Benjamin Franklin once said that the only two certainties in life are death and taxes. But at this rate, we’re going to have to add the Monday Market Melt-up as it’s becoming widely known. This market has become disturbingly predictable. Investors were once again anticipating a Monday rally (after-hours trading on Friday was abnormally active) and these traders were once again able to find plenty of buyers on Monday morning. I would assume that a market this predictable has something structurally wrong with it, but it continues to persist and the market never lies….
Stocks rallied again today by 0.55% after optimism abroad sent futures soaring overnight. China’s mainland market was higher by 2% while Germany’s DAX rallied 0.6%. Chinese stocks rallied after strong earnings and optimism over the beginning of futures trading. Commodity prices were particularly strong as the dollar declined and the Euro rallied on hopes that the mess in Greece is behind them.
Volume was very light today and breadth was strong at 2:1. While many investors appear troubled by the “selling the rally” on both Thursday and Friday last week, there is still a remarkably bullish feel to this market. Is the “can’t lose” market simply taking a breather or is this the first signs of real weakness after 7 great weeks?
From Daily Futures:
U.S. Economy
The U.S. Commerce Department said that personal incomes were unchanged in February while consumer spending was up .3%.
The June U.S. dollar index fell .354 to 81.624, as last week’s European plan to help Greece seems to be quieting any fears of a Greek default.
Grains and Cotton
The central U.S. is expecting warm, dry weather this week, helpful to planting conditions. May corn ended up three-quarters of a cent at $3.57.
The USDA said that last week’s export inspections of:
Corn totaled 37.9 million bushels, up slightly from a year ago.
Soybeans totaled 29.3 million bushels, up 11% from a year ago.
Wheat totaled 14.8 million bushels, down 6% from a year ago.
July wheat was unchanged at $4.78.
May soybeans closed up 15.5 cents at $9.675 ahead of the USDA’s prospective plantings and quarterly grain stocks reports, due out on Wednesday morning.
Livestock – Hogs Up On Friday’s Report
After Friday’s close, the USDA said that there were 63.988 million head of hogs and pigs in the U.S. on March 1st, down 2.8% from a year ago, less than expected. Hogs kept for breeding were down 3.9% from a year ago. June hogs locked up their 3-cent daily limit and never traded lower, ending at 81.02.
June cattle closed up 1.32 at 92.90 in sympathy with hog prices.
Lumber
The housing news has not been very encouraging lately. Last Wednesday, the U.S. Census Bureau released disappointing new home sales figures and today, May lumber finished down its $10 daily limit at $280.00.
Cocoa
May cocoa jumped up $71 to $2,925, the highest close in four weeks, helped by today’s weaker dollar and beliefs by some that this year’s selling was over-done.
Coffee
May coffee closed up 2.30 cents at $1.3815, the highest close in eight weeks, with some still expecting tight world supplies to develop this year.
Metals
The World Gold Council said today that China’s gold consumption amounted to 11% of world demand in 2009 and that it was set to double in the next ten years. June gold was up $6.10 at $1,111.50.
Two economists in China’s government were quoted as saying that real GDP will be up an annual rate of 12% in the first quarter of 2010. May copper jumped up 13.25 cents to $3.5355, the highest close since July of 2008.
Reports on Friday that North Korea may have attacked and sunk a South Korean ship turned out to be unfounded. South Korea is investigating the cause and one theory is that the ship may have hit an old mine.
Energies
June crude oil closed up $2.12 at $82.59, helped by today’s lower dollar.
Currencies
The Reserve Bank of Australia’s Governor Stevens said in a television interview that interest rates were headed higher and he warned people that the real estate market may be getting too heated. The June Australian dollar closed up 1.38 cents at 90.79.
Japan’s Trade Ministry said that retail sales were up 4.2% in February from a year ago, stronger than expected and the biggest monthly gain since 1997. The June yen ended down .0004 at 1.0809.
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.
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