Another Good Day

Today is shaping up to be another good day. If the S&P 500 (^SPX) holds up, we’ll finish at our highest close since May 21, 2001. The Nasdaq Composite (^IXIC) will close at its highest level in over five years. Of course, the index is less well less than of peak its value of six years ago. Thanks to a big small-cap rally this decade, the Wilshire 5000 Total Return Index (^DWCT) is now only about 2% from a new all-time high.
The S&P 400 Mid-Cap Index (^MID) made a new all-time high today, and the S&P 600 Small-Cap Index and Russell 2000 (^RUT) are just short of new all-time highs.
From our Buy List, Brown & Brown (BRO), Expeditors (EXPD) and Danaher (DHR) are all at new highs.
Over the last 10 weeks, the yield curve has started to widen. In late January, the five-year Treasury was yielding only two basis points more than the 90-day T-Bill Today, it’s about 27 points higher.
Two years ago, the 10-year Treasury was over 100 basis points higher than the five-year note. Today, they’re virtually tied. In fact, for a few days in February and March, the five-year yield was higher.
The change is that the long-end of the yield curve has been rising faster than the Fed has been lifting the short end. Perhaps the economy is stronger than people think. The Cyclical Index (^CYC) has roughly doubled the S&P 500 over the last six months.

Posted by on April 5th, 2006 at 2:12 pm


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