Market Edges Higher as Bonds, Finance and Commodities Strong
By Robert Perrego, at 5:06 pm on February 26th, 2010The stock market tried to be bullish today but only managed a 4 point gain for the Dow Jones Industrial Average. I say it was trying as the stocks posting gains were the names you would buy in a bull market. Leading the DJIA was JP Morgan & Chase Co. (NYSE: JPM) which gained $1.38 (+3.25%, $41.97). Looking at the components of the DJIA that were down today and it seemed as if they were selling the defensive names; Kraft Foods Inc. (NYSE: KFT) -1.35%, McDonalds Corp. (NYSE: MCD) -0.69%, Procter & Gamble Co. (NYSE: PG) -0.42%, Coca~Cola Co. (NYSE: KO) -0.35%, Johnson & Johnson (NYSE: JNJ) -0.21% and Wal-Mart Inc. (NYSE: WMT) -0.09%.
The Dow Jones Industrial Average edged up 4.23 points to 10,325.26. The S&P 500 tacked on a small 1.51 point gain (+0.13%, 1,104.49) and the Nasdaq 100 was up 5.77 points (+0.31%, 1,818.68). On the month the DJIA added 257 points (+2.55%), the S&P 500 climbed 30.71 points (+2.86%) and the Nasdaq 100 showed that the place to be in February was in technology, gaining 77.75 points (+4.47%).
Across all markets, bonds and commodities did the best with interest rates dropping in 14 of 17 major economies worldwide. EVEN the Greek 10-year was lower by 30 basis points as bond prices rose on news the German Government might buy Greek debt through a state owned bank. This strengthened the euro against the dollar causing commodities to rise.
Yesterday, I mentioned the CurrencyShares Euro Trust (NYSE: FXE) was something to keep your eye on thinking that the news in Greece has got to get better sometime. The timing was spot-on (better to be lucky than good sometimes, but being right gets paid) as the FXE closed higher today than all but one day in the last two weeks of trading. If the bad news has washed itself out, any further positive developments about the Greek Tragedy of 2010 will be bullish for the euro, commodities and stocks.
On the flip side of this, the PowerShares DB US Dollar Index (NYSE: UUP) closed lower than all days but one in the past two trading weeks. Looks like the dollar is a bit high here, and with the possibility of Washington D.C. passing the $1 trillion health care bill next week via ‘reconciliation’, the path of least resistance for the greenback is down. If the carry trade cowboys get involved here, shorting the dollar and buying stocks, March may indeed come in like a lion.
New York spot gold rose $10.00 an ounce to $1,116.60 (+0.90%, 4:22 p.m.). A break out here would be at about the $1,130 level with support at $1,060. The SPDR Gold Shares (NYSE: GLD) chart is starting to look very interesting with resistance at $111. The only thing I do not like about the chart is the stochastics are too high, but a close (2 closes even better) through $111 and I am a buyer. The GLD closed up $1.12 (+1.03%, $109.43).
Nymex crude is pushing $80 again up $1.51 today to $79.68 a barrel (+1.93%, 4:26 p.m.). Analysts think that crude will trade more off of supply and demand fundamentals and less as a reaction to the dollar in the future. This sounds like it means that oil will trade on the premise of a better functioning economy and not on gloom and doom and fiscal nightmares.
Existing Home Sales were reported this morning at down 7.2% (January) to a seven month low (5.05M vs. 5.5M expected). Last month sales dropped off a cliff (-16.7%) and analysts did not have to think too hard as to why. NO JOBS. An economy can turn up or down on simple expectations. You have a job and things are good, but then a friend gets the axe and your brother calls to tell you his company just shut down. You may still have a good job, but you are not dying to go buy a new house at this point.
The federal tax credit for new home buyers seems to not have helped as much lately and I have a theory – all the new home buyers that were going to buy a home already did. I do not think they are going to squeeze a lot more out of that program. Also, in December you go Christmas shopping not house shopping and it is cold in January. Hopefully, sales pick up in the coming months but with all this snow in February I would not bet on a strong number.
I saved this for last to go out on a good note: The USA Men’s Hockey Team beat Finland 6 -1 in the semifinals today and will play the winner of tonight’s Canada-Slovakia game for the Gold. Team USA vs. Canada will be a great game to watch. Win or lose that one, Team USA is cranking out the medals faster than Freeport-McMoran (NYSE: FCX) and this has been a great Winter Olympics for our athletes and for us.
Have a great weekend.
