MARKET WRAP – THE TEFLON BULL

Investor sentiment has soared back to levels not seen since the 2007 market peak – and for good reason.  The equity market appears truly invulnerable.  A lawsuit against Goldman Sachs and fears over Greek debt have done little to disrupt the markets relentless move higher.  After a brief one day 2.5% decline the dip buyers were back in force.  The usual 10:30 dip was bought aggressively this morning as investor fears were eased by news of a Greek bailout plan.  Volume was not particularly heavy, but that has not been a deterrent at any point in the last few months.  Breadth was strong at 3:1.  This trend is your friend particularly when it bends – buy the dip (any and all) is still in play….The teflon market lives on.

From Daily Futures:

U.S. Economy
The U.S. Labor Department said that jobless claims were down 11,000 last week to 448,000, a little more than expected.

The U.S. Treasury Department sold $32 billion of 7-year T-notes at a median yield of 3.14% with a bid-to-cover ratio of 2.82, a little better demand than expected. The June U.S. T-bonds were up 22/32nds at 118.07/32nds.

Grains and Cotton
The USDA said that, compared to the four-week average, last week’s net sales of:
Corn were up 5%.
Soybeans were down 53%.
Wheat were down 32%.
Cotton were down 33%.

The USDA said today that China bought 120,000 tons of U.S. soybeans and Japan bought 101,600 tons of U.S. corn for the current season. July corn ended up a nickel at $3.69 with high hopes that China will need to buy more this season.

July wheat closed up 7 cents at $4.95 in sympathy with corn and helped by today’s weaker dollar.

Livestock
The USDA said that net sales of beef totaled 17,900 tons last week, up 51% from its four-week average. June cattle closed up .45 at 93.87.

Sugar
Brazil’s Ag Ministry, Conab, predicted that sugar production will be up 17% in 2010-2011 to a record high 38.7 million tons. July sugar closed up .43 at 15.29.

Energies
The U.S. Department of Energy said that underground supplies of natural gas were up 83 billion cubic feet last week to 1.912 trillion cubic feet, more than expected. Supplies are now up 6% from a year ago. June natural gas fell 36.8 cents to $3.98, near its contract low.

The U.S. Coast Guard said that as much as 5,000 barrels of oil per day was coming from the damaged British Petroleum rig in the Gulf of Mexico from a depth of 5,000 feet. Oil could reach the Gulf Coast by Friday. June crude oil finished up $1.95 at $85.17.

Metals
July copper closed down 3.60 cents at $3.3505, pressured by a distaste for Europe’s ongoing debt problems.

Currencies
Germany’s Federal Labor Agency said that the unemployment rate improved from 8.0% to 7.8% in April. The number of unemployed dropped 68,000 to 3.29 million, the biggest decline in over two years. The June euro closed up .0057 at $1.3246 with concerns about Greece still predominant.