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Stocks closed mostly unchanged on one of the lightest volume days of the year.  Big gains in overseas markets were unable to translate to domestic gains.  Combined with a virtual no news day the market action speaks for itself.  Interestingly, upgrades once again outpaced downgrades by 1.5:1, but those investors who bought the market into the close on Friday are disappointed not to see the usual upgrade Monday rally.  Breadth was relatively strong at 1.5:1, but as mentioned before, volume was extremely low at the NYSE with just 850MM shares exchanging hands.   Curiously, the VIX rallied on the day despite a flat market.  This could be a sign that options traders are beginning to implement some hedges as the rally extends itself.

From Daily Futures:

U.S. Economy
According to a survey by the National Association of Business Economists, most of their members expect a small increase in the federal funds rate sometime in the next six months. The June 2011 eurodollars are steady.

Grains and Cotton
The USDA said that last week’s export inspections of:
Corn totaled 34.1 million bushels, down 22% from a year ago.
Soybeans totaled 30.9 million bushels, down slightly from a year ago.
Wheat totaled 20.4 million bushels, up 39% from a year ago.
May corn ended down a quarter-cent at $3.752 and July wheat was up 2 cents at $5.077.

Brazil identified 102 U.S. items that it will begin raising tariffs on in 30 days unless the two governments reach an agreement before then. The World Trade Organization gave its approval for the tariffs in November because of unfair subsidies that the U.S. pays to its cotton producers (see article). May cotton closed down .39 at 82.04.

For the first time since December, Russia has agreed to allow pork imports from the U.S. again. Under the new rules, U.S. exporters will first have to get approval and show that their pork does not contain any of Russia’s banned antibiotics. June hogs closed down .42 at 81.45.

Canada’s Mortgage and Housing Corp. said that housing starts were at an annual rate 196,700 in February, up 6.1% from January and more than expected. May lumber finished up $7.50 at $277.00.

Orange juice
On Wednesday morning, the USDA will give its latest update of this year’s Florida orange crop – will there be another reduction due to January’s freezing temperatures? May orange juice traded both higher and lower today, ending down .0040 at $1.4930.

Are gold bulls having second thoughts? April gold turned unexpectedly weak today in spite of a steady U.S. dollar and closed down $11.20 at $1,124.00.

Industrial output in Germany was up 2.2% in January from a year ago, stronger than expected. The March euro is steady.

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