MARKET WRAP – ANOTHER BIG RALLY
Stocks staged a big rally once again as investors begin to view the sell-off as a buying opportunity. We’re back to the old reflation trade of 2009 where the dollar sells off and everything else rallied. The S&P gained 1.3% on the day, but remains about 1% lower on the year. Volume was moderate on the day and breadth was once again strong at 3:1. The VIX has nearly reversed its entire gain from the last two weeks as the market has stabilized and risk has come back to the market.
From Daily Futures:
U.S. Economy
The National Association of Realtors said that its index of pending home sales was up 1.0% in December and up 10.9% from a year ago. March lumber ended up $2.50 at $261.00, continuing its rebound from depressed levels in 2009.
Grains and Cotton
According to Bloomberg news, China’s Cotton Association estimated that cotton plantings will be down 5% this year, possibly increasing their need to import more. March cotton closed up 1.04 cents at 69.26.
Coffee
March coffee finished up 2.50 cents at $1.3505, supported by lean world supplies and today’s softer dollar.
Reuters reported that Consumer Reports did a test of 37 coffee blends, but did not find any that tested “excellent” or “very good” – a result of this year’s smaller world coffee harvest (see article).
Cocoa
Late yesterday, Fortis Bank predicted that the world will consume 48,000 more tons of cocoa than it will produce in 2010-2011. They also expect the ending stocks to use ratio to fall from 42% to 35%. March cocoa was down $20 at $3,132.
Energies
March crude oil closed higher, supported by last week’s positive GDP report and yesterday’s strong gain in the manufacturing index.
Metals
April gold jumped up $13.00 to $1,118.00 while the U.S. dollar rally shows signs of stalling.
U.S. vehicle sales at Ford were up 25% in January from a year ago, better than expected. March copper closed up .0060 at $3.0895.
Currencies
The Reserve Bank of Australia surprised the markets today by keeping their interest rate unchanged at 3.75%. Most analysts were expecting a quarter-percent increase. The March Australian dollar closed down .0053 at 88.17.
Eurostat said that producer prices in the Euro area were down 2.9% in December from a year ago, the twelfth consecutive decline.
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Can’t imagine why anyone would get excited about a 2 day short-covering rally. When you get the first correction off a distribution phase, especially in an enviroment of almost no perceived risk, the buyers will charge in. Of course, will the sellers come out again or will the buyers push up & take out the stops above? This market is beyond ripe, it stinks but the market tells the tale not us. Risk is to the downside, this retracement is a key test. If we rotate & fail, then the games will truly begin.
no exitment, just booking profit on shorts, gotta cash in those 15-20+%, its what we do, this was too quick, does stink though, something’s not right, but as long as we keep on getting great numbers and the programs will keep pushing, shorting for a move down will be hard, cant wait to see how high this dead cat bounces, when it stops…watch out below
The current “top” certainly doesn’t look like a true top. MAybe there is more downside here put it doesn’t have the right “look” to it. Considering this is a liquidity driven rally it seems to me that this market ought to behave a bit more like a blow-off for the actual top, wherever that might be. So I’m in the camp of a good long liquidation and another push, probably going into the Fall in front of elections (I’m a technician but I keep an eye on the fundamental background noise). MEantime it’s a trading market. The VIX looks like it is at critical mass. IF it closes lower tomorrow then the set up for a good washout is cancelled for now and we will rocket up, otherwise the game is still on.
Well, nobody recognized capitulation in March so I doubt anybody will recognize the top either. I think closer to March people will start getting concerned about tightening of liquidity. I cannot imagine this rally lsting all the way to Fall.
As they say “You Can’t Fight The Fed” and it would seem that there are a lot more sheep to be led to the slaughter… current politicos will be desperate come Fall…expect the kitchen sink to be thrown at the Economy & Mkt. More of the same… Possibility that high for the year not in yet. Can’t say but the true nail in the coffin for the bulls would be a higher high and a failure… Sure are interesting times though..
im just amazed by how quick we turn, in six days those sphoos did 1147-1064-1100 not bad, 110 handles, banks 15-20%, FCX CAT, tag team BUCY&JOYG, VALE&EWZ and the other 20of their frinds, tech, semico’s 10 15%, going into 1147 short DID NOT feel good, if we wouldn’t have dipped, I, and a lot more would be…friday was the perfect cover on the bid, and get minibullish, all those monkeys, some chutzpa, got mom&pup to believe, again, a week later, panic sets in, greece, uk, china, thank G-D there was no asteroid coming to the party…psychologically intriguing, RANDOM WALK is on the money here, good for him going 2 for 20, as far as us, this felt like the dip from 925 to 881 and 1025 to 987 in the S&Ps last year, we had to bounce, now, how high ? 1110 ? 25 ? 30 ? who knows ? why not ? we do love to build castles in the sky…I, would love the games to begin, though, this MKT is net long, if they’re not in the mood for a down move, watch out, green shoots-goldylocks’s back, uk gets beter, china buys greece, boom, S&Ps north bound, why not ? at this point I wouldn’t be surprised 1250sp or 850sp, both do have a reason to be at…we, can switch trade direction in sec’s, that’s all that counts, I hope “reality” sets in quick and nothig too bad happens
The market got too far ahead of itself to the downside for a non-farm week. People who got themselves too short late last week realized on Mon. and Tue. how vulnerable they were to a big print on Friday. This week will still be about non-farm. I know we hear it leading up to every announcement, but one of these times there will be an upside surprise.