Wednesday, December 21, 2005

Stocks Finish Modestly Higher on Merger Activity and Strong US Economic Growth

Indices
S&P 500 1,262.79 +.25%
DJIA 10,833.73 +.26%
NASDAQ 2,231.66 +.42%
Russell 2000 679.74 +1.03%
DJ Wilshire 5000 12,623.75 +.35%
S&P Barra Growth 604.78 +.24%
S&P Barra Value 653.59 +.27%
Morgan Stanley Consumer 600.89 +.27%
Morgan Stanley Cyclical 787.43 +1.16%
Morgan Stanley Technology 527.70 +.55%
Transports 4,198.69 +2.33%
Utilities 408.24 -1.21%
Put/Call .71 -37.72%
NYSE Arms .89 -21.66%
Volatility(VIX) 10.81 -3.40%
ISE Sentiment 204.00 -17.41%
US Dollar 91.00 +.24%
CRB 326.53 +.22%

Futures Spot Prices
Crude Oil 58.65 +.17%
Unleaded Gasoline 154.20 +.36%
Natural Gas 14.31 +.28%
Heating Oil 176.05 +.23%
Gold 497.70 +.48%
Base Metals 151.67 +.39%
Copper 201.50 -.12%
10-year US Treasury Yield 4.49% +.66%

Leading Sectors
Disk Drives +7.55%
Gold & Silver +2.48%
Gaming +1.90%

Lagging Sectors
Semis -.33%
Telecom -.52%
Utilities -1.21%

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 WCC, IBM, PFE, CEM, FD, CCU and GNW.

Afternoon/Evening Headlines
Bloomberg:
- French Connection Group Plc, the owner of fashion stores in Europe, the US and Asia, has won a fight to continue using its FCUK logo on watches and jewelry, the BBC said on its Web site.
- Research In Motion said third-quarter profit rose 33%, beating analysts’ estimates and soothing concerns about customer defections.
BOTTOM LINE: The Portfolio finished higher today on gains in my Medical longs, Medical Information System longs and Computer longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, most sector rose and volume was slightly below average. Measures of investor anxiety were mostly lower into the close. Overall, I would classify today's action as neutral. The major averages and breadth are finishing modestly higher, however the afternoon weakness was disappointing for the bulls. My sense is that hedge funds, which now dominate trading, are very worried about a January swoon in stocks and have been positioning accordingly, which should benefit stocks in January. I expect stocks to put in a better showing to end the week.

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