Thursday, November 10, 2005

Stocks Sharply Higher Mid-day on Falling Energy Prices and Long-term Rates

Indices
S&P 500 1,229.02 +.69%
DJIA 10,623.83 +.73%
NASDAQ 2,189.66 +.64%
Russell 2000 663.16 +.50%
DJ Wilshire 5000 12,275.17 +.61%
S&P Barra Growth 588.44 +.75%
S&P Barra Value 636.35 +.66%
Morgan Stanley Consumer 592.05 +.86%
Morgan Stanley Cyclical 737.55 +.66%
Morgan Stanley Technology 513.26 +.28%
Transports 4,042.38 +.97%
Utilities 389.95 -1.49%
Put/Call .88 +7.32%
NYSE Arms .84 +9.98%
Volatility(VIX) 11.93 -6.80%
ISE Sentiment 146.00 -2.01%
US Dollar 91.71 +.23%
CRB 314.35 -.69%

Futures Spot Prices
Crude Oil 57.90 -1.92%
Unleaded Gasoline 149.75 -3.47%
Natural Gas 11.43 -2.05%
Heating Oil 174.50 -2.49%
Gold 468.00 +.11%
Base Metals 137.81 +.87%
Copper 187.20 +2.21%
10-year US Treasury Yield 4.57% -1.45%

Leading Sectors
Airlines +3.83%
Gaming +2.47%
Homebuilders +2.17%

Lagging Sectors
Coal -1.64%
Energy -2.07%
Oil Service -2.23%
BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Internet longs, Energy-related shorts, Retail longs, Airline longs and Semi longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is above average. Measures of investor anxiety are mostly higher. Overall, market action is positive given terrorism, disappointing earnings from CSCO and recent gains. My sense is that the 10-year T-note yield will head lower through at least year-end as the dollar remains firm, commodity prices weaken further, government deficits improve, demand for U.S. assets increases and inflation reading continue to decelerate. I expect US stocks to trade modestly higher from current levels into the close on short-covering, lower long-term rates, more optimism and lower energy prices.

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