All Markets Up Except Stocks

The stock market has spent the last three days working off the overbought condition it found itself in last week.  One of the interesting things about this is the complete absence of bearish press, except here, of course.  After last week’s high, we have seen a lot of complacency again as to the Santa Claus rally.  When stock owners decide selling can wait, usually the market has just rallied and given them a good chance to sell.  When they normally want to sell is into fear, not strength.

The cross currents in today’s markets were fascinating if you pay any attention to the markets we follow.  The inflation data was mild and the dollar went crazy at the open, the bond market was up and gold was soaring.  Meanwhile the stock market was meandering all day long, truly an odd combination of events.  The Dow squirted ahead about 30 points at the open and then slowly leaked all day to end down about 11.  

The CPI reported out at more than expected but not much out of the ordinary and since the market doesn’t seem to care about inflation, there was no noticeable reaction.  Do recall that gold was up and up big at $10 an ounce, some of which happened before the CPI was released.  The other big move today was in natural gas, which spiked about 7%.  The price of natural gas had traded as high as 15 right around the hurricanes and then traded down to about 11.  Today’s spike took it back up over 12.  You may not recall but the price of natural gas spiked to 8 last November so we are at least 50% higher than last year’s high.  

Some news we didn’t have room for last night was the price of GM which made another multiyear low today.  Last Friday, GM traded around 24.5 but has dropped the last three days and today closed at 21.29, about a 15% drop.  I guess we should consider GM a finance company since about all it does is loan money to buy cars.  So, its counterpart in the mortgage finance business, FNM, Fannie Mae, has not been doing too well the past couple of days either.  FNM is not now punching into multiyear lows but is very close to doing just that.  For its part, FNM was only down about 4% the last couple of days, but in a dull market, a big mover tends to get noticed.

Finally, AMAT announced tonight and said its revenues were down about 22% from last year but somewhat above what was expected.  Profits, on the other hand, were down nearly 50% from last year.  The price of AMAT has recently been very close to what it’s been for the past 18 months, in the 16-18 range.  After the news, the stock jumped a bit over 18 but didn’t hold it and closed down about 50 cents at 17.24.

In other news, the Senate approved a pension bill that would raise premiums paid to the PBGC, Pension Benefit Guaranty Corporation.  This is the organization that tries to protect the defined benefit pension plans of failed corporations.  These plans have some latitude in their assumptions of future returns and can be seriously under funded in a low interest rate environment.  Today’s bill is designed to give the airlines a chance to fully fund their plans over a 20 year period.  That seems mighty aggressive given that they are in bankruptcy and probably will be for a while.

Thursday we get to find out about October housing starts.  We are anxious to hear what this is due to our interest in the real estate market in terms of the stock market.

The next week we are going to modify the post schedule due to the Thanksgiving holiday.  Sunday, Monday, and Tuesday will be normal posts and then probably not another one until the Sunday after Thanksgiving unless the market action requires it.

Dow Industrials:  10,674.76  -11.68
RYVNX:   19.46
TLT:   90.34 (finally back above our purchase price)
BGEIX:  13.30  ( we exited at 13.34 on 9-21)