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Markets Lose Some Altitude: Dave's Daily

Bernanke's ABC TV performance Tuesday was unremarkable saying little to stimulate QE bulls. (It sort of reminded me of a Jackie Kennedy White House tour - yeah, I'm that old.)

Wednesday's Durable Goods Orders missed (2.2% vs 3% expected & prior -4%: ex-transportation 1.6% vs expected 1.5% & prior -3.2%) and didn't thrill bulls. Inside the numbers inventories remain high and sales, particularly of electronic goods, was disappointing.

Oil inventories showed a large and unexpected build with over 7M bbls vs 2.5M expected. France (they won't be the last to do this in a political year) indicated they might be willing to release oil from their strategic reserve. Not mentioned is whether France, or any country, has the refining capacity to handle increased supplies. I doubt it. Nevertheless, supplies and the French news drove crude prices (USO) lower along with the energy sector (XLE).

Stocks overall declined led by losses in materials (AA & XLB) and industrials (CAT & XLI). Meanwhile financials (BAC & XLF) continued to rise, if only slightly. Widely held market darling Apple (AAPL) thumbed its nose at selling while rising slightly as did homebuilders (LEN & ITB). So, we have the odd pairings of Apple, Bank of America and Lennar stronger on the day. This is sector rotation of a different kind.

Bonds are normally the beneficiary on lower stock market days but that wasn't the case Wednesday as prices fell (IEF & TLT) perhaps the victim of a poorly received Treasury auction. The dollar was mostly flat while gold (GLD) and commodities in general (DBC & JJC) were quite weak.

As we approach the quarter-end investors may be looking ahead to early April employment data, earnings reports and QE which may disappointment.

Volume naturally increased on selling as trailing stops were no doubt hit. Breadth per the WSJ was negative.


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