Stocks got clobbered again today by -2.25% as the uncertainty regarding the regulatory changes & the Bernanke reconfirmation weighed on stocks. As we mentioned yesterday, this is just one more worry that the market can’t handle. There is simply no good reason to own stocks when there are so many potential pitfalls in the near future. The market was down again on high volume and breadth was very negative at 4:1. Technically, the S&P has now broken the 50 day moving average so technical analysts are likely to turn more cautious going forward. On the bright side, the market is now severely oversold and the VIX has spiked almost 50% in two days. The complacency of last week has now turned into high levels of caution. Technicals and psychology are only part of the equation, however. Unfortunately for the bulls, this market is unlikely to make a meaningful rally without more clarity on the Bernkanke reconfirmation and the Obama bank plan.
From Daily Futures:
Grains and Cotton
The USDA said that, as of last week, 2009-2010 exports of:
Corn remained up 5% from a year ago.
Soybeans remained up 42% from a year ago.
Wheat improved from down 29% to down 28% from a year ago.
Cotton improved from down 36% to down 34% from a year ago.
March corn fell 7.25 cents to $3.647.
Livestock
After the close, the USDA said that there were 11.009 million head of cattle on feed as of January 1st, down 2.0% from a year ago and a little less than expected. Placements in December were down 6% and marketings were up 3.5%.
The USDA said that net sales of beef totaled 9,800 tons last week, up from 6,300 tons the previous week. April cattle were up .05 at 90.55.
The USDA said that 2.13 billion pounds of beef was produced in December, up 2.5% from a year ago. Pork production totaled 1.99 billion pounds, down 3.3% from a year ago.
After the close, the USDA said that there were 475 million pounds of frozen pork in storage on the final day of 2009, down 15% from a year ago and a little less than expected. Frozen bellies totaled 58 million pounds, up 12% from a year ago and more than expected. April hogs closed down .67 at 71.97.
Cocoa
The National Confectioners Association said that North America’s cocoa grind totaled 111,986 tons in the fourth quarter, down 1.5% from a year ago. March cocoa ended down $6 at $3,425.
Orange juice
The ten-day forecast for central Florida continues to look safely warm, but the extent of damage already done to the citrus crop remains in question. March orange juice closed up 1.90 cents at $1.3865.
After the close, the USDA said that there were 1.19 billion pounds of frozen orange juice concentrate in storage on December 31st, up 9% from a year ago.
Energies
March crude oil closed down $1.54 at $74.54, pressured by weak demand for oil above $80 and concerns about China’s recent attempts to restrain its economy.
Currencies
Statistics Canada said that retail sales were down .3% in November to C$35.2 billion, roughly as expected. The March Canadian dollar closed down .75 at 94.44.
The U.K. Office for National Statistics said that retail sales were up 3.6% in December from a year ago.
Eurostat said that their index of industrial new orders in the EU-27 was up 1.8% in November, but down 2.0% from a year ago.
Source: Daily Futures
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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