Market losses limited with late day buying

Markets bounced back late in the day. With monthly options expiring, it's always difficult to find meaning in this trading. Dow had been down 60 at its low but finished with a loss of 14, decliners led advancers 3-2 & NAZ lost 11 (again, hurt by earnings news from tech heavyweight Dell). Banks lost ground, the Financial Index has been weak for the last couple of weeks.

S&P 500 FINANCIALS INDEX

Value 196.20

Change -1.13

% Change -0.6%

The Alerian MLP Index & Dow Jones REIT Index were each off almost 1 point. Both have seen selling in the last week. Junk bond funds were mixed to higher & continuing near their yearly high levels. The charts show, MLPs have done well in the last 2 months while REITs have had choppy trading & junk bonds have been fairly flat. The yield on the 10-year Treasury bond rose 1 basis point to 3.36%.


Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months




Barclays Cap Hi Yld Bond - 2 months





Commodities firmed in the PM. Gold is heading back for its 1150 record reached this week.

CLZ09.NYM

..Crude Oil Dec 09

..76.90

.. 0.56 ......(0.7%)

GCX09.CMX

..Gold Nov 09

..1,146.40

.. 5.00 ......(0.4%)

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DR Horton (DHI), 2nd largest home builder, suffered its biggest stock price decline in the last year after reporting a Q4 loss that exceeded estimates & saying the housing outlook remains difficult. Sales sank to only $1B (down 44%), the number of completed sales dropped 31%. Orders rose 26%, the first gain in more than 3 years, but DHI didn’t project a recovery to profit for 2010. "The thing that drives our business the most is job creation," said CEO Donald Tomnitz. "If we look at the macro economic environment, it’s not good for us." The stock is up sharply form the lows one year ago but today the stock fell off a cliff, plunging 1.83 (15%). The chart shows that speculation about a recovery in housing early on has disappeared.

DR Horton Plunges as Fourth-Quarter Loss Exceeds Estimates

DR Horoton --- 1 year





Without a lot of news driving late day buying, it has to be attributed to those options guys evening out positions. But the news from Horton is a reminder that this recession, especially in the important housing industry, is not ending soon!

Dow Jones Industrials --- 2 months

Markets drift lower as Dell disappoints

Dow was lower & continues to slide. Dow dropped 57, decliners over advancers 2-1 & NAZ fell 10 (hurt by a weak earnings report from Dell last night). Banks are off again. The Financial Index returned to where it was in mid Sep, not encouraging for the bullish argument.

S&P 500 FINANCIALS INDEX

Value 195.72

Change -1.61

% Change -0.8%

The Alerian MLP Index was off 1 to the 261s, still near the 265 yearly high. The Dow Jones REIT Index was off fractionally after a big loss yesterday. Junk bond funds were mixed to lower. The chart below shows Barclays Capital High Yield Bond has been drifting in the last 2 weeks. The yield on the 10-year Treasury bond was up ½ basis point to 3.36%. Not much happening here.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks




Barclays Cap Hi Yld Bond - 2 weeks





Oil had been stuck in a sideways trading range of 65-75 for much of 2009. In the last month that range has been upped to 75-80, it may want to test the lower end. Gold owners are still happy near its record prices.

CLZ09.NYM

...Crude Oil Dec 09

...76.40

... 1.06 .......(1.4%)

GCX09.CMX

..Gold Nov 09

...1,139.60

... 1.80 .......(0.2%)

After the close last night, Dell (DELL) reported Q3 results & they weren't pretty. Earnings dropped 54% on lower than expected sales. Q3 was the last qtr selling computers with Vista, the Windows 7 launch in Q4 should help their business. Steve Ballmer, CEO of Microsoft (MSFT), last night said Win 7 sales were "fantastic" in its first month. Dell dropped 1.50 (almost 10%) & MSFT was off 25¢. Their 2 year charts shows they've had relatively mild declines followed by more modest recoveries, to be expected for companies in a mature business.

• Dell bets on corporate spending for recovery- Reuters

•[$$] Ballmer Touts Windows 7 Sales
at The Wall Street Journal Online

Dell --- 2 years




Microsoft --- 2 years





After one big up day (Mon) & a big down day (yesterday), Dow is flattish on the week. Options expire today, making any call extra difficult. As of this writing, it's touch & go whether this week will be in the black or red.

Dow Jones Industrials --- 2 weeks

Weak economic data takes its toll on markets

Late day buying reduced markets losses. Dow was off 93 (recovering half its biggest loss), decliners over advancers 4-1 & NAZ fell 36 after being hit been hard hit on a grimmer outlook for chip companies. Intel (INTC), Dow stock, dropped 82¢ (4%). Banks were weak, the Financial index went below 200 one more time. It has not strayed far from 200 for 3 months.


S&P 500 FINANCIALS INDEX

Value 197.33

Change -4.07

% Change -2.0%

The longer term charts gives a reminder of this year. MLPs are having their best year in history. But after hitting their high a month ago, they drifted lower in Nov. The REIT index hit its high over 2 months ago, followed by a choppy, sideways time. Today the MLP Index dropped 2 to the 262s. & the REIT index was off 4½. Junk bond funds were mixed to lower. Treasuries also muddled along. The yield on the 10-year Treasury bond slipped 2 basis points to 3.35%.


Alerian MLP Index --- YTD




Dow Jones REIT Index --- YTD





Commodities fell, oil is a good example. Increased worries about a slow global recovery drags down prices for most of them. But gold just does not want to go down.

CLZ09.NYM

..Crude Oil Dec 09

..77.60

.. 1.98 ......(2.5%)

GCX09.CMX

..Gold Nov 09

..1,144.80

.. 4.10 ......(0.4%)

CNBC has a report about how high the unemployment really is. After adding those who have given up looking & others who accept low paying jobs to "get by," the "real" rate is closer to 18%. Cost cutting approaches aimed at increasing earnings, help stockholders, but laid off workers are still collecting unemployment checks or worse.

• 'Real' jobless rate: 17.5% unemployed- CNBC

The Conference Board’s index of leading indicators rose 0.3% in Oct, its 7th consecutive gain. Improved results are from the rally in stock prices, low short-term interest rates & slowing job losses. But those causes are likely to stabilize.

•Leading Economic Indicators in U.S. Rise, Pointing to Sustained Expansion

Sears (SHLD) had a so-so report. Same stores sales were up less than 1%. But they managed to post a smaller loss form cost cutting. The market was not impressed, the stock dropped 2.83 to 72.94.

Sears --- 1 year





Dow is up an amazing 30% of the lows in July with only minor setbacks. Bulls are hoping this correction is another one of those minor setbacks.

Dow Jones REIT Industrials --- YTD

Markets slumps on weak economic data

Dow sold off 155, decliners over advancers 6-1 & NAZ tumbled 47. Banks which have been trading sideways for 3 months led the way down.


S&P 500 FINANCIALS INDEX

Value 196.96

Change -4.44

% Change -2.2%

The high yielders fell along with the markets. The Alerian MLP Index dropped 2¼ to the 262s, failing to top its 265 yearly high. The Dow Jones REIT Index fell 4 to 160, again not able to take out its 180 highs from 2 months ago. Junk bond funds were down along with the markets. Treasuries rose up modestly, the yield on the 10-year Treasury bond fell 2 basis points to 3.34%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Selling in the markets is affecting commodities. Oil had been trying to break above 80 but that ceiling held, oil is pulling back. There is no listing for gold, still showing 1141.

CLZ09.NYM

...Crude Oil Dec 09

...78.44

... 1.14 .......(1.4%)

OIL (ETF) --- 2 months






More than 14% of homeowners with a mortgage were either behind or in foreclosure by Sep 30, a record-high for the 9th straight qtr, a problem that could threaten the economic recovery. This adds to fears that the housing market & broader recovery could be thwarted by the continuing surge in home loan defaults as unemployment keeps rising. Lost jobs, rather than the shady loans made during the housing boom, are now the main reason homeowners falling behind on mortgages. 4M homeowners were either in foreclosure or at least 3 months behind on mortgage payments as of Sep 30, a lot of homes could be coming to the market next year. Fixed-rate loans made to so-called prime borrowers with good credit histories caused nearly 33% of new foreclosures in Q3, compared with 21% last year. Subprime loans with adjustable rates have fallen to 16% of new foreclosures from 35% a year earlier. More than 18% of FHA borrowers are at least one payment behind or in foreclosure. These figures are gloomy especially when combined with high unemployment dragging on.

•FHA, Prime Mortgage Defaults Rise to Record Highs as U.S. Job Losses Mount

Foreclosures - 1 year




Foreclosures started - 1 year

The number of newly laid-off workers seeking unemployment insurance was unchanged last week, remaining above the level that would indicate the economy is adding jobs. The first-time claims for jobless benefits were 505K, the same as the prior week's revised figure. A year ago, there were 533K claims. The 4-week average fell for the 11th straight week to 514K, the lowest level in almost a year. While the decline in claims is evidence that layoffs are decreasing, they would have to fall to about 425K for several weeks to signal that the economy is adding jobs. The number continuing to claim benefits dropped by 39K to 5.6M for the week ending Nov 7. The continuing claims figure does not include millions who have used up the regular 26 weeks of benefits (typically provided by states) & are receiving extended benefits for up to 73 additional weeks, paid for by the federal gov.

US Initial Jobless Claims Unchanged at 505,000

Weekly jobless claims - 1 year





Dreary economic numbers on housing & employment are too much for the markets to handle. After 3 days of sideways trading Dow broke out, unfortunately to the downside.

Dow Jones Industrials --- 2 weeks

Markets trade sidways for third day

Stocks started lower & remained under water all day. But losses were modest & late day buying limited losses for the day. Dow was down 11, decliners over advancers 5-4 & NAZ was off 10. Banks were higher bringing the Financial Index above 200. It has stayed near 200 for the last 3 months.

S&P 500 FINANCIALS INDEX

Value 201.40

Change 1.78

% Change 0.9%

The Alerian MLP index was off pennies in the 264s but the REIT index was up 3 on encouraging words about commercial REITs. Junk bond funds were a little higher, nearing their recent yearly highs. Treasuries were lower, the yield on the 10-year Treasury bond rose 5 basis points to 3.37%.

Alerian MLP Index --- 2 months




Dow Jones REIT Index --- 2 months




Oil & gold slipped a little in the PM, but still had a good day. Gold bulls are very happy at these levels, gold reached 1150 today before backing off.

CLZ09.NYM

..Crude Oil Dec 09

..79.52

.. 0.38 ......(0.5%)

GCX09.CMX

..Gold Nov 09

..1,141.20

.. 2.40 ......(0.2%)

Microsoft (MSFT), Dow stock, was ordered by a court in China to stop selling versions of Windows which might include software developed by a Chinese company. This is an odd twist of fate since MSFT has been the one attacking software pirates, many coming from China. The stock has had a nice recovery from the lows this year but has spent most of the last decade trading in the 20s. One of the biggest buyers of MSFT has been the company with its stock repurchase plan. MSFT was up 11¢ to 30.11.

•Beijing orders Microsoft to halt some OS sales
at MarketWatch

Microsoft --- 1 year




A FED official said they may not start raising interest rates until 2012. That would help ongoing businesses but low interest rates are aggravating the weak dollar problem which would only get worse, thoughts welcomed by gold bulls. An extra chart is shown to highlight the sideways trading for the Dow this week. I find it creepy, although bulls & bears can each say it encourages their viewpoint on where the markets are going.

Dow Jones Industrials --- 1 week




Dow Jones Industrials --- 2 months

Markets drift lower on sluggish economic data

In another restful day of trading, Dow is off 40, decliners over advancers 4-3 & NAZ fell 15. Banks are getting some buying interest, the Financial Index is back over 200.

S&P 500 FINANCIALS INDEX

Value 201.37

Change 1.75

% Change 0.9%

The high yielders are just meandering around. The Alerian MLP Index is up pennies & the REIT index is up 1. Junk bond funds are up slightly. Treasuries were lower. The yield on the 10-year Treasury bond rose 4 basis points to 3.36%.

Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Oil is trying to getback over 80 & gold keeps marching onward & upward to new records.

CLZ09.NYM

..Crude Oil Dec 09

...79.72

... 0.58 .......(0.7%)

GCX09.CMX

...Gold Nov 09

...1,147.20

... 8.40 .......(0.7%)

• Gold hits record near $1,150/oz as dollar slips- Reuters

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GLD (ETF) --- 1 year





Consumer prices edged up faster than expected in Oct, driven by another increase in energy prices & the biggest jump in new car prices in 28 years. However, prices are lower than they were a year ago & inflation is expected to remain subdued in a slow economic recovery. Consumer prices (CPI) rose 0.3% in Oct. Core inflation, excluding energy & food, rose 0.2%, remaining quiet as it has done for the last year. Overall prices in the last 12 months are down 0.2%, reflecting the effects of the longest recession since the 1930s. Energy prices rose 1.5%, the biggest increase since a 4.6% jump in Aug.

Consumer Prices in US Increased 0.3% in October


Core Inflation Rate -1 year





This is shaping up as another uneventful day in the markets. Housing starts fell 11% in Oct, but that was to be expected with the looming expiration of a gov tax credit & mounting joblessness. Hershey (HSY), down 41¢, & Ferroro (Italian company) may make a bid for Cadbury after Kraft's (KFT), down 16¢, fell flat. Company takeovers can be exciting & bring higher stock prices, but not today. Dow has been flat at 10.4K all week.


Dow Jones Industrials --- 2 weeks

Bull market hesitates

Dow rose 30, decliners ahead of advancers by 15% & NAZ was up 5. Volume was light (only 1B shares were traded on the NYSE floor) in this indecisive day. Along with the markets, banks were essentially flat. They were down until the last ½ hour when buying gave the Financial Index a tiny gain. However the sideways trading pattern in the last 3 months is still in place.


S&P 500 FINANCIALS INDEX

Value 199.62

Change 0.14

% Change 0.1%

The Alerian MLP Index was up .80, still in the 264s & within a point of its recent yearly high. The yearly high of 271 represents bad data from when Enterprises Products (EPD) took over TEPPCO last month. The Dow Jones REIT Index fell 3 (much of that in the last hour) in an unexciting day, it needs 8 points to reach the 2009 high set 2 months ago. Junk bond funds were firmer. The yield on the 10-year Treasury bond slipped 1 basis point to 3.32%.


Alerian MLP Index --- 3 months




Dow Jones REIT Index --- 3 months





Commodities also had a flat day with gold managing to eke out a tiny gain.

CLZ09.NYM

..Crude Oil Dec 09

..79.10

.. 0.20 ......(0.2%)

GCX09.CMX

..Gold Nov 09

..1,138.80

.. 0.20 ......(0.0%)

Smith Intl (SII), an oilfield services company, sold 28M shares in a secondary & it did not go well. The stock fell 3.90 to 26.86 (13%). This is not supposed to happen in a bull market.

• UPDATE - Smith Int'l raising $800 mln in equity, shares dropat Reuters(Mon 4:39pm)

Smith International --- 1 day




Smith International --- 1 year






The President is in Asia holding meetings on important problems (export-import issues, value of Chinese currency, etc.) & very little was decided. Humdrum days are part of the markets' stories. This was one of them. Dow & Nasdaq had to struggle to crawl up to record highs for 2009. Even red hot gold could only inch up. SII picked a bad day for their stock offering. Hopefully the difficulty SII had with its big offering was only a one day event & will not be repeated.

Dow Jones Industrials --- 3 months

Lackluster day for the markets

Dow was off 38, decliners over advancers 2-1 & NAZ fell 11 in unexciting trading. The Financial Index has been clinging to the 200 level for 3 months while other averages have been hitting new 2009 highs.


S&P 500 FINANCIALS INDEX

Value 198.23

Change -1.25

% Change -0.6%

More sideways trading as the MLP index & REIT index are up pennies on this bland day. But each is near its 2009 high. Junk bond funds, not knowing where to go, are flattish. The yield on the 10-year Treasury bond rose 3 basis points to 3.36%.


Alerian MLP Index --- 2 weeks




Dow Jones REIT Index --- 2 weeks





Commodities, especially oil & gold, are taking a rest today.

CLZ09.NYM

...Crude Oil Dec 09

...78.88

... 0.02 .......(0.3%)

GCX09.CMX

...Gold Nov 09

...1,135.60

... 3.00 .......(0.3%)

Wholesale prices rose less than expected in Oct, the weak economy kept inflation pressures largely in check, which will in turn, keep short-term interest rates at record lows.The Producer Price Index (PPI) rose 0.3% last month, after falling 0.6% in Sep. In the 12 months ending in Oct, PPI fell 1.9% for the 11th straight decline. Excluding volatile food & energy costs, the core index dropped 0.6%. In the last year, the core index rose 0.7%, the smallest increase in more than 5 years. High unemployment helps keep a lid on labor costs, which enables companies to hold prices down. The inflation news remains "good"for a continuation of low interest rates.

•Producer Prices in U.S. Rise Less Than Forecast, Easing Inflation Concern


Change in core PPI (%)- 1 year





Home Depot (HD), Dow stock, reported Q3 earnings fell 8.9% when the housing & renovation markets remained weak. However, HD raised its outlook for 2009 after Q3 earnings topped expectations. Frank Blake, CEO, said that HD had seen signs of stabilization in real estate & has added market share in the qtr. Declines in the average checkout receipt eased a bit in Q3, falling 7.1% to $51.89 (compared with 8.2% decline YTD). Falling purchases of big-ticket items (like major appliances) have been a particular worry for retailers. Revenue fell 8% to $16.4B & EPS was 41¢ in Q3 ending Nov 1 (vs expectations of 36¢). The all important sales at stores open at least a year fell 6.9%. For the full year, HD expects earnings from continuing operations of about $1.50, a 9.5% increase over last year. HD fell 1.24.

•Home Depot Quarterly Profit Falls as Customers Cut Spending Amid Recession


Home Depot --- 1 year





Not much happening in the markets, at least they generally remain near 2009 highs.


Dow Jones Industrials --- 2 weeks