MARKET WRAP – THE RALLY CONTINUES

The relentless move higher continued today as equities advanced by0.2%.  Stocks did close well off their highs, however, as some of the enthusiasm was sapped from the market as the day wore on.  Equities have surged 7% in a little over 3 weeks, but remain range-bound when taking a longer perspective.  Volume was remarkably low at well under a billion shares at the NYSE.  Breadth was fairly strong, however, at 2:1.  Fear has rapidly been replaced with complacency as the fears of three weeks ago are now largely forgotten.  As we mentioned earlier in the day the VIX marked its 14th losing day in the last 15 – an unprecedented trend since the March 2009 rally began.

From Daily Futures:

U.S. Economy
General Motors said that U.S. vehicle sales were up 12% in February from a year ago, less than expected. Ford’s U.S. sales were up 43% in February from a year ago.

Grains and Cotton
Did cotton go too far, too fast? May cotton closed down 1.44 cents at 81.85.

May soybean oil closed up .34 at 40.24, the highest close in seven weeks with little explanation in the news.

Livestock
Beef demand must be improving. June cattle have gained over 7 cents in less than three months and closed up .65 today at 91.25, the highest in nine months.

Lumber
Canada’s Mortgage and Housing Corporation said that it expects roughly 170,000 housing starts in 2010, up from 149,081 in 2009. May lumber was up $1.90 at $267.50.

Energies
May crude oil closed up .98 at $80.06, helped by a general perception that the world economy is improving and by a growing hope that Greece’s debt problems are manageable.

Yesterday’s 6 to 10 day forecast from the National Weather Service is expecting above average temperatures for the northeastern U.S. May natural gas ended up 2.9 cents at $4.775.

Metals
May copper closed up 6.15 cents at $3.4115, the highest close in six weeks, while some copper mines are still said to be down after Chile’s earthquake on Friday.

April gold jumped up $19.10 to $1,136.90, the highest close in five weeks with ongoing support from the Federal Reserve’s low interest rate policy.

Currencies – Positive Surprise in Japan
Japan’s Statistics Bureau said that the unemployment rate improved from 5.2% to 4.9% in January, the lowest in ten months and much better than expected. The economy showed an increase of 540,000 jobs, the biggest monthly gain since 1973. Also, household spending was up 1.7% in January. The March yen closed up .0050 at 1.1280, the highest close in eleven weeks.

The Reserve Bank of Australia raised its interest rate from 3.75% to 4.00%, as some expected, the fourth increase in the past twelve months. The March Australian dollar finished up .32 at 90.27, the highest close in five weeks.

The Bank of Canada met and kept its interest rate unchanged at .25%, as expected. However, the Bank adjusted its view of inflation risk from ‘downward’ to ‘roughly balanced’ and that led some to believe that an increase in rates may be coming, possibly this summer. The March Canadian dollar closed up a half-cent at 96.53, the highest close in five weeks.

Eurostat said that it expects consumer prices in the Euro area to have risen .9% in February from a year ago.

The Bank of Montreal said that it earned $657 million in the quarter that ended on January 31st, up from a $225 million profit a year ago. The Bank’s lending operations made $403 million and they also noted signs of improvement in the midwestern U.S.