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MARKET WRAP – A WELL OILED BEAR KILLING MACHINE

These days, the market does just two things: opens on time and goes higher.  Like a well oiled machine, this market just continues to line the bears up and knock ’em down.  Buyers continue to pile into equities like they’re going out of style.  Today’s action might have been lower, but the action has to make the bulls happy. There was a “sell the news” mentality from the second the bell opened, but the market could never muster a substantial move.  A brief move to the downside was vigorously bought as investors piled into the small dip and bought all the way into the closing bell.  High beta names finished solidly in the black with the Russell closing up by 0.7% and the Nasdaq 100 finishing higher by 0.6%.

This market is truly unstoppable. We all know the facts by now.  Monday’s are always up days.  The 10:30 dip is always bought.  A futures ramp after the close is a near certainty.  Any dip of over 0.5% is guaranteed to be bought.  And most importantly, stocks don’t decline (at least never substantially).   I can’t remember seeing a market like this in quite some time.  Oil in summer ’08 was the last time I saw this sort of craziness.  I would say this all has a very bubbly feel, but that gets old when you say it 15 days in a row.  This isn’t just a friendly trend.  Some investors want to date it, marry it and take it home for mom and dad to meet.

From Daily Futures:

U.S. Economy
The Mortgage Bankers Association’s index of mortgage applications increased 13.6% last week. The average rate on a 30-year fixed mortgage fell from 5.17% to 5.04%.

The International Monetary Fund (IMF) said that it expects real GDP in the U.S. to be up 3.1% in 2010 and up 2.6% in 2011. The IMF also expects world growth of 4.2% in 2010 and 4.3% in 2011. This helped reinforce the notion that the world economy is improving and also helped most commodities close higher today.

Grains and Cotton
July soybean meal closed up $5.50 at $292.80, the highest close in over three months, with support from talk of strong demand from China.

July cotton ended up .55 at 85.15 after yesterday’s limit-up close with news that India banned cotton exports to protect domestic supplies.

Livestock
The USDA said in today’s Livestock Outlook: “Cattle feeding margins were positive for the first quarter of 2010 for the first time since the first quarter of 2008. Current fed cattle price levels at or near $100 per hundredweight will continue to provide positive cattle feeding margins and further incentives to cattle feeders over the near term.” June cattle closed up .85 at a new contract high of 95.45.

The USDA also said: “Lower expected hog supplies – domestic and Canadian born – plus the likelihood of stronger consumer pork demand are expected to yield year-over-year higher hog prices for the balance of 2010.” June hogs finished up 1.57 at a new contract high of 87.07.

Energies
The U.S. Department of Energy (DOE) said that crude oil supplies were up 1.9 million barrels last week to 355.9 million barrels. Supplies of gasoline were up 3.6 million barrels and heating oil supplies were up 600,000 barrels. June crude oil ended down .17 at $83.68.

The DOE also said that refinery use increased from 85.6% to 85.9% of capacity last week. Over the past four weeks, gasoline demand was up 2.7% from a year ago and distillate demand was down .1% from a year ago.

Metals
The International Copper Study Group estimated that world copper production exceeded usage by 122,000 tons in January, down from a surplus of 159,000 tons in the same month a year ago. July copper closed up 2.20 cents at $3.5470.

Currencies
The U.K.’s Office for National Statistics said that the unemployment rate from December to February was 8.0%, up from 7.8% a month ago.

Statistics Canada said that wholesale sales totaled C$43.83 billion in February, down 1.2% on the month, but up 8.5% from a year ago. The figures were weaker than expected.

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