages at yearly highs

Dow shot ahead 53 taking it above 10½K to a new 2009 high, advancers over decliners almost 3-1 & NAZ gained 16 to another yearly high. Not a sign of a bear in sight. Banks also had a good day as the Financial Index is putting more distance between it & its trading range low. While this has been a stellar year for many stocks, others have not done so well. Citigroup (C) is one of my favorites which falls into the latter group.


S&P 500 FINANCIALS INDEX

Value 195.77

Change 1.67

% Change 0.9%

Citigroup --- YTD




The Alerian MLP Index & the Dow Jones REIT Index each gained 2½ to new yearly highs. However for MLPs it's a year they will will never forget, up 111 already. Junk bond funds were strong taking them to new yearly highs bringing yields down to "only" 10% or so. Treasuries sold off again, the yield on the 10-year Treasury bond rose 6 more basis points to 3.81% which will work its way thru to higher rates on mortgages.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD





Commodities joined stocks finishing the week with solid gains.

CLG10.NYM

..Crude Oil Feb 10

..77.75

.. 1.08 ......(1.4%)

GCZ09.CMX

..Gold Dec 09

..1,104.30

.. 11.00 ......(1.0%)

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For the bargain hunters, not all the MLPs participated in this year's rally. Constellation Energy Partners (CEP) has had a tough time which meant dropping the distribution, allowing them to pay down part of their loan. Recently they refinanced that loan with a larger one. Its units are still under $4, but those who like risk might be interested in this MLP on the assumption they will turn around. If so, gains will be substantial.

Constellation Partners --- YTD





Markets had another good week with major averages reaching new 2009 highs. Gov debt is mounting, unemployment drones on & sales are sluggish at best, but bulls like what they see. Next week holiday retail sales will be reported. They may be wishy washy, but bulls are in charge & will probably take markets to new heights.


Dow Jones Industrials --- YTD



Nasdaq --- YTD

Happy holidays to all
& to all a good night!!

Decline in jobless claims raises stocks

Dow is flirting with a new 2009 high. Dow is up 41 taking it over 10½K, advancers over decliners 2-1 & NAZ is up 10 to another yearly high. Banks are attracting buyers. The Financial Index is trying to put some distance between it & its recent lows of 190.

S&P 500 FINANCIALS INDEX

Value 195.30

Change 1.20

% Change 0.6%

High yields are red hot. The Alerian MLP Index rose another 2 to the 287s while the REIT index also gained 2 but to the 187s, both yearly highs. The MLP Index is up an eye popping 63% this year & distributions are a bonus. From the dreary lows, the index is coming close to double. Meanwhile the yield on the index has dropped to under 7½% from over 15% in the ugly days. Junk bonds don't want to be left behind, they're also advancing. Treasuries are a little soft, the yield on the 10-year Treasury bond rose 2 basis points to 3.77% (a 6 month high).


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Large storms, falling supplies, a weak dollar & a slightly better employment picture sent futures higher, especially oil. Oil inventory supplies fell 5M barrels last week, but supplies remain ample. Gold had a rally, still trying to find footing after its Dec decline.

CLG10.NYM

...Crude Oil Feb 10

...77.14

... 0.47 .......(0.6%)

GCZ09.CMX

...Gold Dec 09

...1,103.00

... 9.70 .......(0.9%)

GLD (ETF) --- 2 weeks





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The number of workers filing claims for unemployment benefits fell more than expected last week & the 4-week average fell for the 16th straight week, to its lowest point in 15 months. The Labor Dept reported the number of new jobless claims fell to 452K last week, down 28K from the prior week, better performance than 470K that was forecasted. The 4-week average fell to 465K.

Further good news for the economy was that orders to U.S. factories for big-ticket durable goods rose in Nov but the increase was less than expected. Excluding the volatile transportation category, the gains were twice what had forecast.

•U.S. Initial Jobless Claims Decline to Lowest Level Since September 2008
•Durables Orders in U.S. Rise in Sign Companies Investing Ahead of New Year


Jobless claims - 1 year




4 Week Average - 1 year




# Receiving Continuing Claims - 1 year





In addition to approving massive spending on a new health plan, the Senate voted to raise the ceiling on gov debt to $12.4T, just another increase . The vote raises the ceiling by $290B. The bill permits the Treasury to issue enough bonds to fund the government's operations & programs until ONLY mid-February. Next week they will auction another $118B in debt. Take a look at the graph below, this a is a looming problem that is not going away!

Senate Votes to Increase Debt Ceiling by $290 Billion

US debt ($T) - 1 year





Bulls remain in charge of the markets. We're back to all news is good news which is taking all markets higher. Unless there is major news to counter that thinking, markets should close out the year continuing their rally.


Dow Jones Industrials --- 2 weeks

Divergent markets - commodities up, new home sales down

Stocks gave mixed signals, a sign that worries. Dow was about even (really up all of 1), advancers ahead of decliners 5-2 & NAZ gained 16 for another excellent day. All 30 in the Dow were little changed. The strength of techs & high yields while others are muddling along is a source of concern. Speaking of muddling along banks continue on their sideways track, the Financial Index just can't break above 190 in a meaningful way.


S&P 500 FINANCIALS INDEX

Value 194.10

Change -0.69

% Change -0.4%

The Alerian MLP Index is hotter than you know what. The index rose 2½ to 285 (up 109 YTD). Now REITs are participating in the rally, the Dow Jones REIT Index shot up 2 to 185, another 2009 high. Junk bond funds advanced again & the VIX continued with only a modest gain to 19¾ (an 18 month low). The 10 year Treasury bond rallied in the AM but lost the gains in the PM. The yield on the 10-year Treasury ended flat at 3.75%, an important worry for the housing industry.


Alerian MLP Index --- 3 months



Dow Jones REIT Index --- 3 months





The dollar was a little weaker bringing buyers back into commodities. Oil had a superb day, it wants to establish 75 as a launch pad for moving up. Gold has had a very rough time in Dec, but found a few buyers today. There is talk that the dollar may weaken early in the new year but should be very strong later in 2010. This could take the € (Euro) down to $1.32 in 12 months & bring the Japanese ¥ to 108 to the dollar.

CLG10.NYM

..Crude Oil Feb 10

..76.50

.. 2.10 ......(2.8%)

GCZ09.CMX

..Gold Dec 09

..1,090.00

.. 4.00 ......(0.4%)

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The S&P 500 Dividend Aristocrats have had an unusually wild year. 10 were dropped from the list while only 2 were added, reducing the size of the group to 43. However, those remaining have even more impressive track records after being able to continue raising yearly divs during the financial meltdown. A few survivors include:

3M (MMM)
Coca Cola (KO)
Eli Lilly (LLY)
Exxon Mobil (XOM)
Kimberley Clark (KMB)
McDonald's (MCD)
Procter & Gamble (PG)
VF Corp (VFC)
Wal-Mart (WMT)
Walgreen (WAG)

Many have been laggards this year as risk has been rewarded following a period when it was shunned. These are the type of companies to be analyzed when choosing long term investments.


The record for the last qtr is clear, Dow just can't break out of its sideways trading pattern (much like the Financial Index). Meanwhile high yielders have done well. MLPs keep rolling along, REITs finally broke into new high territory & junk bond funds are finding more buyers taking their yields even lower. Techs have been almost as hot, NAZ is up almost 700 (45%) YTD. The new year will have new hot players. My old rule of hat is winners will whither with new groups rotating into leadership roles.

Dow Jones Industrials --- 3 months




Nasdaq --- 3 months