Year-end Scoreboard*

Indices
S&P 500 1,248.29 +4.91%
DJIA 10,717.50 +1.72%
NASDAQ 2,205.32 +2.13%
Russell 2000 673.22 +4.64%
DJ Wilshire 5000 12,497.18 +4.57%
S&P Equity Long/Short Index 1,109.58 +9.04%
S&P Barra Growth 596.52 +4.01%
S&P Barra Value 647.55 +5.85%
Morgan Stanley Consumer 591.50 +2.21%
Morgan Stanley Cyclical 785.05 +2.17%
Morgan Stanley Technology 522.21 +3.37%
Transports 4,196.03 +11.65%
Utilities 405.11 +25.12%
S&P 500 Cum A/D Line 7,613 +8.0%
Bloomberg Crude Oil % Bulls 27.03 -33.2%
Put/Call .76 -11.63%
NYSE Arms 1.65 +37.5%
Volatility(VIX) 12.07 -9.18%
ISE Sentiment 163.00 -23.47%
AAII % Bulls 37.30 -35.31%
AAII % Bears 36.51 +108.39%
US Dollar 91.07 +12.63%
CRB 331.83 +16.88%
ECRI Weekly Leading Index 135.00 +.52%

Futures Spot Prices
Crude Oil 61.04 +47.08%
Unleaded Gasoline 172.74 +56.36%
Natural Gas 11.22 +82.44%
Heating Oil 176.98 +65.40%
Gold 519.70 +18.11%
Base Metals 152.41 +21.35%
Copper 203.20 +61.27%
10-year US Treasury Yield 4.39% +4.03%
Average 30-year Mortgage Rate 6.22% +7.06%

Leading Sectors
Energy +40.51%
HMOs +37.14%
Gold & Silver +30.55%
I-Banks +29.84%
Utilities +25.12%

Lagging Sectors
Foods -4.04%
Telecom -5.71%
Computer Hardware -7.34%
Airlines -9.34%
Broadcasting -20.12%

This Year’s Winners
This Year’s Losers

*1 Year Total Return

Stocks Lower Mid-day on Year-end Profit-taking and Rising Energy Prices

Indices
S&P 500 1,249.86 -.36%
DJIA 10,735.03 -.46%
NASDAQ 2,207.90 -.46%
Russell 2000 674.81 -.50%
DJ Wilshire 5000 12,507.36%
S&P Barra Growth 597.02 -.37%
S&P Barra Value 647.48 -.46%
Morgan Stanley Consumer 592.46 -.62%
Morgan Stanley Cyclical 785.55 -.57%
Morgan Stanley Technology 522.54 -.54%
Transports 4,208.48 -.77%
Utilities 404.65 -.48%
Put/Call .80 -11.11%
NYSE Arms 1.47 +22.79%
Volatility(VIX) 11.74 +1.12%
ISE Sentiment 162.00 -1.0%
US Dollar 91.22 +.13%
CRB 331.78 +.75%

Futures Spot Prices
Crude Oil 61.04%
Unleaded Gasoline 171.00 +3.49%
Natural Gas 11.22 +.02%
Heating Oil 172.80 +1.47%
Gold 519.50 +.39%
Base Metals 152.41 -.37%
Copper 203.30 -.61%
10-year US Treasury Yield 4.38% +.81%

Leading Sectors
Oil Service +1.74%
Energy +1.15%
Disk Drives +.53%

Lagging Sectors
Gold & Silver -1.01%
Restaurants -1.06%
HMOs -1.08%

BOTTOM LINE: The Portfolio is lower mid-day on losses in my Medical longs, Semi longs and Energy-related shorts. I exiting a long and added IWM and QQQQ shorts this morning, thus leaving the Portfolio 75% 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. Overall, today’s market action is negative considering recent losses and lack of year-end leadership. It looks as if the S&P 500 is going to finish the year with around a 5% total gain including dividends, short of my 10% projection. Next year has the potential to be much better. I will try and post a Year-End Scoreboard later this evening. I expect US stocks to trade higher from current levels into the close on short-covering and seasonal strength.

Today's Headlines

Bloomberg:
- Bill Miller, manager of the Legg Mason Value Trust, is about to beat the S&P 500 for a record 15th consecutive year.
- UK house prices rose for a fourth month in December, the Nationwide Building Society said, adding to evidence of a sustained pickup in the $6 trillion property market.
- Internet service providers in China, which already use software to monitor user behavior, will soon have to record which Web sites their users visit and what time they logged on, by law.
- Genentech filed for US marketing approval of its Lucentis treatment for age-related macular degeneration, the leading cause of blindness among the elderly.
- Venezuela’s IBC stock index fell the most among the world’s 78 primary equity benchmarks this year, plunging 32%, on concern President Hugo Chavez will divert profits from investors as he seeks to redistribute wealth to the country’s poor.

Wall Street Journal:
- European mergers and acquisitions activity should grow in 2006 as economic and financial conditions become more favorable, citing bankers.
- Wal-Mart Stores plans to offer employee health insurance through Sam’s Club to small business owners.
- NTP Inc., the patent-holding company involved in a dispute with BlackBerry-maker Research in Motion, has obtained a 30-day extension from the US Patent and Trademark Office to file a defense for its claims.

NY Times:
- NY Mayor Michael Bloomberg and Joel Klein, chancellor of NY’s public schools, have convinced many private donors to donate more than $300 million for the city’s schools.

USA Today:
- As many as 56% of high-definition televisions’ purchasers haven’t bought the necessary special set-top box from cable or satellite providers that will enable the high-definition programming, citing surveys by Leichtman Research Group.

Financial Times:
- US legislation passed to encourage donations after Hurricane Katrina will probably make this year the best in history for US charities.

AP:
- The US Justice Department has begun an investigation into the leak of classified information about the National Security Agency’s domestic spy program to monitor overseas terror threats to the US.

NY Post:
- NY Senate Majority Leader Joseph Bruno said yesterday that democratic sate Attorney General Eliot Spitzer should support an independent investigation into the claim by former Goldman Sachs Chairman Whitehead that Spitzer had threatened him.

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

Friday Watch

Late-Night Headlines
Bloomberg:
- A new-found flaw in Microsoft’s Windows operating system is being used by hackers to install malicious code on personal computers.
- Intel will replace its corporate logo and simplify product brands in a major shakeup of the company’s marketing.
- Japanese stocks may rise, helping the Nikkei 225 Average close out the year with the biggest annual gain in at least 19 years.

London-based Times:
- Google is being sued for patent infringement over Google Talk, a free Internet telephone system, citing documents posted on line by Search Engine Watch, a Blog that first reported the case.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on IHS.

Business Week:
- AmeriCredit Corp.(ACF), which provides car loans to borrowers with poor credit histories, may be an attractive takeover target for a bank or financial group.
- Focus Media Holding Ltd.(FMCN), a Chinese advertising display company that’s listed on the Nasdaq Composite Index, will benefit as domestic shopping expands in China.
- Overseas Shipholding Group(OSG) is likely to benefit from growing demand to transport fuel to energy hungry nations.

Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated +.10%.
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
VRTY/.08

Upcoming Splits
CELL 3-for-2
ORI 5-for-4
SIE 2-for-1

Economic Releases
- None of note

BOTTOM LINE: Asian indices are lower, dragged down my commodity and exporting companies in the region on worries over the US housing market. I expect US equities to open modestly lower and to rally modestly into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Finish Near Session Lows on Light Volume

Indices
S&P 500 1,254.42 -.30%
DJIA 10,784.82 -.11%
NASDAQ 2,218.16 -.48%
Russell 2000 677.96 -.31%
DJ Wilshire 5000 12,556.02 -.28%
S&P Barra Growth 599.71 -.39%
S&P Barra Value 650.43 -.20%
Morgan Stanley Consumer 596.14 -.17%
Morgan Stanley Cyclical 790.04 -.03%
Morgan Stanley Technology 525.39 -.72%
Transports 4,241.34 +.41%
Utilities 406.63 -.10%
Put/Call .90 +7.14%
NYSE Arms 1.19 +6.61%
Volatility(VIX) 11.61 +2.29%
ISE Sentiment 163.00 -17.68%
US Dollar 91.09 -.13%
CRB 329.32 unch.

Futures Spot Prices
Crude Oil 60.31 -.02%
Unleaded Gasoline 165.24 +3.85%
Natural Gas 11.19 -.25%
Heating Oil 170.10 -.11%
Gold 518.70 +.23%
Base Metals 152.98 -.52%
Copper 204.50 -.02%
10-year US Treasury Yield 4.36% -.31%

Leading Sectors
Gold & Silver +1.67%
Airlines +.75%
Steel +.75%

Lagging Sectors
Semis -.96%
Tobacco -1.38%
Oil Service -1.57%

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 Outperform on SPLS ,HD, ODP, DKS and PETM.

Afternoon/Evening Headlines
Bloomberg:
- US music album sales dropped about 7% this year as Internet sites such as Apple Computer’s iTunes store more than doubled their share of the market.
- Sumner Redstone placed his stake in Midway Games into a new company controlled by his daughter, Shari Redstone, as part of an effort to free him from debt.
- ConocoPhillioips, Marathon Corp. and Amerada Hess Corp. said they reached an agreement with the Libyan National Oil Corp. allowing them to return to Libya after a 19-year absence.
CNBC:
- Applied Digital Solutions’(ADSX) VeriChip Corp. subsidiary has filed papers for an IPO

BOTTOM LINE: The Portfolio finished slightly lower today as losses in my Medical longs and Computer longs more than offset gains in my Energy-related shorts. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was mildly negative today as the advance/decline line finished modestly lower, most sectors declined and volume was very light. Measures of investor anxiety were higher into the close. Overall, today's action was good for the bears as the major averages and breadth finished near session lows. It seems as though technology shares come under pressure any time a weak housing number is released. Time and signs of stabilizing home sales will cure this. I still expect any early January weakness to be shallow and short-lived.

Stocks Slightly Higher Mid-day on Light Volume

Indices
S&P 500 1,258.99 +.07%
DJIA 10,815.40 +.18%
NASDAQ 2,228.07 -.04%
Russell 2000 681.61 +.23%
DJ Wilshire 5000 12,603.29 +.10%
S&P Barra Growth 601.88 -.03%
S&P Barra Value 652.92 +.18%
Morgan Stanley Consumer 597.10 -.01%
Morgan Stanley Cyclical 793.56 +.42%
Morgan Stanley Technology 527.55 -.31%
Transports 4,264.08 +.95%
Utilities 408.33 +.32%
Put/Call .86 +2.38%
NYSE Arms .98 -12.44%
Volatility(VIX) 11.30 -.44%
ISE Sentiment 175.00 -11.62%
US Dollar 91.10 -.12%
CRB 329.13 -.06%

Futures Spot Prices
Crude Oil 60.20 +.64%
Unleaded Gasoline 165.00 +3.70%
Natural Gas 11.26 -3.15%
Heating Oil 170.50 +1.19%
Gold 518.00 +.33%
Base Metals 152.98 -.52%
Copper 204.40 -1.21%
10-year US Treasury Yield 4.37% -.05%

Leading Sectors
Gold & Silver +1.37%
Airlines +1.32%
Steel +1.18%

Lagging Sectors
Networking -.66%
Oil Service -.92%
Tobacco -1.25%

BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my Medical longs and Computer longs. I have not traded this morning, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, most sectors are higher and volume is light. Measures of investor anxiety are mixed. Overall, today’s market action is neutral considering positive economic data and lower natural gas prices. The AAII % Bulls fell to 37.30% this week from 41.03% the prior week. This reading is still at below-average levels and has declined 21.3 percentage points in seven weeks. The percentage bears rose to 36.51% from 28.21% the prior week. This reading is now at above-average levels and has increased 20.5 percentage points in five weeks. I expect bullish sentiment to rise modestly next week. My sense is that many funds that have been badly burned in recent Januarys have cut long exposure over the past few weeks. The fact that bullishness has declined to this extent with the market near a four-year high bodes very well for another push higher during first quarter 2006. I expect US stocks to trade mixed-to-higher into the close on short-covering, more optimism and seasonal strength.

Today's Headlines

Bloomberg:
- Holiday sales on the Internet soared 30% over last year as people shopped online for computers and electronic devices such as Apple Computer’s iPod music players.
- AT&T will spend hundreds of millions of dollars on a branding campaign that begins on New Year’s Eve and includes the music of UK rock band Oasis.
- Use of the so-called date-rape drug, gamma hydroxybutate dropped 76% over five years in California, a study says.

Wall Street Journal:
- The Federation of Islamic Organizations in Europe often identifies with radical fundamentalist groups, making it difficult for European officials to establish a dialogue to fight terrorism.
- Smith Barney plans to bring together some of its branch offices and Citigroup’s retail-banking operations in an attempt to leverage the parent company’s resources.
- German police have banned the association that ran a Muslim cultural center for allegedly promoting Islamic jihad.
- Retailers and manufacturers of flat-panel TVs are cutting prices as sales outstrip revenue earned from ordinary TVs.
- Venture capitalists are investing in companies that produce consumer electronics after years of focusing mainly on companies that supplied equipment for businesses.

NY Times:
- US homes are more affordable than they were two decades ago because of higher income and lower interest rates, loan fees and downpayment requirements, citing Economy.com.
- Semiconductor industry groups in the US, Europe, Japan, Korea and Taiwan outlined a plan to replace conventional silicon transistors in electronics with switches made from single molecules or electrons in a report to be issued Dec. 31.

NY Post:
- The number of crimes on NY’s subways has been cut in half since 1997, a result of the decision to add police officers to the system as part of increased anti-terrorism efforts.

Financial Times:
- Amazon.com’s UK unit had a record Christmas season this year, delivering 20% more gifts on its busiest day compared with 2004.

Labor Market Still Healthy, Chicago Manufacturing Strong, Home Sales Slow, Oil Supplies Rise

- Initial Jobless Claims rose to 322K last week versus estimates of 320K and 319K the prior week.
- Continuing Claims rose to 2715K versus estimates of 2625K and 2630K prior.
- Chicago Purchasing Manager for December rose to 61.5 versus estimates of 60.0 and a reading of 61.7 in November.
- Existing Home Sales for November fell to 6.97M versus estimates of 7.0M and 7.09M in October.
- The EIA reported crude inventories rose 118,000 barrels vs. estimates of a 500,000 barrel drawdown. Gasoline supplies fell 1.22 million barrels vs. estimates of a 250,000 decline. Distillate supplies fell 890,000 barrels vs. estimates of a 1.5-million-barrel fall. Refinery utilization rose 0.83% vs. estimates of a 0.63% rise. Natural gas supplies fell 162 bcf vs. estimates of a 160 bcf fall.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits rose last week, remaining below the average for 2005 and suggesting the labor market is still growing, Bloomberg reported. The four-week moving average rose to 325,000 from 324,750. The unemployment rate for those eligible for benefits, which tracks the US unemployment rate remained at 2.1%. I continue to believe the labor market will remain healthy over the intermediate-term as interest rates remain low and businesses increase spending.

An index of Chicago-area business conditions fell less than expected in December as orders increased, suggesting manufacturing in the region remained strong at year-end, Bloomberg said. The prices paid component of the index fell to 83.8 from 94.1 in November. The new orders component of the index rose to 66.7 from 61.6 in November. The employment component of the index rose to 51.7 from 50.3 the prior month. I continue to believe manufacturing will add to US economic growth over the intermediate-term on hurricane and inventory rebuilding.

US previously owned home sales declined in November to an eight-month low, Bloomberg reported. The median home price rose 13.2% from a year-ago to $215,000. The supply of homes for sale rose to 5 months’ worth from 4.9 months’ worth the prior month. Sales fell 3.7% in the West, 2.7% in the Northeast, 1.3% in the Midwest and .7% in the South. I continue to believe the housing market is slowing from its record-setting pace to healthy more sustainable levels.

Overall, the EIA inventory numbers are bearish for the energy complex considering how much talk there has been of substitution away from natural gas.

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:
- South Korea’s industrial production rose 5% in November to a record as car companies and chipmakers expanded to meet export orders and rebounding domestic demand.
- Deutsche Bank AG advises betting on the dollar continuing its advance against the yen.
- South Korean laboratories used by scientist Hwang Woo Suk no longer have any stem cells created from patients’ tissues, the result of the researcher’s landmark May 2005 paper.

Financial Times:
- Public US companies may have to provide investors with valuations of senior executives’ pensions and stock options as part of an overhaul of disclosure rules on executive pay by the SEC.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on BSX.

Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.12%.

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/1.02
NAV/3.06

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 320K versus 318K the prior week.
- Continuing Claims are estimated to fall to 2625K versus 2638K prior.

10:00 am EST
- Chicago Purchasing Manager for December is estimated to fall to 60.0 versus a reading of 61.7 in November.
- Existing Home Sales for November are estimated to fall to 7.0M versus 7.09M in October.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude drawdown of 500,000 barrels. Gasoline inventories are estimated to fall 125,000 barrels, and distillate supplies are expected to fall 1,500,000 barrels. Finally, refinery utilization is expected to rise 0.63%.

BOTTOM LINE: Asian indices are higher, boosted by exporting shares in the region after US consumer confidence improved. I expect US equities to open mixed and to rally modestly into the afternoon. The Portfolio is 100% net long heading into the day.

Stocks Finish Slightly Higher on Better Consumer Confidence and Rebounding Energy Shares

Indices
S&P 500 1,258.17 +.13%
DJIA 10,796.26 +.17%
NASDAQ 2,228.94 +.09%
Russell 2000 680.08 +.52%
DJ Wilshire 5000 12,591.17 +.20%
S&P Barra Growth 602.07 +.19%
S&P Barra Value 651.75 +.06%
Morgan Stanley Consumer 597.18 +.29%
Morgan Stanley Cyclical 790.24 +.43%
Morgan Stanley Technology 529.18 +.14%
Transports 4,223.93 +.18%
Utilities 407.05 -.48%
Put/Call .84 -4.55%
NYSE Arms 1.12 -32.49%
Volatility(VIX) 11.35 -1.90%
ISE Sentiment 198.00 +.51%
US Dollar 91.20 +.01%
CRB 329.32 +1.46%

Futures Spot Prices
Crude Oil 60.00 +.30%
Unleaded Gasoline 159.20 +.06%
Natural Gas 11.65 +.11%
Heating Oil 168.96 +.42%
Gold 518.50 +.43%
Base Metals 153.77 +.17%
Copper 206.60 -.14%
10-year US Treasury Yield 4.37% +.76%

Leading Sectors
Gold & Silver +2.47%
Oil Service +1.86%
Steel +1.56%

Lagging Sectors
Utilities -.48%
Disk Drives -.83%
Airlines -2.237%

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 Outperform on STZ.

Afternoon/Evening Headlines
Bloomberg:
- Guidant Corp. recommended that shareholders approve a $21.5 billion takeover offer by Johnson & Johnson and scheduled a Jan. 31 vote while it continues to review a higher offer from Boston Scientific.
- The US Defense Department is contemplating cutting about 24,500 Army and National Guard personnel as part of a plan to save $11.1 billion in Army spending over the next five years, according to Pentagon documents.

Financial Times:
- Hilton Group Plc is near to completing its $6.2 billion sale of its hotels business to US-based Hilton Hotels.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Retail longs and Internet longs offset losses in my Energy-related shorts. I covered my IWM and QQQQ shorts, thus leaving the Portfolio 100% net long. The tone of the market was mildly positive today as the advance/decline line finished modestly higher, sector performance was mixed and volume was very light. Measures of investor anxiety were lower into the close. Overall, today's action was slightly bullish considering the jump in energy prices. However, I expect better action to end the week.

Stocks Higher Mid-day as Energy Shares Rebound

Indices
S&P 500 1,260.36 +.30%
DJIA 10,815.08 +.35%
NASDAQ 2,231.63 +.21%
Russell 2000 679.73 +.47%
DJ Wilshire 5000 12,609.44 +.34%
S&P Barra Growth 603.39 +.41%
S&P Barra Value 652.82 +.23%
Morgan Stanley Consumer 598.27 +.48%
Morgan Stanley Cyclical 791.38 +.57%
Morgan Stanley Technology 530.19 +.33%
Transports 4,229.13 +.31%
Utilities 406.22 -.69%
Put/Call .83 -5.68%
NYSE Arms .90 -45.72%
Volatility(VIX) 11.30 -2.33%
ISE Sentiment 217.00 +10.15%
US Dollar 91.31 +.13%
CRB 329.54 +1.55%

Futures Spot Prices
Crude Oil 60.10 +3.34%
Unleaded Gasoline 159.50 +5.39%
Natural Gas 11.15 +1.16%
Heating Oil 168.40 +2.87%
Gold 517.40 +.21%
Base Metals 153.77 +.17%
Copper 206.55 -.17%
10-year US Treasury Yield 4.37% +.85%

Leading Sectors
Oil Service +2.08%
Energy +1.85%
Gold & Silver +1.69%

Lagging Sectors
Utilities -.70%
Disk Drives -.77%
Airlines -2.51%

BOTTOM LINE: The Portfolio is unchanged mid-day as losses in my Energy-related shorts are offsetting gains in my Retail longs and Internet longs. I added IWM and QQQQ shorts this morning, thus leaving the Portfolio 50% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, most sectors are higher and volume is light. Measures of investor anxiety are lower. Overall, today’s market action is positive considering the rise in energy prices and bears inability to gain traction. The Johnson Redbook same-store sales index rose 3.7% year-over-year last week vs. a 3.4% rise the prior week. This week's gain is up from a 1.5% increase in late April, and it's the 34th week in a row that the index has risen 3% or more. The Morgan Stanley Retail Index (MVRX) has returned 15.3% since late October vs. a 7.2% gain for the S&P 500. While these stocks are due for a breather, I expect this sector to continue to outperform over the intermediate term. I expect US stocks to trade mixed-to-higher into the close on short-covering, more optimism and seasonal strength.

Today's Headlines

Bloomberg:
- Nissan Motor plans to unveil a concept car equipped with an Xbox 360 system from Microsoft that allows drivers to play video games.
- The move to online advertising is happening faster than analysts anticipated as companies devote more of their budgets to the Internet than traditional media.
- Crude oil, heating oil and gasoline rose after Iran’s deputy oil minister said OPEC should cut output next month to “keep prices stable.”
- Donald Trump’s casino company and partners today said they pan to spend $350 million to develop the TrumpStreet Casino and Entertainment Complex in Philadelphia.
- Celgene’s shares rose as much as 7.8% today after US regulators approved the company’s Revlimid capsule for a rare blood cancer.

Wall Street Journal:
- The US administration has applied sanctions against nine foreign companies for selling missile components and chemical weapons materials to Iran.
- The US government plans to spend $1 billion or more in the next ten years to construct high-security labs to study exotic and potentially lethal illnesses.

NY Times:
- More US food marketers are selling products that promise health benefits such as cholesterol reduction and improved digestion.
- Many US police departments, which are shot on staff, are seeking to boost recruitment by offering signing bonuses and other perks.

NY Post:
- New York Democratic Attorney General Eliot Spitzer should be impeached if it’s found that he personally threatened the former chairman of Goldman Sachs, John Whitehead, a Republican Assemblymen said.

CNBC:
- ShopperTrak CEO Bill Martin said unadjusted average weekly retail sales rose 7.4% in December from a year ago.

Independent:
- A daily dose of Vitamin D may cut cancers of the breast, colon and ovary by as much as half, citing a review of research published in the American Journal of Public Health.

Consumer Confidence Continues Rebound after Hurricanes

- Consumer Confidence for December rose to 103.6 versus estimates of 103.0 and a reading of 98.3 in November.

BOTTOM LINE: US consumer confidence rose in December to the highest level in four months, helped by falling gas prices and an improving labor market, Bloomberg said. The present situation component of the index jumped to 121.5 from 113.2 last month. The future outlook component rose to 91.6 versus 88.4 in November. Those consumers that said jobs are plentiful rose to 23.6% from 21.1% the prior month. I expect consumer confidence to make new cycle highs next year.

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:
- Sharp Corp., the world’s top maker of liquid-crystal display televisions, will raise panel output by at least 10% to meet demand driven by soccer’s World Cup and the Winter Olympics, according to executives.
- Growth in Australia’s economy will accelerate to 3.3% next year as exports and business investment surge, economists said.
- The board of NY’s main transit union voted tonight in favor of a contract offer to end a dispute that sparked a three-day subway and bus strike last week, the union said.

Late Buy/Sell Recommendations
Goldman Sachs:
- None of note

Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated +.05%.
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
- None of note

Upcoming Splits
ABC 2-for-1

Economic Releases
10:00 am EST
- Consumer Confidence for December is estimated to rise to 102.5 versus a reading of 98.9 in November.

BOTTOM LINE: Asian indices are mostly lower, dragged down by financial shares in the region. I expect US equities to open modestly lower and to rally modestly into the afternoon, finishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Finish Near Session Lows, Led by Energy Shares

Indices
S&P 500 1,256.54 -.96%
DJIA 10,777.77 -.97%
NASDAQ 2,226.89 -1.0%
Russell 2000 676.58 -1.44%
DJ Wilshire 5000 12,566.31 -1.0%
S&P Barra Growth 600.91 -1.03%
S&P Barra Value 651.33 -.88%
Morgan Stanley Consumer 595.44 -.60%
Morgan Stanley Cyclical 786.89 -.75%
Morgan Stanley Technology 528.46 -.84%
Transports 4,216.26 -1.18%
Utilities 409.02 -.64%
Put/Call .88 +27.54%
NYSE Arms 1.66 +27.86%
Volatility(VIX) 11.57 +12.66%
ISE Sentiment 197.00 +23.13%
US Dollar 91.17 +.43%
CRB 324.59 -.53%

Futures Spot Prices
Crude Oil 57.80 -.62%
Unleaded Gasoline 151.30 -.03%
Natural Gas 10.97 -.43%
Heating Oil 163.65 -.03%
Gold 510.10 unch.
Base Metals 153.51 +.63%
Copper 206.95 +.10%
10-year US Treasury Yield 4.33% -.98%

Leading Sectors
Airlines +1.55%
Homebuilders -.05%
Telecom -.15%

Lagging Sectors
Coal -1.98%
Energy -2.82%
Oil Service -3.13%

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 Outperform on BSX.

Afternoon/Evening Headlines
Bloomberg:
- First Data Corp. shares rose as much as 1.6% after a report today that the company is in discussions with unidentified private equity firms about a sale of its Western Union subsidiary.
- Poland’s two-month-old government plans to keep soldiers in Iraq next year, countering the previous cabinet’s pledge to pull out of the US-led operation by this week.
- Fidelity National Financial, the biggest US title insurer, agreed to buy Sedgwick CMS Holdings for $635 million to offer third-party claims management services to Fortune 500 companies.
- Natural gas futures plunged 10%, the largest one-day drop in almost 3 years, as warmer-than-normal weather slashed demand for the furnace fuel.
- US Treasury notes rose on speculation a decline in 10-year yields to below two-year yields may foreshadow an economic slowdown.
- Hurricanes Katrina, Rita and Wilma may cost insurers $57.6 billion, more than double the annual record for US natural disasters, a consulting firm said.

Reuters:
- Iraq’s political leaders plan to meet their country’s interim president in his Kurdish homeland in the next few days to lay the groundwork for a new government, citing a senior government official.

CNBC:
- Mortgage-backed securities are attractive because of their high yields relative to government and corporate debt and their credit quality, Paul McCulley, a managing director at PIMCO said.

BOTTOM LINE: The Portfolio finished lower today on losses in my Medical longs, Internet longs and Semi longs. I covered some of my IWM and QQQQ shorts, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished substantially lower, almost every sector fell and volume was very light. Measures of investor anxiety were mostly higher into the close. The 4-basis-point decline in the 10-year Treasury note yield, besides energy declines, worried traders today. I continue to believe U.S. growth is slowing to average rates from vigorous levels before the hurricanes. This, combined with decelerating inflation readings and rising demand for U.S. assets, helped boost bonds. I do not believe bond gains are foreshadowing a meaningful slowdown in U.S. economic activity.

Stocks Sharply Lower Mid-day, Pressured by Energy Shares

Indices
S&P 500 1,258.83 -.77%
DJIA 10,800.19 -.76%
NASDAQ 2,229.91 -.87%
Russell 2000 677.68 -1.28%
DJ Wilshire 5000 12,587.37 -.83%
S&P Barra Growth 602.02 -.85%
S&P Barra Value 652.50 -.70%
Morgan Stanley Consumer 596.00 -.51%
Morgan Stanley Cyclical 788.37 -.56%
Morgan Stanley Technology 528.62 -.81%
Transports 4,219.88 -1.10%
Utilities 409.26 -.59%
Put/Call .93 +34.78%
NYSE Arms 1.55 +19.44%
Volatility(VIX) 11.50 +11.98%
ISE Sentiment 202.00 +26.25%
US Dollar 91.04 +.29%
CRB 323.87 -.75%

Futures Spot Prices
Crude Oil 57.65 -1.33%
Unleaded Gasoline 152.25 -1.81%
Natural Gas 11.01 -10.12%
Heating Oil 165.00 -3.24%
Gold 510.10 +.83%
Base Metals 153.51 +.63%
Copper 206.75 +1.60%
10-year US Treasury Yield 4.34% -.71%

Leading Sectors
Airlines +1.89%
Gold & Silver +.07%
Homebuilders +.05%

Lagging Sectors
Coal -2.16%
Energy -2.83%
Oil Service -3.20%

BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet longs, Medical longs and Semi longs. I added IWM and QQQQ shorts this morning, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is substantially lower, most sectors are lower and volume is light. Measures of investor anxiety are mostly higher. Overall, today’s market action is negative considering the decline in energy prices, falling long-term rates and lack of normal seasonal strength. It appears to me the losses in the energy sector, which had been one of the best performing in 2005, are prompting hedge funds to take profits in most other winners. Gains by most funds are mediocre for the year and they do not want to slip into the red. I expect US stocks to trade mixed-to-higher from current levels into the close on short-covering.

Today's Headlines

Bloomberg:
- Boston Scientific plans to proceed with its $25 billion offer to buy Guidant Corp. even after the cardiac device maker said profits will sink because of product recalls.
- Hedge fund investors, frustrated by the lowest returns in three years, say they are giving more money to managers who bet on stocks and macroeconomic trends because they expect them to post the biggest gains in 2006.
- Guidant was barred by US regulators from exporting heart-rhythm devices from its principal plant in St. Paul, Minnesota, because of quality-system failures.
- Natural gas is plunging for a third day in NY, dropping almost 30% in 10 days, as warmer-than-normal weather slashed demand for the furnace fuel.

Wall Street Journal:
- Beijing’s Communist Party leadership has announced a campaign against bad manners as the city prepares to host an international throng of Olympic spectators in 2008.
- NY State AG Eliot Spitzer served subpoenas on Sony BMG Music Entertainment and Vivendi Universal’s Universal Music Group as part of an industry-wide investigation into pricing of digitally downloaded music.
- US Retail spending over the holiday shopping period rose a strong 8.7%, with the biggest increase in sales of home furnishings and consumer electronics.
- A lawsuit by as many as 1,000 employees of Cintas Corp. against unions trying to organize at the company’s plants may deter workers from supporting further organizing drive.
- GM will introduce sport-utility vehicles that consume less fuel next year, including a new version of the Chevy Tahoe, to help it reverse a decline in sales.
- Sanofi-Aventis SA investors hoping the company’s obesity drug Accomplia will become a miracle cure risk being disappointed.
- Gamco Investors’ Mario Gabelli’s involvement in more than a dozen bids for airwave licenses from the FCC have become the focus of a federal lawsuit.
- North Korea wants to end food aid from the UN and private charities to limit the international presence in the country, citing Richard Ragan, head of North Korean operations for the UN’s World Food Program.

NY Times:
- Michigan Governor Jennifer Granholm is courting Toyota Motor, which has said it may build an engine plant in the Midwest.
- Louisiana planners are seeking to move an entire string of seaside Cajun towns and villages and their 4,000 residents in Cameron Parish as much as 20 miles inland.
- Sears Holdings, Target and other US retailers are tightening store policies to discourage returns because of the extra labor they involve.

NY Post:
- NYC’s Department of Health is buying radiation-detection equipment for 33 private city hospitals to prepare for the possibility of a “dirty bomb” attack.

AP:
- US companies, which contributed millions of dollars in relief following tsunamis, hurricanes and earthquakes in 2005, found their philanthropic works gave them a competitive advantage in the marketplace.
- More than 10,000 Iraqi demonstrators backing Sunni Arab and secular Shiite politicians marched through the streets of Baghdad today to push for unity throughout the country.

AFP:
- Britain and Sweden are the only European countries that are likely to meet their Kyoto Protocol commitments on greenhouse gas emissions, citing a UK study.

BBC:
- Numerous mass graves with thousands of bodies have been discovered in Iraq since the ousting of dictator Saddam Hussein in 2003.

Manufacturing Slows in Mid-Atlantic, Outlook Improves

- The Richmond Fed Index for December fell to -2 versus estimates of 10 and a reading of 9 in November.

BOTTOM LINE: Manufacturing activity in the Central Atlantic region edged lower in December, Bloomberg reported. The shipments component of the index fell to 1 from 14. The new orders component fell to -2 from 10 and a gauge of manufacturing employment in the region fell to -6 from 0. However, measures of confidence improved as the expected shipments component rose 21 points to 50. The expected new orders component of the index rose 20 to 43. The index for expected manufacturing employment rose 11 points to 10. Finally, the planned capital expenditures component rose 6 points to 18. I continue to believe manufacturing will add to US economic growth over the intermediate-term as businesses increase spending, inventories are rebuilt and hurricane rebuilding accelerates.

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

Weekend Headlines
Bloomberg:
- US toy sales are headed for their third straight annual decline because children like 6-year-old Dawson Painter prefer electronic games.
- President Bush asked Americans to keep the families of US military men and women in mind during the Christmas holiday, saying their wartime sacrifices are protecting the country’s freedoms.
- Eastman Kodak probably generated increased holiday sales of digital cameras and printers, boosting efforts by the world’s largest photography company to shift from its traditional film business.
- Amazon.com said holiday sale worldwide set a record this year on demand for Apple’s iPod music players, video games and jewelry.
- Royal Dutch Shell Plc said it discovered oil off Brazil’s southeastern coast and wants to start producing by the end of the decade.
- The yen is falling by the most against the euro in more than two months and had the biggest loss versus the dollar in a week after reports showed Japanese household spending unexpectedly slid and unemployment increased.
- Crude oil is falling as much as 1.4% in NY on forecasts for milder weather in the US and on expectations heating fuel stockpiles, including natural gas, are adequate to meet winter demand.

NY Times:
- Goldman Sachs and Merrill Lynch are among Wall Street firms investing in online casinos and betting parlors and ignoring the government’s edict that those organizations are illegal.
- Pennsylvania lawmakers are investigating whether the political atmosphere of 18 state-run universities and colleges requires legislation to ban political bias in the classroom.
- The Israeli economy is likely to grow 5% this year, up from 4% in 2004, as its technology industries approach the peak they reached in 2000.

Washington Post:
- Immigrant entrepreneurs in the US are using small vending carts or kiosks in malls as a springboard into retailing.

Economic Daily News:
- Global shipments for flat-panel displays used in computers will see a modest slide in the first quarter of 2006, falling by a single digit from the fourth quarter, citing AU Optronics Executive VP Hui.

Kommersant:
- OPEC President Sheikh al-Sabah is visiting Moscow to ask Russia to cooperate on a planned cut in oil production and to learn more about Russia’s plans to supply China.

Weekend Recommendations
Barron's:
- Had positive comments on OSK, COP, APC and FDX.
- Had negative comments on GE and NTRI.

Goldman Sachs:
- Reiterated Outperform on EBAY.

Night Trading
Asian indices are -.50% to +.50% on average.
S&P 500 indicated +.13%.
NASDAQ 100 indicated +.24%.

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
CBI/.26
TDS/.29
USM/.37

Upcoming Splits
MRTN 3-for-2
KNX 3-for-2
JBLU 3-for-2
WFMI 2-for-1

Economic Releases
10:00 am EST
- Richmond Fed Index for December is estimated to rise to 10 versus a reading of 9 in November.

BOTTOM LINE: Asian Indices are mixed, as declining energy prices are offsetting disappointing economic data from Japan. I expect US stocks to open modestly higher and build on gains later in the day. The Portfolio is 100% net long heading into the week.

Weekly Scoreboard*

Indices
S&P 500 1,268.66 +.11%
DJIA 10,883.27 +.07%
NASDAQ 2,249.42 -.14%
Russell 2000 686.44 +.49%
DJ Wilshire 5000 12,692.96 +.20%
S&P Equity Long/Short Index 1,108.41 +.27%
S&P Barra Growth 607.15 +.11%
S&P Barra Value 657.12 +.11%
Morgan Stanley Consumer 599.02 -.05%
Morgan Stanley Cyclical 792.81 +.76%
Morgan Stanley Technology 532.92 -.32%
Transports 4,266.75 +3.0%
Utilities 411.65 -1.48%
S&P 500 Cum A/D Line 8,664 unch.
Bloomberg Crude Oil % Bulls 21.9 -57.93%
Put/Call .69 -13.75%
NYSE Arms 1.30 +35.42%
Volatility(VIX) 10.27 -3.84%
ISE Sentiment 160.00 -13.98%
AAII % Bulls 41.03 -11.09%
US Dollar 90.78 +1.19%
CRB 326.31 -.01%
ECRI Weekly Leading Index 135.40 -.07%

Futures Spot Prices
Crude Oil 58.43 -.97%
Unleaded Gasoline 155.05 -.48%
Natural Gas 12.28 -10.01%
Heating Oil 170.53 -1.63%
Gold 505.90 -.16%
Base Metals 153.51 -.14%
Copper 203.50 +.20%
10-year US Treasury Yield 4.38% -1.35%
Average 30-year Mortgage Rate 6.26% -.63%

Leading Sectors
Disk Drives +8.45%
Gaming +2.94%
Drugs +2.92%

Lagging Sectors
Internet -1.33%
Utilities -1.48%
Oil Tankers -2.0%

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

*5-Day % Change

***Alert***

I am done posting for the day. I will post the Weekly Scoreboard this evening.

Chart of Interest

Durable Goods Orders Jump, Consumer Confidence Rises Most in 13 Years Last 2 Months, New Home Sales Weaken

- Durable Goods Orders for November rose 4.4% versus estimates of a 1.2% increase and a 3.0% gain in October.
- Durables Ex Transportation for November fell .6% versus estimates of a 1.0% gain and a .2% decline in October.
- Final Univ. of Mich. Consumer Confidence for December rose to 91.5 versus estimates of 89.0 and a prior estimate of 88.7.
- New Home Sales for November fell to 1245K versus estimates of 1300K and 1404K in October.

BOTTOM LINE: US orders for durable goods jumped 4.4% in November, the most in six months, propelled by a surge in demand for aircraft, Bloomberg reported. Orders for transportation equipment soared 15.6% versus an 11.2% gain the prior month. Orders for defense hardware plunged 27% in November. Bookings for non-defense capital goods excluding aircraft, a proxy for future business investment, dropped 2% last month. The decline in durables ex transportation is surprising given record low inventory levels. I would expect to see an increase in this number next month.

US consumer confidence rose in December to the highest since July as lower gas prices and a rising stock market gave Americans more money to spend for the holidays, Bloomberg reported. The expectations component of the index soared to 80.2 from 69.6 the prior month. The current conditions component of the index, which is a gauge of Americans’ perception of their financial situation and if it’s a good time to purchase large items such as cars, jumped to 109.1 from 100.2 in November. Consumer confidence has now surged 17.3 percentage points in two months, the biggest two-month gain since the final two months of 1992. I expect consumer confidence to reach cycle highs over the intermediate-term as rising stock prices, low interest rates, an end to the Fed tightening cycle, falling energy prices, a stable job market and lower inflation readings more than offset a slowing housing market, thus leading to a lifting of the irrational pessimism that has developed since the bursting of the stock market bubble and 9/11 terrorist attacks.

US new home sales in November fell as rising mortgage rates and elevated prices discouraged some buyers, Bloomberg reported. Sales fell 11.3% from an all-time high in October, while the median price of a new home rose slightly to $225,200. The supply of new homes at the current sales rate increased to 4.9 months, the most in 9 years. Sales fell 22.1% in the West, 18.3% in the Midwest and 5.5% in the South. Sales rose 13.4% in the Northeast. I continue to expect the housing market to slow to more healthy, sustainable levels from all-time record highs. This will likely lead to a slowing in the overall US economy to average rates from high rates, which will benefit US stocks.

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:
- A Washington, DC law aimed at capping pharmaceutical prices was ruled unconstitutional by a federal court.
- Families and friends of the estimated 220,000 people killed or missing after the Indian Ocean tsunami will attend beachside ceremonies marking the first anniversary of the disaster of Dec. 26.
- Samsung Electronics, the world’s largest maker of memory chips and liquid-crystal displays, expects fourth-quarter profit from both products to beat its earlier projections because of cost cuts and flat-panel television demand.
- Asian contract rates for coal used in power plants may fall more than 20% next year as Indonesia and rival mining nations raised output after prices surged, Australia & New Zealand Banking Group Ltd. said.

Financial Times:
- For the first time since 2001, the four largest US investment banks each had more than $1 billion in mergers and acquisitions revenue this year.
- As much as a third of the $590 million spent by the United Nations on aid following last year’s Indian Ocean tsunami went to administrators and related costs.
- Google founders Sergey Brin and Larry Page have been named “Mean of the Year,” citing its own poll.

Dong-a Ilbo:
- Hwang Woo Suk falsified a 2005 landmark study on stem cell research, according to findings by a Seoul National University internal investigation, citing a Seoul National official.

Seoul Economic:
- Samsung Electronics will begin production at its newest liquid-crystal display factory about three months ahead of schedule because of rising demand for LCD televisions.

Nihon Keizai:
- Sony Corp. has developed an 82-inch liquid-crystal display television to compete against market leader Sharp Corp.

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

Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.03%.

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
NDN/.06

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Durable Goods Orders for November are estimated to rise 1.2% versus a 3.4% gain in October.
- Durables Ex Transportation for November are estimated to rise 1.0% versus a .3% gain in October.

9:45 am EST
- Final Univ. of Mich. Consumer Confidence for December is estimated to rise to 89.0 versus a reading of 88.7 in November.

10:00 am EST
- New Home Sales for November are estimated to fall to 1300K versus 1424K in October.

BOTTOM LINE: Asian indices are higher, boosted by tech shares in the region after Samsung boosted its earnings forecast. I expect US equities to open higher and to build modestly on gains into the afternoon. The Portfolio is 100% net long heading into the day.

Stocks Finish Near Session Highs as Natural Gas Plunges and Long-term Rates Fall

Indices
S&P 500 1,268.12 +.42%
DJIA 10,889.44 +.51%
NASDAQ 2,246.49 +.66%
Russell 2000 684.08 +.64%
DJ Wilshire 5000 12,681.68 +.46%
S&P Barra Growth 606.96 +.36%
S&P Barra Value 656.77 +.49%
Morgan Stanley Consumer 601.61 +.12%
Morgan Stanley Cyclical 790.85 +.43%
Morgan Stanley Technology 532.34 +.88%
Transports 4,250.61 +1.24%
Utilities 410.88 +.65%
Put/Call .75 +5.63%
NYSE Arms .83 -5.92%
Volatility(VIX) 10.29 -4.81%
ISE Sentiment 144.00 -29.41%
US Dollar 90.77 -.19%
CRB 326.76 +.07%

Futures Spot Prices
Crude Oil 58.22 -.10%
Unleaded Gasoline 154.06 +.27%
Natural Gas 12.82 -.79%
Heating Oil 174.00 unch.
Gold 506.50 +.30%
Base Metals 152.55 +.58%
Copper 202.55 unch.
10-year US Treasury Yield 4.43% -1.27%

Leading Sectors
Gold & Silver +2.15%
Biotech +1.84%
HMOs +1.46%

Lagging Sectors
Energy -.14%
Broadcasting -.23%
Oil Tankers -.23%

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 Outperform on GE.

Afternoon/Evening Headlines
Bloomberg:
- Medicare drug plans have enrolled 21 million customers so far, with 1 million getting prescription coverage for the first time.
- Natural gas futures had their biggest drop in more than two and a half years because of mild weather forecasts and a smaller-than-expected decline in stored supplies.
- The European Union threatened to fine Microsoft as much as $2.4 million a day for failing to comply with a 2004 antitrust order.
- US Treasuries rose after the Fed’s preferred measure of inflation increased less than forecast, narrowing the gap between two- and 10-year note yields to the least since the start of January 2001.
- The US and leading contributors to the UN proposed a $900 million spending limit for the organization in 2006 while talks continue on ways to overhaul its scandal-plagued management.

Wall Street Journal:
- Tommy Hilfiger is in final negotiations to be sold to private equity firm Apax Partners for more than $1.5 billion.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Medical longs, Software longs, Semi longs and Internet longs. I added to my PWR long and OMM short, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, most sectors rose and volume was below average. Measures of investor anxiety were mixed into the close. Overall, today's action was pretty good for the bulls as the major averages and breadth finished near session highs with almost every sector contributing and tech outperforming. The 10-year Treasury note yield closed near session lows of 4.42%, falling 6 basis points. Moreover, natural gas fell 10.5% today from session highs. I expect US stocks to build on gains tomorrow.

Stocks Modestly Higher Mid-day as Natural Gas Falls Substantially

Indices
S&P 500 1,266.35 +.28%
DJIA 10,872.39 +.35%
NASDAQ 2,240.01 +.38%
Russell 2000 682.57 +.41%
DJ Wilshire 5000 12,659.33 +.28%
S&P Barra Growth 605.78 +.16%
S&P Barra Value 656.05 +.38%
Morgan Stanley Consumer 600.72 -.03%
Morgan Stanley Cyclical 790.15 +.35%
Morgan Stanley Technology 530.78 +.58%
Transports 4,246.03 +1.12%
Utilities 409.72 +.36%
Put/Call .72 +1.41%
NYSE Arms .85 -4.44%
Volatility(VIX) 10.51 -2.78%
ISE Sentiment 172.00 -15.69%
US Dollar 90.73 -.23%
CRB 326.05 -.11%

Futures Spot Prices
Crude Oil 58.25 -.53%
Unleaded Gasoline 153.75 +.07%
Natural Gas 12.89 -9.68%
Heating Oil 174.00 -.93%
Gold 505.90 +2.14%
Base Metals 152.55 +.58%
Copper 202.55 +.40%
10-year US Treasury Yield 4.42% -1.36%

Leading Sectors
Airlines +1.47%
HMOs +1.40%
Biotech +1.23%

Lagging Sectors
Oil Service -.23%
Broadcasting -.33%
Oil Tankers -.66%

BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Semi longs, Medical longs, Internet longs and Energy shorts. 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 higher and volume is below average. Measures of investor anxiety are mostly lower. Overall, today’s market action is mildly positive considering the decline in natural gas and long-term rates. The AAII percentage bulls fell to 41.03% this week from 46.15% the prior week. This reading is now at below-average levels and has declined 18 percentage points in six weeks. The percentage bears rose to 28.21% from 22.12% the prior week. This reading is now back to average levels and has increased 12 percentage points in four weeks. I expect bullish sentiment to fall modestly again next week. The fact that bullishness has declined to this extent with the market near a four-year high bodes very well for another push higher in the major averages during first quarter 2006. I expect US stocks to trade mixed-to-higher into the close on short-covering and falling energy prices.

Today's Headlines

Bloomberg:
- UK Prime Minister Tony Blair arrived in Iraq on an unannounced trip to visit British troops and US officials.
- Japan’s population will decline this year for the first time since 1899, a trend that is expected to continue, reducing the government’s ability to raise tax revenue and repay debt.
- GE will buy Arden Realty for $45.25/share, adding the biggest publicly traded landlord in southern California as US real estate acquisitions accelerate.
- Placer Dome agreed to an increased takeover offer from Barrick Gold valued at $10.4 billion, uniting the two Canadian companies to create the world’s largest gold producer.
- Natural Gas prices are having their biggest drop in more than a year because of mild weather forecasts and a smaller-than-expected decline in stored supplies.
- Striking subway and bus workers in NYC agreed to end a three-day walkout today.

Wall Street Journal:
- Albertson’s may not accept a takeover offer from investors including Cerberus Capital Management, valuing the company at $9.6 billion.
- EntreMed’s cancer drug has shown promising results in human tests in China after failing to meet test objectives in the US.
- John Whitehead, former chairman of Goldman Sachs, said New York Democratic Attorney General Eliot Spitzer phoned him and said there was a “war” between them after Whitehead criticized Spitzer in an April commentary.

NY Times:
- President Bush has met with new NAACP President Gordon three times since September as he seeks to reach out to critics.

USA Today:
- NY’s population fell and more Californians left than moved in, citing Census figures.
- Volunteers and non-governmental organizations are helping rebuild areas affected by Hurricane Katrina as relief work moves forward.

Daily Telegraph:
- Harley-Davidson now has a larger market value than GM.

Interfax:
- Russian President Putin called on the government to boost the attractiveness of the nation’s energy industry for foreign investors.

CNBC:
- Ford Motor union workers at three plants rejected a health-care plan that would save the automaker $850 million annually.

Incomes and Spending Healthy, Another Measure of Inflation Decelerates, Leading Indicators Point to Further Strength

- Personal Income for November rose .3% versus estimates of a .3% increase and a .5% gain in October.
- Personal Spending for November rose .3% versus estimates of a .4% increase and a .2% gain in October.
- The PCE Core for November rose .1% versus estimates of a .2% increase and a .1% gain in October.
- Leading Indicators for November rose .5% versus estimates of a .5% increase and an upwardly revised 1.0% gain in October.

BOTTOM LINE: US consumer spending rose in November as auto sales recovered from a 7-year low and prices increased less than expected, Bloomberg reported. Rising incomes, increasing home values, rising stocks prices and falling gas prices are helping to boost consumer spending. The year-over-year gain in the PCE Core, the Fed’s favorite inflation gauge, of 1.8% is the smallest since March 2004. Income and spending growth should decelerate modestly in 2006, along with the PCE Core. This should help keep long-term interest rates near historically low levels.

The number of Americans filing first-time claims for unemployment benefits fell 13,000 last week, suggesting companies are keeping workers and hiring new ones to meet demand, Bloomberg said. The four-week moving average decreased to 324,500 from 329,250 the prior week. The unemployment rate for those eligible for claims, which follow the US unemployment rate, rose to 2.1% from 2.0% the prior week. I continue to believe the labor market will remain healthy over the intermediate-term without generating substantial inflation pressures.

The US index of leading economic indicators rose in November for a second month as the labor market improved and consumers became more optimistic, Bloomberg said. Leading Indicators are still pointing to healthy economic growth.

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Thursday Watch

Late-Night Headlines
Bloomberg:
- US foodmakers are betting on a rebound of sales of sweets and baked goods and are introducing new items, including breakfast cookies and dessert pizzas.
- World oil markets are “well supplied,” OPEC President Sheikh Amad Fahd al-Sabah said today in Beijing.
- The US Senate passed a six-month extension of the USA Patriot Act after talks failed to produce a new version of the anti-terrorism law, part of which will expire at the end of the year.

Financial Times:
- Procter & Gamble will adopt the distribution systems and business practices of Gillette Co., which the biggest US household-goods maker bought for $57 billion, citing an interview with CEO Lafley.

Nihon Keizai:
- Sony Corp. is among companies that Saudi Prince Alwaleed bin Talal is considering for investment.

NHK Television:
- KDDI Corp. plans to tie up with Qualcomm Inc. to start distributing television programs for mobile phones in Japan.

Hindu Business Line:
- Coal India Ltd. may cut output of the fuel as inventories pile up at thermal power plants and mines in the country.

Kyodo News:
- Japan’s Foreign Minister Taro Aso said China’s increasing military presence is “beginning to be a considerable threat” to Japan.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ALK, CAKE, SBUX.
- Reiterated Underperform on DRI, MU and HRB.

Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.03%.

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Earnings of Note
Company/EPS Estimate
AGE/.71
AM/.58
CTAS/.48
CAG/.38
DCN/-.02
GIS/.96
GPN/.35
OLG/.66
SLR/.03

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Personal Income for November is estimated to rise .3% versus a .4% increase in October.
- Personal Spending for November is estimated to rise .4% versus a .2% gain in October.
- The PCE Core for November is estimated to rise .2% versus a .1% gain in October.
- Initial Jobless Claims for last week are estimated to fall to 325K versus 329K the prior week.
- Continuing Claims are estimated to fall to 2580K versus 2606K prior.

10:00 am EST
- Leading Indicators for November are estimated to rise .4% versus a .9% increase in October.

BOTTOM LINE: Asian indices are lower on profit-taking in the region after recent strong gains. I expect US equities to open mixed and to trade modestly higher into the afternoon. The Portfolio is 100% net long heading into the day.