Stocks Finish Higher as Energy Prices Fall Sharply from Highs and Fed "pause" Talk Increases

Indices
S&P 500 1,220.33 +.99%
DJIA 10,481.60 +.66%
NASDAQ 2,152.09 +1.05%
Russell 2000 666.51 +1.95%
DJ Wilshire 5000 12,199.09 +1.13%
S&P Barra Growth 584.38 +.95%
S&P Barra Value 631.65 +1.03%
Morgan Stanley Consumer 581.96 +.70%
Morgan Stanley Cyclical 736.16 +.84%
Morgan Stanley Technology 496.38 +.82%
Transports 3,680.86 +.89%
Utilities 407.46 +1.06%
Put/Call .80 -22.33%
NYSE Arms .79 -28.84%
Volatility(VIX) 12.60 -7.69%
ISE Sentiment 134.00 -6.94%
US Dollar 87.58 -.87%
CRB 329.42 -.53%

Futures Spot Prices
Crude Oil 68.90 -.06%
Unleaded Gasoline 261.45 +5.64%
Natural Gas 11.60 +1.31%
Heating Oil 205.30 -1.10%
Gold 439.20 +.25%
Base Metals 129.38 -.74%
Copper 162.30 +.19%
10-year US Treasury Yield 4.01 -1.86%

Leading Sectors
Oil Tankers +4.38%
Homebuilders +3.96%
Oil Service +3.57%

Lagging Sectors
Insurance +.12%
Hospitals -.04%
Gaming -.25%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- None of note

Afternoon/Evening Headlines
Bloomberg:
- IAC/InterativeCorp, the tv and Internet services company owned by Barry Diller, plans to enter the US real-estate brokerage business next year to expand beyond offering property and mortgage listings on Web sites.
- Hurricane Katrina may harm the US economy more than initially estimated, economists said.
- President Bush said it “will take years” for the US Gulf Coast to recover from Hurricane Katrina and pledged the full resources of the federal government to aiding the storm-ravaged region.
- US Treasuries surged after an index showed Chicago-area manufacturing contracted in August for the first time since 2003 and economists increased worries over the effects of the hurricane.

Cnet News.com:
- Google is buying ad pages in technology publications including PC Magazine and Maximum PC and reselling the space to its online ad clients.

AP:
- New Orleans Mayor Ray Nagins said Hurricane Katrina may have killed hundreds, and possibly thousands, of people in the city.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Oil Tanker shorts and Internet longs. I covered a few shorts and added RUTH long in the afternoon, thus leaving the Portfolio 50% net long. I am using an $18 stop-loss on this position. The tone of the market was positive today as the advance/decline line finished substantially higher, almost every sector rose and volume was about average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was very positive. Today’s rally was mainly a function of investors’ belief that the Fed may pause for awhile as a result of the spike in gas prices and devastation in the Gulf. While near-term stocks may move higher, another test of the recent lows is likely as more economic data disappoints over the coming weeks. I believe oil has finally seen its highs for the year and will begin an accelerated move downwards over the next few weeks. From now on, any gains in gasoline prices will likely be viewed as a negative for crude prices.

Stocks Modestly Higher Mid-day on Decline in Long-term Rates and Reversal in Energy Prices

Indices
S&P 500 1,211.27 +.24%
DJIA 10,424.76 +.12%
NASDAQ 2,137.25 +.35%
Russell 2000 661.67 +1.21%
DJ Wilshire 5000 12,112.46 +.41%
S&P Barra Growth 580.37 +.26%
S&P Barra Value 626.82 +.25%
Morgan Stanley Consumer 578.04 +.02%
Morgan Stanley Cyclical 730.23 +.02%
Morgan Stanley Technology 493.74 +.30%
Transports 3,655.37 +.20%
Utilities 404.88 +.42%
Put/Call .77 -25.24%
NYSE Arms 1.13 +2.29%
Volatility(VIX) 13.32 -2.34%
ISE Sentiment 134.00 -6.94%
US Dollar 87.60 -.85%
CRB 328.27 -.88%

Futures Spot Prices
Crude Oil 67.80 -2.74%
Unleaded Gasoline 260.00 +5.05%
Natural Gas 11.25 -3.51%
Heating Oil 203.25 -2.09%
Gold 438.50 +.69%
Base Metals 129.38 -.74%
Copper 162.00 -1.64%
10-year US Treasury Yield 4.02% -1.59%

Leading Sectors
Oil Tankers +4.24%
Homebuilders +2.75%
Oil Service +2.34%

Lagging Sectors
Airlines -.64%
Insurance -1.06%
Gaming -1.33%

BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet longs and Oil Tanker shorts. I added to my IWM and QQQQ shorts this morning, thus leaving the Portfolio 25% net long. The tone of the market is positive as the advance/decline line is higher, sector performance is mixed and volume is below average. Measures of investor anxiety are mixed. Today’s overall market action is very positive given the disappointing Chicago PMI and rise in gas prices. I expect US stocks to trade mixed from current levels into the close as short-covering offsets worries over economic growth.

Today's Headlines

Canceled due to a scheduling conflict. I will post the Mid-day Scoreboard within the hour.

GDP Still Healthy, Chicago PMI Plunges, Distillate Inventories Rise Above Estimates

- Preliminary 2Q GDP rose 3.3% versus estimates of a 3.4% gain and a prior estimate of a 3.4% increase.
- Preliminary 2Q GDP Price Index rose 2.4% versus estimates of a 2.4% gain and a prior estimate of a 2.4% increase.
- Preliminary 2Q Personal Consumption rose 3.0% versus estimates of a 3.4% gain and a prior estimate of a 3.3% increase.
- The Chicago Purchasing Manager Index for August fell to 49.2 versus estimates of 61.0 and a reading of 63.5 in July.
- The EIA reported that crude oil inventories fell 1.52 million barrels vs. estimates of a rise of 1.0 million barrels. Gasoline inventories dropped 508,000 barrels vs. estimates of a 1.63 million barrel decline. Distillate inventories rose 2.75 million barrels vs. expectations of a 1.5 million barrel build.

BOTTOM LINE: The US economy expanded at a 3.3% rate in the second quarter. The Core PCE Price Index, the Fed’s favorite inflation gauge, rose 1.6% in the second quarter versus a 2.4% increase in the first quarter. Growth in the US economy has exceeded 3% for nine straight quarters, the best stretch since the 13 quarters that ended in January-March 1986, Bloomberg reported. A measure of demand, excluding inventories, rose 5.4% in the second quarter. Personal incomes rose at a 6.3% annual rate in the second quarter, twice as much as the Consumer Price Index. Rising incomes have boosted the US economy substantially even as energy prices reach records.

Manufacturing in the Chicago area unexpectedly contracted in August for the first time since April 2003, suggesting record oil prices are slowing factory demand, Bloomberg said. The new-orders component of the index fell to 46.5 from 69.6. The prices paid component rose to 62.9 from 61.3. The employment component of the index fell to 51.7 from 56.6. This sharp move lower is a worrisome development considering the recent spike in energy prices.

The EIA numbers would normally be viewed as bearish for oil.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- US drivers braced for gasoline prices that may average $3 a gallon for regular grade in coming days, after Hurricane Katrina shut down oil refineries near the Gulf of Mexico.
- Japanese government bonds gained, sending 10-year yields to the lowest in more than four weeks, after a government report showed industrial production dropped more than twice as much as expected in July.
- The death toll from Hurricane Katrina may be in the hundreds.
- Australia’s July building approvals fell the most in three years and credit growth had the smallest increase since October 2003, signaling the fifth-biggest Asian Pacific economy is slowing.

Late Buy/Sell Recommendations
Goldman Sachs:
None of note

Night Trading
Asian Indices are -.50% to -.25% on average.
S&P 500 indicated -.17%.
NASDAQ 100 indicated -.29%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
FRE/1.77
TIF/.24

Upcoming Splits
STSA 3-for-2

Economic Releases
8:30 am EST
- Preliminary 2Q GDP is estimated to rise 3.4% versus a prior estimate of 3.4%.
- Preliminary 2Q GDP Price Index is estimated to rise 2.4% versus a prior estimate of a 2.4% gain.
- Preliminary 2Q Personal Consumption is estimated to rise 3.4% versus a prior estimate of a 3.3% increase.

10:00 pm EST
- Chicago Purchasing Manager for August is estimated to fall to 61.0 from 63.5 in July.

10:30 pm EST
- Platt's estimates weekly crude inventories fell 800,000 barrels, gasoline inventories fell 1.7 million barrels, distillate inventories rose 1.4 million barrels and refinery utilization rose .75%.

BOTTOM LINE: Asian indices are lower on increasing concerns over the impact of energy prices on exporters in the region. I expect US equities to open lower, however shares may rise modestly later in the day on short-covering and month-end window-dressing. The Portfolio is 50% net long heading into the day.

Stocks Continue to Display Resilence as Gas Prices Soar

Indices
S&P 500 1,208.41 -.32%
DJIA 10,412.82 -.48%
NASDAQ 2,129.76 -.37%
Russell 2000 653.76 -.24%
DJ Wilshire 5000 12,062.75 -.28%
S&P Barra Growth 578.90 -.44%
S&P Barra Value 625.24 -.20%
Morgan Stanley Consumer 577.92 -.70%
Morgan Stanley Cyclical 730.06 -.33%
Morgan Stanley Technology 492.32 -.34%
Transports 3,648.30 -1.0%
Utilities 403.18 +.07%
Put/Call 1.03 +3.0%
NYSE Arms 1.11 +45.03%
Volatility(VIX) 13.65 +.96%
ISE Sentiment 144.00 +5.11%
US Dollar 88.35 +.11%
CRB 331.19 +2.46%

Futures Spot Prices
Crude Oil 70.50 +.99%
Unleaded Gasoline 249.10 +.65%
Natural Gas 12.08 +3.61%
Heating Oil 208.55 +.46%
Gold 435.90 +.09%
Base Metals 130.35 +.28%
Copper 164.25 -.27%
10-year US Treasury Yield 4.09 -1.80%

Leading Sectors
Oil Service +1.98%
Energy +1.81%
HMOs +.58%

Lagging Sectors
Restaurants -2.17%
Disk Drives -2.77%
Airlines -2.97%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Hurricane Katrina devastated parts of Louisiana, Mississippi and Alabama, killing dozens of people, cutting off power to 2 million and leaving most of New Orleans flooded by water as deep as 20 feet. US and state officials say it may be the nation’s worst natural disaster.
- Billionaire financier Carl Icahn may make a tender offer for as much as 10% of Time Warner, adding pressure on the media company to buy back shares and spin off its cable-tv unit.
- President Bush is cutting short a scheduled vacation to return to Washington tomorrow to supervise the federal response to Hurricane Katrina.
- Surging fuel prices will probably filter into the cost of other US consumer goods at least temporarily, possibly curbing spending and economic growth, Federal Reserve policy makers said at their Aug. 9 meeting.
- The hurricane that struck the US Gulf Coast this week may prompt S&P to lower its ratings on $7.86 billion of municipal bonds sold by Louisiana, Mississippi and other borrowers along the storm’s path.
- Cardinal Health said it is restating earnings for changes including inventory valuation and is discussing a settlement to resolve a US regulatory investigation.
- Crude oil and gas rose to a record for a second straight day after Hurricane Katrina shut 95% of production in the Gulf of Mexico.
- US Treasuries surged, led by the biggest rally in two-year notes this year, on speculation record energy costs will temper economic growth.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Oil Tanker shorts and Telecom Equipment longs offset losses in my Retail and Internet longs. I did not trade in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished lower, most sectors fell and volume was light. Measures of investor anxiety were mostly higher into the close. Overall, today’s market action was slightly negative. While the market’s relatively muted reaction to $70 oil is impressive, I am worried that measures of anxiety are too low given the risks that are forming. The possibility of a fear-induced blow-off spike in oil have increased considerably over the last 24 hours.

Stocks Lower Mid-day on Fears Over Rising Energy Prices

Indices
S&P 500 1,204.15 -.66%
DJIA 10,377.16 -.82%
NASDAQ 2,122.62 -.72%
Russell 2000 652.15 -.49%
DJ Wilshire 5000 12,022.63 -.61%
S&P Barra Growth 576.75 -.80%
S&P Barra Value 623.15 -.53%
Morgan Stanley Consumer 576.58 -.93%
Morgan Stanley Cyclical 726.63 -.79%
Morgan Stanley Technology 490.17 -.77%
Transports 3,642.72 -1.15%
Utilities 400.98 -.47%
Put/Call 1.03 +3.0%
NYSE Arms 1.19 +56.01%
Volatility(VIX) 13.95 +3.18%
ISE Sentiment 143.00 +4.38%
US Dollar 88.45 +.23%
CRB 331.13 +2.47%

Futures Spot Prices
Crude Oil 69.40 +3.27%
Unleaded Gasoline 243.00 +17.93%
Natural Gas 11.65 +4.59%
Heating Oil 202.50 +6.09%
Gold 435.60 -1.31%
Base Metals 130.35 +.28%
Copper 164.70 +1.57%
10-year US Treasury Yield 4.11% -1.34%

Leading Sectors
Oil Service +1.76%
Energy +1.45%
HMOs +.51%

Lagging Sectors
Retail -2.18%
Disk Drives -2.91%
Airlines -3.13%

BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my Internet and Retail longs. I exited a few longs this morning as they hit stop-losses and added back IWM and QQQQ shorts, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are lower and volume is light. Measures of investor anxiety are mostly higher. Today’s overall market action is modestly negative given another rise in energy prices. I expect US stocks to trade mixed-to-higher from current levels into the close on short-covering and bargain-hunting.

Today's Headlines

Bloomberg:
- American Express, Goldman Sachs and Allianz AG will sign a nonbinding agreement to buy a $3 billion stake in Industrial & Commercial Bank of China.
- High school students achieved the highest average math score ever recorded on the SAT examination, the most widely used college-entrance test, as they reaped the rewards of more-challenging coursework.
- GM said it doesn’t expect sales of large SUVs to regain peak levels of the past amid rising fuel prices and changes in consumer tastes.
- US Treasuries are rising, pushing yields on 10-year notes to the lowest since mid-July, on speculation record energy costs will temper economic growth.
- Crude oil is rising to another record for a second day after Hurricane Katrina shut about 92% of production in the Gulf of Mexico.
- The US dollar is rising the most in a month against the yen after Japanese government reports showed household spending unexpectedly declined and the jobless rate rose from a seven-year-low.

Wall Street Journal:
- Hurricane Katrina, which slammed into Louisiana’s Gulf Coast yesterday and is now moving steadily north-northeast, will cause delays and cancellations in US air travel for much of this week.
- Hurricane Katrina left a potential public health disaster in its wake.
- Sprint Nextel is nearing an agreement to buy two of its wireless affiliates for a combined price of about $700 million.
- Supervalu, the owner of Save-A-Lot, has built one of the most successful grocery chains in the US by expanding in low-income neighborhoods.
- Nextel Communications, Verizon Wireless and Cingular Wireless are among mobile-phone companies that have cut their international calling rates as they bid for a share of the growing overseas phone-call market.
- EchoStar Communications plans to offer multiple image, or “mosaic,” screens to its “Dish Home” channel.

NY Times:
- Apple Computer and Motorola plan to introduce next week a cellular phone that will play music using Apple’s iTunes software.
- Chinese police raided the offices of a human rights group in Beijing yesterday.
- Seven oil rigs are adrift in the Gulf of Mexico following the passage of Hurricane Katrina.
- UK retail sales fell for a sixth month in August, a survey of 109 companies showed.
- A jump in fuel prices caused by production and supply bottlenecks after Hurricane Katrina would do more to slow the US economy than the demand-driven price increases of the last two years, economists said.

Washington Post:
- The US Air Force issued rules yesterday saying that prayers aren’t appropriate at most official events.

Confidence About Jobs Best Since Before 9/11, Factory Orders Decline After Recent Gains

- Consumer Confidence for August rose to 105.6 versus estimates of 101.0 and a reading of 103.6 in July.
- Factory Orders for July fell 1.9% versus estimates of a 2.3% fall and a .9% increase in June.

BOTTOM LINE: Consumer confidence in the US unexpectedly rose in August as more jobs and rising incomes eased concerns about high gas prices, Bloomberg said. Americans are now more optimistic about finding jobs than at any time since the month of the terrorist attacks in 2001. The component of the index that measures consumers’ expectations for the next 6 months rose to 93.7 from 93.2. A measure of optimism about the present situation rose to 123.6, also the best since September 2001. The proportion of US consumers expecting to buy a new car in the next six months rose to 3.3% from 3.0%. This reading is a huge positive for investors and I continue to believe all measures of confidence will reach cycle highs during the fourth quarter.

US factory orders declined last month for the first time since January, reflecting less demand for aircraft, computers and machinery, Bloomberg reported. The decline follows a two-month surge. Orders for non-defense capital goods excluding aircraft, a measure of future business investment, declined 4.1% versus a 4.9% gain the prior month. The inventory-to-shipments ratio held at 1.19 months in July. Unfilled orders rose 1.0% after a 2.8% gain in June, which also points to rising production next quarter. I expect factory orders to accelerate next month.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Asian economic growth is under threat should oil prices remain above $70/bbl., economists said.
- Japan’s household spending unexpectedly fell for a third month in July as individuals cut expenditures on transportation and housing, suggesting consumer demand may not lead growth in the world’s second-biggest economy.
- Crude oil is rising for a second day in NY on concern Hurricane Katrina damaged platforms and ports on the Gulf of Mexico.

Financial Times:
- Next Plc and Debenhams Plc may be among UK retailers planning to move production to Eastern Europe, Turkey and India from China to ensure they get the latest styles into stores more quickly.

Shanghai Daily:
- Shanghai Airlines is seeking Chinese government approval to operate freight services to the US.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on EBAY, MERQE and MRVL.

Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.06%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
ADCT/.28
MCRS/.43
SMTC/.14

Upcoming Splits
None of note

Economic Releases
10:00 am EST
- Consumer Confidence for August is estimated to fall to 101.0 from 103.2 in July.
- Factory Orders for July are estimated to fall 2.2% versus a 1.4% increase in June.

2:00 pm EST
- Minutes of Aug. 9 FOMC Meeting

BOTTOM LINE: Asian indices are mostly higher on gains in financial shares in the region. I expect US equities to open modestly higher, however shares may weaken later in the day after the release of the FOMC Minutes. The Portfolio is 75% net long heading into the day.

Stocks Finish Near Session Highs as Oil Reverses

Indices
S&P 500 1,212.28 +.60%
DJIA 10,463.05 +.63%
NASDAQ 2,137.65 +.80%
Russell 2000 655.32 +1.03%
DJ Wilshire 5000 12,096.19 +.63%
S&P Barra Growth 581.46 +.72%
S&P Barra Value 626.50 +.48%
Morgan Stanley Consumer 581.30 +.58%
Morgan Stanley Cyclical 731.90 +.24%
Morgan Stanley Technology 493.66 +.53%
Transports 3,685.21 +.49%
Utilities 402.91 +.75%
Put/Call 1.0 -15.25%
NYSE Arms .76 -54.77%
Volatility(VIX) 13.52 -1.46%
ISE Sentiment 137.00 -20.35%
US Dollar 88.20 +.39%
CRB 323.23 +1.93%

Futures Spot Prices
Crude Oil 67.76 +.83%
Unleaded Gasoline 208.60 +1.23%
Natural Gas 11.39 +1.24%
Heating Oil 191.45 +.30%
Gold 441.40 unch.
Base Metals 129.99 unch.
Copper 162.70 +.34%
10-year US Treasury Yield 4.16 -.46%

Leading Sectors
Oil Tankers +3.52%
Steel +2.63%
Biotech +1.38%

Lagging Sectors
Tobacco -.04%
Restaurants -.37%
Airlines -1.03%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Eastman Kodak is retaking the photo kiosk business at Walgreen from Fuji Photo Film, making it the choice of the three biggest US retailers of prints.
- Hurricane Katrina’s estimated cost for insurers such as Allstate Corp. was cut to $9 billion to $16 billion by storm modeler Eqecat after the storm veered away from New Orleans.
- Cultivation of opium poppies in Afghanistan, which are used to produce the narcotic heroin, decreased by 21% this year, the UN said.

AP:
- A Yemeni sheik convicted in NY of conspiring to fund terrorism by Hamas and al-Qaeda has been sent to a super-maximum security prison in Florence, Colorado, to serve his sentence.

Agence France-Presse:
- Israel will abandon more West Bank settlements in negotiations with the Palestinian Authority, Prime Minister Ariel Sharon said today on Israel’s Channel 10 tv.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet, Retail, Semiconductor and Computer longs. I took profits in a few trading longs in the afternoon and added to my oil tanker shorts, thus leaving the Portfolio 75% net long. The tone of the market was modestly positive today as the advance/decline line finished higher, most sectors rose and volume was very light. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was very positive. However, volume was much lighter than I would have liked to have seen.

Stocks Ignoring Hurricane Katrina Mid-day, Moving Higher

Indices
S&P 500 1,211.45 +.53%
DJIA 10,456.76 +.57%
NASDAQ 2,134.91 +.69%
Russell 2000 652.97 +.67%
DJ Wilshire 5000 12,084.65 +.53%
S&P Barra Growth 581.15 +.66%
S&P Barra Value 626.15 +.42%
Morgan Stanley Consumer 581.05 +.54%
Morgan Stanley Cyclical 731.66 +.22%
Morgan Stanley Technology 493.68 +.53%
Transports 3,681.41 +.38%
Utilities 402.55 +.66%
Put/Call 1.16 -1.69%
NYSE Arms .72 -57.10%
Volatility(VIX) 13.47 -1.97%
ISE Sentiment 138.00 -19.77%
US Dollar 88.20 +.39%
CRB 323.13 +1.90%

Futures Spot Prices
Crude Oil 67.00 +1.32%
Unleaded Gasoline 206.00 +6.91%
Natural Gas 10.78 +10.29%
Heating Oil 190.50 +3.72%
Gold 441.70 -.09%
Base Metals 129.99 unch.
Copper 162.50 -1.10%
10-year US Treasury Yield 4.16% -.41%

Leading Sectors
Oil Tankers +3.57%
Steel +2.67%
Gold & Silver +1.75%

Lagging Sectors
REITs -.12%
Restaurants -.49%
Airlines -1.15%

BOTTOM LINE: The Portfolio is higher mid-day on gains in my Internet, Retail, Semiconductor and Computer longs. I added a few new longs this morning, thus leaving the Portfolio 100% net long. One of my new longs is AMR Corp.(AMR) and I am using a $13 stop-loss on this position. The tone of the market is positive as the advance/decline line is modestly higher, most sectors are higher and volume is very light. Measures of investor anxiety are mostly lower. Today’s overall market action is very positive given the damage from the hurricane. As I have surmised many times, the price of oil has substantially passed levels justified by the underlying fundamentals, as a speculative fervor not seen since the Internet bubble took over the commodity and related securities. The most massive storm the U.S. has seen in years just hit the area most vulnerable to energy supply disruptions and oil is up a $1.12 cents to $67.25, below the record $68 per barrel, which was seen just a few days ago. This may be the beginning of the "sell the news" phenomenon that I had anticipated as we reached a peak in hurricane and terrorism fears. I expect US stocks to trade modestly higher from current levels into the close on short-covering and bargain hunting.

Today's Headlines

Bloomberg:
- Hurricane Katrina came ashore along the Louisiana coast, sparing New Orleans a direct hit, as it weakened on a path toward Biloxi, Mississippi.
- This month’s decline in shares of US homebuilders, the steepest in three years, may be short-lived as companies benefit from record demand and earnings.
- Intelsat Ltd. agreed to buy PanAmSat Holding for $3.2 billion in cash to become the world’s largest commercial-satellite operator.
- OPEC may raise its production ceiling when the oil exporters group meets next month to try to reduce record prices.
- Hurricane Katrina may cost US insurers such as Allstate as much as $25 billion, making it the most expensive storm to ever hit the US.
- Patients given a statin drug within 24 hours of a heart attack increase their chances of survival by more than 50%, according to a UCLA study of more than 170,000 patients.
- US Treasuries rose as Hurricane Katrina sent crude oil prices above $70 a barrel, stoking speculation economic growth will slow.
- Hewlett-Packard said customers of its Snapfish online photo service can pick up prints in one hour at Walgreen stores, one of three new offerings aimed at expanding its printing business.
- The yen is falling against the US dollar after opinion polls showed Japanese Prime Minister Koizumi’s lead over the opposition slipping before next month’s election.

Wall Street Journal:
- Abercrombie & Fitch’s CEO Michael Jeffries sold stock in the teen clothing retailer ahead of the second-quarter report.
- US workers may be able to reduce their retirement tax burden through a new 401K pension plan starting from next year.
- Delphi, GM, Ford and Visteon may cut wages and thousands of jobs in cost-saving restructuring plans.
- Tango dancing with more fluid, callisthenic movements to the music of Massive Attack or Jimi Hendrix is sweeping the dance floors across the US.
- The US and Mexico may be close to ending a 15-year disagreement about US antidumping duties on Mexican cement, as shortages in the US prompt political pressure to increase imports.

NY Times:
- An increasing number of religious groups are broadcasting their services to users of Apple’s iPod.

NY Post:
- Microsoft officials have held talks in recent weeks with NY real estate brokers who have sold retail space in Times Square.

Crain’s NY Business:
- China’s Beijing Ventone Real Estate wants to acquire as much as 1 million square feet of Manhattan office space to create a center for Chinese companies.

LA Times:
- Actor George Clooney will announce plans today to build a $3 billion, 25-acre casino, boutique hotel and condominium project in Las Vegas.

Economic Releases

None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Monday Watch

Weekend Headlines
Bloomberg:
- New Orleans residents were orders to evacuate the city today as Hurricane Katrina, one of the most powerful and potentially deadly storms ever to threaten the US Gulf Coast, approached land with its 160 mph winds. Here are a few New Orleans WebCams.
- Wal-Mart Stores said August sales at US stores open at least a year rose about 3.3%, within its forecast range, as surging gasoline prices led shoppers to limit purchases to food and basic back-to-school merchandise.
- The EU may start to unblock millions of Chinese garments from customs warehouses by mid-September.
- Crude oil is soaring to a record above $70/bbl. in NY after Hurricane Katrina forced companies including Exxon Mobil and Chevron to shut operations in the Gulf of Mexico.
- The US dollar is declining against the euro in Asia on speculation rising energy prices and declining consumer confidence will hamper growth in the US.
- Iraqi lawmakers completed a constitution to put before voters in an October referendum after Kurds and Shiite and Sunni Arabs failed to agree on all issues.

Barron’s:
- Oracle, IBM, Microsoft and SAP AG may be planning acquisitions to add customers because growth in the software market has slowed.
- The new US bankruptcy code, which will take effect on Oct. 17, may have companies such as Delphi and Northwest Air reconsidering reorganization as rules become more stringent.
- Share-price appreciation may be little-related to earnings growth and more driven by changes in p/e ratios, citing its own study of the past five decades.

New York Times:
- Apple Computer faces demands from at least two of the four major record companies that may jeopardize the flat 99-cent fee its iTunes service charges for downloaded songs.
- KPMG LLP will pay $456 million to settle a US Justice Department case over allegedly illegal tax shelters and accept an outside monitor.
- US patients suffering from chronic and acute back pain from broken vertebrae are clamoring for a surgical procedure that injects a form of cement into the bone and eases the pain.
- Barr Pharmaceuticals may conduct a new label-comprehension study to sell its Plan B “morning after” contraceptive over the counter.
- Shares of Microsoft may rise as the company introduces new versions of its Xbox game, SQL Server and Windows operating system.

San Francisco Chronicle:
- California’s Air Resources Board has proposed regulations that would require public transit systems to replace diesel buses with vehicles that run on natural gas.

Detroit News:
- The United Auto Workers won’t accept Delphi’s request for $2.5 billion of concessions.

Washington Post:
- Washington-area residents are diving less because of high gasoline prices, diminishing the fuel tax receipts used to fund local transportation projects.
- The US government plans to triple the number of airport quarantine stations to prevent the spread of deadly infectious diseases by international travelers.
- Starbucks, McDonald’s and other US companies such as grocery chains and clothing retailers are selling or giving away technology including video rentals and cell phone ring tones.

AFP:
- The US military freed 1,000 prisoners from Iraq’s Abu Ghraib prison.

London-based Times:
- Nasdaq Stock Market and Instinet Group’s planned merger is being further examined by the US Dept. of Justice over competition concerns.

Xinhua news:
- China’s lawmakers ratified a ban on cigarette vending machines in a bid to cut the incidence of smoking among minors.

China Business News:
- China’s government won’t repeat its decision last month to raise the value of the yuan and will instead allow supply and demand to drive the currency rate.

Weekend Recommendations
Forbes on Fox:
- Had guests that were positive on FDX, PKI, BMET and mixed on CAL, RYAAY.

Cashin' In:
- Had guests that were positive on GNSS, ENER, WMG, PVH, MDT, mixed on VCG and negative on GTW.

Barron's:
- Had positive comments on ALEX, ASI and BKS.

Goldman Sachs:
- None of note

Night Trading
Asian indices are -1.50% to -1.0% on average.
S&P 500 indicated -.75%.
NASDAQ 100 indicated -.70%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/Estimate
AES/.15
MBT/.62

Upcoming Splits
DADE 2-for-1
SPF 2-for-1

Economic Releases
None of note

BOTTOM LINE: Asian Indices are lower, spurred by losses in exporters in the region as Hurricane Katrina causes a spike in energy prices. I expect US stocks to open lower on losses in Asia and higher energy prices. The Portfolio is 75% net long heading into the week.

Weekly Outlook

There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - None of note
Tues. - Consumer Confidence, Factory Orders and Fed Minutes
Wed. - 2Q GDP, 2Q GDP Price Index, 2Q Personal Consumption and Chicago Purchasing Manager
Thur. - Personal Income, Personal Spending, PCE Deflator, PCE Core, Initial Jobless Claims, Continuing Claims, Construction Spending, ISM Manufacturing, ISM Prices Paid, Pending Home Sales and Total Vehicle Sales
Fri. - Unemployment Rate, Average Hourly Earnings, Change in Non-farm Payrolls

A few of the more noteworthy companies that release quarterly earnings this week are:

Mon. - AES Corp.(AES)
Tues. - Zale Corp.(ZLC)
Wed. - Freddie Mac(FRE), Tiffany & Co.(TIF)
Thur. - H&R Block(HRB), Saks Inc.(SKS)
Fri. - Del Monte Foods(DLM)

Other events that have market-moving potential this week include:

Mon. - None of note
Tue. - GM Analyst Event, NVLS Mid-Quarter Update
Wed. - Fed’s Santomero speaks, Fed’s Yellen speaks
Thur. - None of note
Fri. - None of note

BOTTOM LINE: I expect US stocks to finish the week modestly higher on higher volatility. Equities will likely come under pressure early in the week on fears over a spike in commodity prices related to Hurricane Katrina. According to Stratfor.com, the Port of Southern Louisiana is the fifth-largest port in the world and the biggest port in the United States. It is a key global port for the export and import of commodities. The port could become unusable if levees burst, thus substantially impacting global agricultural prices as peak harvest time is over the next 30 days. Gasoline prices would also rise on any significant and sustained disruption to transportation systems to and from the port. About 2% of global oil production and about 25% of US produced oil comes from the Gulf, according to Stratfor. Later this week, US stocks should rally as the negative economic impact of the hurricane is viewed as mostly temporary and economic data come in better-than-expected. I continue to believe we are in a consolidation phase within a significant intermediate-term move higher in the major averages. My trading indicators are now giving mixed signals and the Portfolio is 75% net long heading into the week.

Economic Week in Review

ECRI Weekly Leading Index 135.40 -.07%

Existing Home Sales for July fell to 7.16M versus estimates of 7.25M and 7.35M in June. US sales of previously owned homes slowed in July, leaving the rate of purchases at the third-highest on record as low interest rates and growing employment supported demand, Bloomberg reported. The median price of an existing home rose .5% to $218,000 in July. The median price is 14% above year-ago levels. Re-sales fell 7.5% in the West, 3.3% in the Northeast and 1.8% in the Midwest. The South was unchanged. The supply of homes for sale increased to 4.6 months’ worth, the highest since November 2003, from 4.4 months’ worth in June. “The economy is good, jobs are being created, interest rates are still at historic lows, demographics are overwhelming, which should drive demand,” said James Gillespie, CEO of Coldwell Banker Real Estate.

Durable Goods Orders for July fell 4.9% versus estimates of a 1.5% decrease and an upwardly revised 1.9% gain in June. Durables Ex Transportation for July fell 3.2% versus estimates of a .8% fall and an upwardly revised 3.6% gain in June. US orders for durable goods declined more than forecast in July after a three-month surge, reflecting less demand for aircraft, computers and communications equipment, Bloomberg reported. Orders for non-defense capital goods excluding aircraft, a proxy for future corporate investment, declined 3.7% last month, the largest amount since October 2004. “New orders have been much stronger than shipments recently, suggesting that capital spending is likely to accelerate during the second half of the year despite this month’s weakness,” said Steven Wood, chief economist at Insight Economics.

New Home Sales for July rose to 1410K versus estimates of 1328K and 1324K in June. US new home sales unexpectedly rose to a another all-time high last month as mortgage rates below 6% and steady employment gains sent American streaming into the housing market, Bloomberg said. The median price of a new home fell to $203,800, the lowest since December 2003. New Home Sales rose 36% in the West and 10.1% in the Northeast. However, they fell 13.5% in the Midwest and 3.5% in the South. Finally, the supply of new homes for sale at the current pace fell to 4 months from 4.1 months in June. “Today’s report is another very robust signal for the housing market,” said Dean Maki, chief US economist at Barclays Capital.

Initial Jobless Claims for last week fell to 315K versus estimates of 315K and 319K the prior week. Continuing Claims fell to 2578K versus estimates of 2575K and 2587K prior. The number of Americans filing first-time claims for jobless benefits fell to 315,000 last week as companies held on to workers in an expanding economy, Bloomberg reported. The four-week moving-average rose to 315,000 from 313,750. However, the four-week moving-average of continuing claims was the lowest since March 2001. The insured employment rate, which tends to track the US unemployment rate, was unchanged at 2.0%. “This data supports the idea that payrolls will be strong again in August,” said Ellen Beeson, an economist at Bank of Tokyo-Mitsubishi Ltd.

Final Univ. of Mich. Consumer Confidence for August fell to 89.1 versus estimates of 92.5 and a prior estimate of 92.7. US consumer confidence fell for the first time in three months in August as Americans paid record prices at the gas pump, Bloomberg reported. The average retail price of a gallon of regular gas increased to $2.61 this week. The current conditions component of the index, which measures whether or not consumers feel it’s a good time to buy big-ticket items, fell to 108.2 from 113.5 in July. The expectations component of the index fell to 76.9 from 85.5 the prior month. “Up until now, we haven’t seen any backlash to record prices at the pump from consumers, but now the story is changing,” said Richard Yamarone, chief economist at Argus Research.

BOTTOM LINE: Overall, last week's economic data were mixed. I continue to believe the rate of home price appreciation will slow over the coming months, not plunge. I do not believe a slowing from record levels to more healthy sustainable rates will have a meaningfully negative impact on the economy. The decline in Durable Goods Orders is not likely the beginning of a trend. I expect orders to bounce back next month. Recent jobless claims figures point to healthy employment gains of about 200,000 in the upcoming employment report. I continue to believe consumer sentiment will make new cycle highs over the coming months as employment prospects continue to improve slowly, energy prices fall, inflation decelerates, interest rates remain relatively low, the housing market stays strong by historic standards and the stock market rallies further. I expect the US economy to grow a robust 4%+ during the second half of the year. Finally, the ECRI Weekly Leading Index fell .07% to 135.40 and is forecasting stable healthy growth.

Market Week in Review

S&P 500 1,205.10 -1.20%*



Click here for the Weekly Wrap by Briefing.com.

BOTTOM LINE: Overall, last week's market performance was negative. The advance/decline line fell slightly, most sectors declined and volume was very light on the week. Measures of investor anxiety were mostly higher. However, the AAII % Bulls rose for the week, but is still at below average levels. The average 30-year mortgage rate fell to 5.77% and is only 56 basis points above all-time lows set in June 2003 and down from 2005 highs of 6.04% set in April. As well, the benchmark 10-year T-note yield fell another 3 basis points on the week as economic data spurred fears of a slowdown. Economic worries also resulted in the underperformance by cyclical stocks and spurred losses in the US dollar. Small-caps outperformed on the week even as the dollar weakened. Finally, crude oil failed to move higher even as hurricane fears intensified and gasoline supplies fell, which is a negative for the commodity.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,205.10 -1.20%
DJIA 10,397.29 -1.53%
NASDAQ 2,120.77 -.69%
Russell 2000 684.64 -.59%
DJ Wilshire 5000 12,020.59 -1.05%
S&P Equity Long/Short Index 1,054.08 -.01%
S&P Barra Growth 577.33 -1.10%
S&P Barra Value 623.50 -1.29%
Morgan Stanley Consumer 577.97 -1.18%
Morgan Stanley Cyclical 730.13 -1.48%
Morgan Stanley Technology 491.06 -1.23%
Transports 3,667.36 -1.38%
Utilities 399.90 +1.37%
S&P 500 Cum A/D Line 7,706.00 -.57%
Bloomberg Crude Oil % Bulls 50.85 -9.20%
Put/Call 1.18 +13.46%
NYSE Arms 1.68 +44.83%
Volatility(VIX) 13.72 +2.23%
ISE Sentiment 172.00 +43.33%
AAII % Bulls 36.14 +23.39%
US Dollar 87.86 -.81%
CRB 317.10 +.61%

Futures Spot Prices
Crude Oil 66.13 +.27%
Unleaded Gasoline 192.69 +1.15%
Natural Gas 9.79 +7.60%
Heating Oil 183.66 +.09%
Gold 442.50 -.18%
Base Metals 129.99 +.74%
Copper 164.20 +.06%
10-year US Treasury Yield 4.18% -4.75%
Average 30-year Mortgage Rate 5.77% -.52%

Leading Sectors
Alternative Energy +4.63%
Utilities +1.37%
Semis +.38%

Lagging Sectors
Gold & Silver -2.44%
Banks -2.52%
Tobacco -3.19%

One-Week High-Volume Gainers
One-Week High-Volume Losers

*5-Day % Change

Stocks Lower Mid-day on Greenspan Comments and Lower Consumer Confidence

Indices
S&P 500 1,205.85 -.54%
DJIA 10,402.40 -.46%
NASDAQ 2,121.74 -.59%
Russell 2000 649.86 -1.19%
DJ Wilshire 5000 12,033.94 -.57%
S&P Barra Growth 577.83 -.46%
S&P Barra Value 623.83 -.61%
Morgan Stanley Consumer 577.84 -.40%
Morgan Stanley Cyclical 729.56 -.43%
Morgan Stanley Technology 490.49 -.51%
Transports 3,655.33 -1.10%
Utilities 400.48 -.41%
Put/Call 1.22 +41.86%
NYSE Arms 1.81 +96.77%
Volatility(VIX) 13.97 +1.75%
ISE Sentiment 199.00 -1.97%
US Dollar 87.70 +.07%
CRB 319.73 +.44%

Futures Spot Prices
Crude Oil 67.80 +.46%
Unleaded Gasoline 197.30 +.47%
Natural Gas 9.95 +1.84%
Heating Oil 187.00 +.03%
Gold 442.00 -.25%
Base Metals 129.99 +.74%
Copper 164.30 +2.30%
10-year US Treasury Yield 4.17% +.55%

Leading Sectors
Broadcasting +.63%
Gold & Silver +.17%
Software -.22%

Lagging Sectors
Oil Tankers -1.74%
Steel -1.95%
Tobacco -2.59%

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my Oil Tanker shorts, Steel shorts and Internet longs. I temporarily hedged further this morning, however the Portfolio is now back to 50% net long. The tone of the market is negative as the advance/decline line is substantially lower, almost every sector is lower and volume is very light. Measures of investor anxiety are higher. Today’s overall market action is modestly negative given a rise in long-term rates after Greenspan’s comments and hurricane worries. The AAII % Bulls rose to 36.14% this week from 29.29% the prior week; this reading is at below-average levels. Likewise, the % Bears fell to 31.33% from 40.40% the prior week; this is slightly above-average levels. Sentiment will likely fall next week. I expect US stocks to trade modestly higher from current levels into the close on short-covering and bargain hunting.

Today's Headlines

Bloomberg:
- The Federal Reserve is paying closer attention to the rising values of assets such as stocks and homes, as low interest rates encourage more risk-taking.
- Time Warner’s publishing unit issued a hiring freeze and clamped down on spending on customer gifts and travel to meet profit targets.
- US Treasuries are falling after Fed Chairman Greenspan said the central bank is paying closer attention to asset values.
- Broadcom CEO McGregor said he is focused on winning Nokia Oyj as a customer for the company’s mobile-phone chips for the first time.

Wall Street Journal:
- Merck may consider settling a small number of cases involving its painkiller Vioxx, if patients who claim they were damaged fit certain criteria.
- Some mutual funds, seeking to boost returns, have been beating the market by acting as hedge funds.
- China’s environmental destruction as a result of fast economic growth has many middle-class Chinese worried as water is drained from parks, old palaces and wetlands.
- RealNetworks and Napster failed to reach an agreement with music copyright holders over how much to pay copyright holders for streamed music.
- The SEC has started an informal inquiry into Pixar computer animation film studios over its DVD release of “The Incredibles.”
- McDonald’s and Subway are finding the new fad for toasted sandwiches is harder to satisfy than expected.

NY Times:
- Northwest Airlines mechanics’ strike probably won’t lead to the airline to seek bankruptcy protection unless the walkout’s impact on operations worsens significantly.

Washington Post:
- Sirius Satellite Radio will have two channels devoted to radio host Howard Stern when his show begins airing in January.

Chronicle of Higher Education:
- More than 100 Iowa State University faculty members have signed a statement that denounces “intelligent design,” the theory that a higher being oversaw evolution, and asks colleagues not to suggest the concept is science.

High Energy Prices Taking Toll on Sentiment

- Final Univ. of Mich. Consumer Confidence for August fell to 89.1 versus estimates of 92.5 and a prior estimate of 92.7.

BOTTOM LINE: US consumer confidence fell for the first time in three months in August as Americans paid record prices at the gas pump, Bloomberg reported. The average retail price of a gallon of regular gas increased to $2.61 this week. The current conditions component of the index, which measures whether or not consumers feel it’s a good time to buy big-ticket items, fell to 108.2 from 113.5 in July. The expectations component of the index fell to 76.9 from 85.5 the prior month. I continue to believe consumer sentiment will make new cycle highs over the coming months.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Friday Watch

Late-Night Headlines
Bloomberg:
- Japan’s consumer prices fell in July for a second month, suggesting deflation lingers and that the central bank isn’t likely to abandon its policy of pumping money into the world’s second-largest economy.
- The yen fell against the dollar for a third day in four after a Financial Times report said al-Qaeda may be planning a terror attack on an Asian financial center.
- Goldman Sachs was hired to prepare an IPO for Bank of China, the nation’s second-biggest lender.
- Hurricane Katrina hit land in southeastern Florida and caused two fatalitites.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on JCI.
- Reiterated Underperform on CMOS.

Business Week:
- AtheroGenics(AGIX), which develops treatments for inflammatory diseases, may be bought by a bigger pharmaceutical company, citing Medical Technology Stock Letter editor John McCamant.
- Tarragon Corp.(TARR), a US homebuilder and property investment company, is expected to see its shares climb even if housing demand slows.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.06%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
AGI/.09

Upcoming Splits
OSK 2-for-1
ROP 2-for-1
TTI 3-for-2

Economic Releases
9:45 am EST
- Final Univ. of Mich. Consumer Confidence for August is estimated to fall to 92.5 versus a prior estimate of 92.7.

BOTTOM LINE: Asian indices are mostly higher on gains in energy shares in the region. I expect US equities to open mixed and to move higher later in the day. The Portfolio is 50% net long heading into the day.

Stocks Finish Slightly Higher as Lower Long-term Rates Offset Higher Energy Prices

Indices
S&P 500 1,212.39 +.23%
DJIA 10,450.63 +.15%
NASDAQ 2,134.37 +.26%
Russell 2000 657.70 +.41%
DJ Wilshire 5000 12,102.72 +.24%
S&P Barra Growth 580.49 +.23%
S&P Barra Value 627.64 +.23%
Morgan Stanley Consumer 580.14 +.25%
Morgan Stanley Cyclical 732.74 +.39%
Morgan Stanley Technology 492.95 unch.
Transports 3,695.95 +.82%
Utilities 402.11 +1.18%
Put/Call .86 -5.49%
NYSE Arms .92 -32.64%
Volatility(VIX) 13.73 -3.11%
ISE Sentiment 203.00 +69.17%
US Dollar 87.73 +.10%
CRB 318.33 -.53%

Futures Spot Prices
Crude Oil 67.47 -.03%
Unleaded Gasoline 196.45 +.04%
Natural Gas 9.75 -.15%
Heating Oil 186.80 -.08%
Gold 443.00 -.02%
Base Metals 129.04 -.72%
Copper 160.80 +.12%
10-year US Treasury Yield 4.15 -.19%

Leading Sectors
Steel +2.06%
Utilities +1.18%
Gaming -.99%

Lagging Sectors
Software -.28%
Homebuilders -.75%
Oil Tankers -1.78%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Underperform on AMLN.

Afternoon/Evening Headlines
Bloomberg:
- Iraqi officials extended talks on a new constitution until tomorrow to give negotiators a fourth day to reach consensus between Sunnis and the Kurds and Shiites who have submitted a draft document.
- Merck now faces 4,951 lawsuits over the painkiller Vioxx in state and federal courts, or 15% more than a month ago.
- United Airlines parent UAL Corp., the second-largest US carrier, has received four proposals from banks willing to provide $3 billion in financing to help the company exit bankruptcy.
- California sued GlaxoSmithKline Plc, Bristol-Myers Squibb and 37 other pharmaceutical companies as part of a lawsuit accusing drugmakers of defrauding the state’s $34 billion Medi-Cal program by inflating prescription prices.

Financial Times:
- Al-Qaeda may be planning a terror attack on a financial center in Asia.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Oil Tanker shorts offset losses in my Medical longs. I did not trade in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was modestly positive today as the advance/decline line finished slightly higher, most sectors rose and volume was very light. Measures of investor anxiety were lower into the close. Overall, today’s market action was neutral. The fact that oil is moving relentlessly higher and stocks refuse to sell-off in any significant fashion is a huge positive.

Stocks Slightly Higher Mid-day on Light Volume

Indices
S&P 500 1,210.75 +.10%
DJIA 10,435.51 unch.
NASDAQ 2,131.92 +.14%
Russell 2000 656.67 +.25%
DJ Wilshire 5000 12,087.81 +.11%
S&P Barra Growth 579.79 +.11%
S&P Barra Value 626.78 +.10%
Morgan Stanley Consumer 579.23 +.09%
Morgan Stanley Cyclical 732.16 +.31%
Morgan Stanley Technology 492.86 -.01%
Transports 3,687.41 +.58%
Utilities 400.72 +.83%
Put/Call .96 +5.49%
NYSE Arms 1.05 -22.63%
Volatility(VIX) 14.08 -.64%
ISE Sentiment 198.00 +65.0%
US Dollar 87.70 -24.24%
CRB 317.71 -.78%

Futures Spot Prices
Crude Oil 67.10 -.33%
Unleaded Gasoline 194.00 +.74%
Natural Gas 9.52 -4.65%
Heating Oil 185.40 -.61%
Gold 442.50 +.05%
Base Metals 129.04 -.72%
Copper 160.60 -1.11%
10-year US Treasury Yield 4.16% -.09%

Leading Sectors
Steel +1.93%
Gold & Silver +1.20%
Airlines +.76%

Lagging Sectors
Homebuilders -.36%
Telecom -.37%
Oil Tankers -1.47%

BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Oil Tanker Shorts are offsetting losses in my Medical longs. I have not traded this morning, thus leaving the Portfolio 50% net long. The tone of the market is mildly positive as the advance/decline line is slightly higher, most sectors are gaining and volume is very light. Measures of investor anxiety are mostly lower. Today’s overall market action is neutral given another decline in long-term rates and bounce in energy prices from morning lows. The average 30-year mortgage rate fell to 5.77% this week from 5.80% the prior week. This is down from 6.04% on April 1 and only 56 basis points away from record lows set in June 2003. The Homebuilding Index is down .35% today, underperforming the market, even as the yield on the 10-year T-note is falling to 4.16%. I expect US stocks to trade mixed-to-lower from current levels into the close on continuing worries over energy prices.

Today's Headlines

Bloomberg:
- GM will extend its offer of employee discounts to all US buyers until the end of September as it tries to boost sales of its cars and trucks.
- Boeing’s machinists union, whose labor agreement expires Sept. 1, said the world’s top aircraft maker’s initial contract proposal was “an insult” and fell short of demands on health care and pensions.
- Crude oil and natural gas are falling from records in NY on forecasts that Tropical Storm Katrina will probably miss oil and gas fields in the Gulf of Mexico.

Wall Street Journal:
- US technology companies, such as Dell, Hewlett-Packard, EMC and Microsoft may benefit from plans to increase tech spending.
JetBlue Airways has been profitable for 18 consecutive quarters while bigger airlines have suffered losses totaling billions of dollars, but now it’s relaxing the formula that brought it success.
- US Internet-based phone providers may have to next week cut off tens of thousands of customers who haven’t formally acknowledged that they understand problems they may encounter in calling emergency services.
- Volkswagen AG, criticized recently for targeting luxury-car buyers instead of its core customers, is offering special lease deals on some new models to speed up the launch of its redesigned Jetta and Passat sedans.
- Subscribers to “third-generation” wireless services are increasing rapidly, thought they still account for only a fraction of mobile-phone users in Europe.
- Sports-equipment makers, such as Head NV, Wilson Sporting Goods, Prince Sports and Fischer GmbH, are targeting recreational players with rackets featuring nanotechnology, magnetic forces, aerodynamics and advanced physics principles.

NY Times:
- Guidant will face an extensive inspection of its manufacturing facilities by the FDA.
- US credit card companies have only just started to focus on protecting customers’ personal information following security breaches, as they realize it is putting their brands at risk.

NY Sun:
- NYU economics professor Thomas Sargent is living in a $5 million university-owned apartment overlooking Central Park in the five-star Pierre Hotel.

Daily Deal:
- Vonage Holdings, a closely held provider of Internet-based calling, plans to raise as much as $600 million in an IPO.

Washington Post:
- Hackers are using Chinese Web sites to breach US government computer networks.

Reuters:
- Microsoft will receive $5 million plus a percentage of ticket sales from a film to be made by Universal Pictures that’s based on the “Halo” space-based video games.

Jobless Claims Remain Low

- Initial Jobless Claims for last week fell to 315K versus estimates of 315K and 319K the prior week.
- Continuing Claims fell to 2578K versus estimates of 2575K and 2587K prior.

BOTTOM LINE: The number of Americans filing first-time claims for jobless benefits fell to 315,000 last week as companies held on to workers in an expanding economy, Bloomberg reported. The four-week moving-average rose to 315,000 from 313,750. However, the four-week moving-average of continuing claims was the lowest since March 2001. The insured employment rate, which tends to track the US unemployment rate, was unchanged at 2.0%. Recent jobless claims figures point to employment gains of about 200,000 in the upcoming employment report.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Thursday Watch

Late-Night Headlines
Bloomberg:
- Nokia Oyj and Motorola won bigger shares of the global market in the second quarter, widening their lead over competitors including Samsung Electronics and Siemens AG.

Wall Street Journal:
- India’s minister for petroleum and natural gas told the country’s oil companies to intensify efforts to buy overseas energy assets as Oil & Natural Gas Corp. considers making a counterbid for Canadian company PetroKazakhstan.

Financial Times:
- Nasdaq Stock Market may today say it will offer its users access to options trading, months ahead of the NYSE.

China Daily:
- 3M Co. plans to invest $300 million in China during the next five years.

Asian Wall Street Journal:
- News Corp’s plans to operate a prime-time television channel in China have unraveled amid a government crackdown on the media industry.
- Tropical Storm Katrina headed toward southeastern Florida, with maximum sustained winds of 50 mph and gusting higher, prompting officials to issue a hurricane warning for parts of the state’s Atlantic coast.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Underperform on GCO.

Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.16%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
CHS/.27
DG/.21
FRED/.09
JTX/-.31
NOVL/.02
OVTI/.26
PETC/.31
PDCO/.32
NX/1.62
SFD/.44
TOL/1.19

Upcoming Splits
None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated at 315K versus 316K the prior week.
- Continuing Claims are estimated at 2575K versus 2593K prior.

BOTTOM LINE: Asian indices are mixed, as gains in Hong Kong are being offset by losses in Australian shares. I expect US equities to open modestly lower on continuing energy fears. The Portfolio is 50% net long heading into the day.

Stocks Finish at Lows on Energy Concerns

Indices
S&P 500 1,209.59 -.66%
DJIA 10,434.87 -.81%
NASDAQ 2,128.91 -.39%
Russell 2000 655.01 -.07%
DJ Wilshire 5000 12,074.33 -.53%
S&P Barra Growth 579.15 -.64%
S&P Barra Value 626.18 -.67%
Morgan Stanley Consumer 578.72 -.81%
Morgan Stanley Cyclical 729.89 -.86%
Morgan Stanley Technology 492.96 -.75%
Transports 3,665.97 +.13%
Utilities 397.44 -.38%
Put/Call .91 -10.78%
NYSE Arms 1.37 +11.62%
Volatility(VIX) 14.17 +6.22%
ISE Sentiment 120.00 -38.14%
US Dollar 87.92 -.18%
CRB 320.02 +.77%

Futures Spot Prices
Crude Oil 67.75 +3.10%
Unleaded Gasoline 196.25 +5.62%
Natural Gas 10.00 +3.29%
Heating Oil 188.05 +3.36%
Gold 442.40 -.43%
Base Metals 129.98 -.75%
Copper 162.30 -1.22%
10-year US Treasury Yield 4.16% -.32%

Leading Sectors
Oil Tankers +4.24%
Oil Service +1.52%
Homebuilders +.86%

Lagging Sectors
Airlines -2.02%
Gold & Silver -2.11%
Steel -2.12%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Former WorldCom CEO Bernard Ebbers must serve his 25-year sentence in a Louisiana medium security prison instead of a low-security prison near his Mississippi home.
- The Federal Reserve Bank of New York invited 14 of the “major participants” in the credit-derivatives market to a meeting next month amid concern the $8.4 trillion industry is rife with trades lacking key paperwork.
- GM and Ford Motor’s debt were lowered to junk by Moody’s Investors Service following two quarters of losses at both companies’ North American auto operations.
- Johnson Controls will buy York International for $2.4 billion to double its heating-and-cooling systems business.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Oil Tanker shorts and Retail longs. I added back my IWM and QQQQ shorts in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was modestly negative today as the advance/decline line finished lower, most sectors fell and volume was average. Measures of investor anxiety were mostly higher into the close. Overall, today’s market action was slightly negative.