Equities powered higher today by 0.7% after the SEC imposed a new rule banning all selling at the New York Stock Exchange.  Of course, we’re just kidding, but if I didn’t know any better I’d have assumed that the SEC banned down ticks at the NYSE.  The rally over the last 6 weeks has been really breathtaking.  If you’ve bought stocks in the last 4 weeks you’ve experienced just 4 down days.  If you’ve bought stocks in the last 32 days you’ve experienced just 7 total down days.

Many reputable news sources are attributing today’s move to the existing homes sales, which were actually in-line with expectations and show underlying signs of continuing weakness.  The truth is, this market is rallying on very bullish sentiment, fearful short covering and technicals.  In other words, no real news.

In addition, investors are very eagerly running into stocks as earnings season begins in a few weeks and shorts slowly begin to throw in the towel as this market simply appears unbeatable.  We’re almost certainly setting up for another “sell the news” earnings season at this pace.  And if earnings even remotely disappoint we could see a substantial “sell the news” earnings season.

The amazing stats just continue to pile-up:

  • The Russell 2,000 has rallied 18% in just 6 weeks.
  • The S&P has rallied 12.5% in 6 weeks.
  • The SPY and Russell 2,000 have rallied in 25 of the 32 sessions during the move higher.
  • Banks have rallied 18% while rising in 26 of the 32 sessions.

Perhaps most amazing is that most of this move has been on very little news and light volume.  Nonetheless, the market’s collision course with S&P 1,200 appears unstoppable.

From Daily Futures:

U.S. Economy
The National Association of Realtors said that existing home sales were at an annual rate of 5.02 million units in February, down .6% on the month, but a little better than expected.

The Richmond Federal Reserve’s regional index of manufacturing increased from +2 to +6 in March, better than expected. The June 2011 eurodollars were up .035 at 98.46.

The U.S. Treasury sold $44 billion of two-year T-notes at a median yield of .96% with a bid-to-cover ratio of 3.00.

Grains and Cotton
Today’s U.S. Palmer Drought Map shows excessively moist conditions in the Dakotas, Nebraska, Iowa, Missouri, and Illinois. The central U.S. is enjoying another day of dry weather today. May corn closed down 7 cents at $3.637.

The USDA said late yesterday that the good to excellent ratings for the winter wheat crops in Kansas, Oklahoma, and Texas were 64%, 67%, and 53% respectively. July wheat fell 9.75 cents to $4.892, the lowest close this year.

After yesterday’s close, the USDA said that, as of February 28th, there were 516.8 million pounds of frozen pork in storage, down 17% from a year ago and more than expected. June hogs closed down .80 at 82.05.

Have cattle prices reached their limit? June cattle fell 1.70 cents to 92.37 after gaining nearly 13 cents in three months.

The liquidation continues in sugar. May sugar dropped 1.27 cents to 16.57, the lowest close in ten months.

Orange juice
After yesterday’s close, the USDA said that, as of February 28th, frozen supplies of orange juice concentrate in storage totaled 1.295 billion pounds, up 3% from a year ago. May orange juice closed down 2.05 cents at $1.4250.

Late yesterday, the International Copper Study Group said that world production of copper exceeded usage by 365,000 tons, up from a 224,000 ton surplus in 2008. In December alone, production exceeded usage by 115,000 tons. May copper ended down .0015 at $3.3790.

China’s Customs Office said that imports of refined copper were up 12% in February.

The U.K.’s Office for National Statistics said that consumer prices were up 3.0% in February from a year ago, down from a 3.5% annual gain in January. The June British pound was down .0059 at $1.5024.

Statistics Canada said that its composite index of leading indicators was up .8% in February after a .7% increase in January.

There doesn’t seem to be much hope that Germany will budge at this week’s European Union summit and agree to to any aid for Greece. There is ongoing talk that help for Greece may come from the International Monetary Fund. The June euro finished down .0055 at $1.3489, the lowest close in ten months.


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Cullen Roche

Mr. Roche is the Founder of Orcam Financial Group, LLC. Orcam is a financial services firm offering research, private advisory, institutional consulting and educational services.

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  • shrek

    thats what happens when the government gets out of control

  • FXBot

    The banks are padding their first quarter earnings. It’s sad, but true. You can tell the equity markets are rigged because the Forex markets are trading totally different most of the time. Currency traders are taking money out of the Euro and putting it into safehavens because the economic risks in Europe are on the rise. Meanwhile, stocks melt higher in the U.S. as the banks buy buy buy.

    This is the world we live in now. It’s ruled by government from China to USA.

  • CC

    last week’s AAII has a surprise (to me) down tick on the Bullish sentiment. I think the rally won’t stop until it turns most people to the bullish camp…

  • brian

    It used to be normal for markets to go down a few days (even in bull markets) based on nothing more than profit taking after a decent sized run up. Now it seems that for markets to go down there must be some significant external event that takes the risk trade off or else stocks will be immediately scooped up on any dip.

  • DanH

    Has anyone else noticed that the rest of the world is trading lower for the year while our fraudulent bank owned stock market trades 5% higher?

  • chris

    “You can tell the equity markets are rigged because the Forex markets are trading totally different most of the time”

    are you suggesting that there should be a correlation between equity and currency markets? if so which currency indexes? seems to me that the dollar sometimes is positively correlated to equities, and sometimes not.

  • Mike

    There id a sizable down move around April 5-9th. It is not a top however. I think mid May to early June is the possible top.

  • TPC

    I think what FX is saying is that the risk aversion currencies aren’t rallying in step with US equities. And as a commenter below noted, it is quite odd that US equities are so substantially outperforming their peers….Is the US really in much better shape than the rest of the globe?