Between the Hedges Between the Hedges

Portfolio Manager's commentary on investing and trading in the U.S. financial markets

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Saturday, November 19, 2005

Market Week in Review 

S&P 500 1,248.27 +1.10%*

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Click here for the Weekly Wrap by Briefing.com.

BOTTOM LINE: Overall, last week's market performance was positive considering recent gains, worries over GM and weaker data from the housing sector. The advance/decline line rose, most sectors gained and volume was about average on the week. Measures of investor anxiety were mostly lower. The AAII % Bulls fell for the week, which is a positive, but is still at above average levels. I would only become worried over this gauge on sustained readings above 60. The average 30-year mortgage rate rose to 6.37% which is 116 basis points above all-time lows set in June 2003 and the highest since June of last year. Mortgage rates will likely head lower over the intermediate-term. The benchmark 10-year T-note yield fell 7 basis points on the week as multiple inflation readings decelerated and a report showed international demand for US assets increased to record levels. Tech and cyclicals outperformed on increased optimism over US economic growth and accelerated corporate spending. The US dollar rose slightly on the week as optimism over US economic growth relative to that of other developed nations and increasing demand for US assets more than offset expectations of a European Central Bank rate hike. Gold jumped, notwithstanding the decelerating inflation data, on Middle Eastern diversification out of oil and the euro and into the precious metal. Unleaded Gas futures continued their recent collapse, now falling 50% since September highs even as refinery utilization still remains below normal as a result of the hurricanes. Moreover, natural gas supplies increased again this week even as 36% of daily Gulf of Mexico production remains shut-in. Natural Gas has now dropped 22.6% from recent highs. I continue to believe global energy demand destruction and a substantial increase in supplies into 2006 will continue pushing energy prices substantially lower over the intermediate-term. I also still expect the S&P 500 to end the year strongly, finishing with around a 10% gain. The index is currently up 4.7% for the year.

*5-day % Change
Posted by: Gary / 1:25 AM

Friday, November 18, 2005

Weekly Scoreboard* 

Indices
S&P 500 1,248.27 +1.10%
DJIA 10,766.33 +.75%
NASDAQ 2,227.07 +1.12%
Russell 2000 672.22 +.83%
DJ Wilshire 5000 12,468.99 +1.09%
S&P Equity Long/Short Index 1,066.99 -.17%
S&P Barra Growth 598.17 +1.26%
S&P Barra Value 645.75 +.95%
Morgan Stanley Consumer 593.39 -.25%
Morgan Stanley Cyclical 764.64 +2.72%
Morgan Stanley Technology 526.33 +2.07%
Transports 4,140.69 +1.66%
Utilities 396.46 +2.17%
S&P 500 Cum A/D Line 7,794.00 +2.82%
Bloomberg Crude Oil % Bulls 45.0 +161.6%
Put/Call .62 -7.46%
NYSE Arms .73 -8.75%
Volatility(VIX) 11.12 -6.55%
ISE Sentiment 181.0 +7.74%
AAII % Bulls 53.63 -8.51%
US Dollar 91.93 +.10%
CRB 312.74 -.90%

Futures Spot Prices
Crude Oil 57.21 -2.12%
Unleaded Gasoline 146.20 -1.75%
Natural Gas 11.41 -2.77%
Heating Oil 169.62 -1.95%
Gold 486.70 +3.71%
Base Metals 141.21 +1.01%
Copper 191.70 +3.34%
10-year US Treasury Yield 4.49% -1.75%
Average 30-year Mortgage Rate 6.37% +.16%

Leading Sectors
Papers +8.36%
Oil Service +4.98%
Homebuilders +3.85%

Lagging Sectors
Disk Drives -1.09%
Drugs -1.15%
Software -1.30%

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

*5-Day % Change
Posted by: Gary / 10:49 PM

Stocks Slightly Higher Mid-day on Merger Activity and another Decline in Energy Prices 

S&P 500 1,244.52 +.14%
DJIA 10,724.63 +.04%
NASDAQ 2,225.58 +.23%
Russell 2000 671.21 +.61%
DJ Wilshire 5000 12,434.39 +.15%
S&P Barra Growth 596.63 +.19%
S&P Barra Value 643.37 +.05%
Morgan Stanley Consumer 592.28 -.11%
Morgan Stanley Cyclical 761.60 +.50%
Morgan Stanley Technology 526.22 +.18%
Transports 4,133.85 +1.26%
Utilities 395.32 -.56%
Put/Call .62 -12.68%
NYSE Arms .84 +25.04%
Volatility(VIX) 11.48 +2.04%
ISE Sentiment 173.00 -4.95%
US Dollar 91.93 +.08%
CRB 311.96 -.38%

Futures Spot Prices
Crude Oil 55.50 -1.49%
Unleaded Gasoline 145.20 -.51%
Natural Gas 11.43 -4.29%
Heating Oil 169.00 -.14%
Gold 486.00 -.18%
Base Metals 141.21 +1.58%
Copper 191.30 +1.81%
10-year US Treasury Yield 4.47% +.52%

Leading Sectors
Semis +2.19%
Broadcasting +1.18%
Telecom +.89%

Lagging Sectors
Coal -.87%
Gold & Silver -1.13%
Airlines -1.60%
BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my Semi longs, Computer longs, Steel shorts and Energy-related shorts. I have not traded this morning, 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 heavy. Measures of investor anxiety are mostly higher. Overall, today’s market action is neutral considering the fall in energy prices and merger activity. Beazer Homes (BZH) is making an all-time high today. This is significant. Beazer has more ARMs exposure than any other major homebuilder, as well as significant exposure to many of the perceived "overheated" markets. This stock has been targeted by the shorts as the most exposed to the coming housing collapse they have been forecasting for a several years. 27.3% of the float is short. I continue to believe housing is slowing to more sustainable healthy levels, not collapsing. A slowing housing market is a big positive for U.S. stocks, in my opinion. I expect US stocks to trade modestly higher from current levels into the close on short-covering and falling energy prices.
Posted by: Gary / 2:10 PM

Today's Headlines 

Bloomberg:
- Swiss Reinsurance agreed to buy GE’s reinsurance business for $6.8 billion in cash and stock, in the company’s biggest acquisition ever.
- Liz Claiborne offered to buy women’s apparel retailer J. Jill Group for $365.9 million after an earlier offer was rejected and said it may consider a hostile bid.
- European Central Bank President Jean-Claude Trichet said the bank is ready to raise interest rates to stem inflation in the 12 nations sharing the euro.
- Cisco Systems agreed to buy Scientific-Atlanta for $6.9 billion, adding the second-largest US maker of set-top boxes for cable television and tapping into the growing market for Internet TV.
- Alltel, the fifth-largest US mobile-phone services company, agreed to buy Midwest Wireless for $1.08 billion, adding 400,000 customers in Minnesota, Iowa and Wisconsin.
- Crude oil is falling to a five-month low in NY on speculation that fuel stockpiles are adequate to meet global demand.
- The dollar is approaching its highest level against the euro and yen since 2003 on speculation the gap between US economic growth and other developed nations will widen further.

Wall Street Journal:
- US drugmakers are fining cholesterol-lowering drugs such as statins so effective that the companies are having trouble finding improved treatments for preventing heart attacks and strokes.
- The US Financial Accounting Standards Board may change guidelines to restrict companies from keeping lease costs out of financial statements.
- China is broadening its effort to win friends and influence people in the US to maintain its economic growth, reduce poverty, and become a global power.
- Global copper and aluminum prices are at or near the peaks of their current cycle and may fall next year, China’s top planning agency said.

Business Week:
- Intel co-founder Gordon E. Moore and his wife, Betty, are among the top US individual philanthropists.
- Billionaire investor Carl Icahn is forming a group of possible directors to replace Time Warner board members during a proxy fight that may include the ouster of CEO Parsons.
- Microsoft may begin shipments of its new Windows Vista software to manufacturers on Aug. 31.

USA Today:
- Some US states may cut taxes in 2006 as revenues have climbed 7.2% so far this year, the most since 1990, as economic growth surged past expectations.

NY Times:
- Some US hospitals are trying to get doctors to cut costs by sharing the savings with them.

NY Post:
- New Yorkers constitute one-fifth of the 157,252 Americans infected with the HIV virus in the last four years, citing a new federal Centers for Disease Control report.

The Deal:
- Goldman Sachs Group is in discussions to buy a stake in the Chicago Stock Exchange.

San Francisco Chronicle:
- Home sales in the San Francisco Bay Area declined in October for a seventh straight month.

Denver Post:
- The Hyatt Regency Denver set a record for the hotel chain’s pre-opening sales with $100 million in business booked through 2012.
Posted by: Gary / 12:28 PM

Economic Releases 

- None of note
Posted by: Gary / 10:40 AM

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
Posted by: Gary / 9:13 AM

Thursday, November 17, 2005

Friday Watch 

Late-Night Headlines
Bloomberg:
- Australia won’t withdraw its troops from Iraq prematurely, Australian Foreign Minister Alexander Downer said in response to a new terrorism threat against Australia in a videotape found in Indonesia.
- China may default on money-losing copper trades because the country doesn’t have enough of the metal to make good on delivery commitments next month, said Mark Topfer, the former No. 2 lawyer at the London Metal Exchange.
- Public approval of Congressional Democrats has fallen to 25% and Republicans to 27% in the most recent Harris Interactive poll.
- Shares of Toyota Motor, the world’s largest automaker by market value, surged to their highest level since being listed in 1949, making the company 14 times bigger than General Motors.

Business Week:
- Interpublic Group, the world’s third largest advertising company, may have to sell assets as part of a plan to reorganize the company.

AFP:
- The UN General Assembly adopted a resolution expressing concern over North Korea’s human rights record.

Daily Deal:
- Kohlberg Kravis Roberts is leading a group of private investors that may bid for General Motor’s residential mortgage finance unit.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on GILD.
- Reiterated Underperform on PSS and MESA.

Business Week:
- Shares of Laserscope(LSCP), the maker of lasers used to treat enlarged prostates, may rise because some investors sold too many shares.
- SBA Communications(SBAC) shares are worth as much as $27, citing William Harnisch, CEO of hedge fund Peconic Partners.

Night Trading
Asian Indices are +.75% to +1.25% on average.
S&P 500 indicated -.02%.
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
ANN/.37
DDS/-.22
URI/.27

Upcoming Splits
TRID 2-for-1

Economic Releases
- None of note

BOTTOM LINE: Asian indices are higher, boosted by exporters in the region after oil fell below $56/bbl. I expect US equities to open mixed and to trade modestly higher later in the day. The Portfolio is 100% net long heading into the day.
Posted by: Gary / 11:41 PM

Stocks Finish Sharply Higher on Falling Energy Prices, Lower Long-term Rates and Increasing Optimism 

Indices
S&P 500 1,242.80 +.94%
DJIA 10,720.22 +.43%
NASDAQ 2,220.46 +1.49%
Russell 2000 667.14 +1.91%
DJ Wilshire 5000 12,415.41 +1.07%
S&P Barra Growth 595.45 +.72%
S&P Barra Value 643.02 +1.15%
Morgan Stanley Consumer 592.93 +.56%
Morgan Stanley Cyclical 757.79 +1.44%
Morgan Stanley Technology 525.30 +2.05%
Transports 4,082.39 +2.02%
Utilities 397.53 +1.55%
Put/Call .71 -7.79%
NYSE Arms .67 -21.11%
Volatility(VIX) 11.25 -8.24%
ISE Sentiment 182.00 +21.33%
US Dollar 91.88 -.49%
CRB 313.21 -.67%

Futures Spot Prices
Crude Oil 56.49 +.27%
Unleaded Gasoline 146.20 +.17%
Natural Gas 11.92 -.14%
Heating Oil 170.20 +.29%
Gold 486.70 -.04%
Base Metals 139.01 +.14%
Copper 187.60 -.16%
10-year US Treasury Yield 4.45% -.31%

Leading Sectors
Airlines +3.50%
Homebuilders +3.12%
Networking +2.75%

Lagging Sectors
Foods +.42%
Energy +.10%
Tobacco -.27%

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 GILD.

Afternoon/Evening Headlines
Bloomberg:
- DaimlerChrysler’s Chrysler will offer free gasoline and maintenance for two years and extended warranties on most new 2005 and 2006 models to win back buyers.
- Crude oil fell to a five-month low after an Energy Department report showing an increase in inventories of natural gas eased concern that heating-fuel supplies would be low this winter.
- Warren Buffett’s Berkshire Hathaway bought 20 million Wells Fargo shares in September.
- GM CEO Wagoner told employees that the automaker doesn’t intend to file for bankruptcy and has “a robust balance sheet.”
- Wal-Mart will be the first participant in a new Salvation Army holiday fund-raising program where companies and groups can put a virtual version of the charity’s red kettle on their Internet site.
- The Environmental Protection Agency will issue new rules next month to reduce parasites in the nation’s drinking water.
BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Internet longs, Retail longs, Medical longs, Medical Information Systems longs and Airline longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was very positive today as the advance/decline line finished substantially higher, almost every sector rose and volume was above average. Measures of investor anxiety were lower into the close. Overall, today's market action was positive. The homebuilders and airlines, arguably the two most hated sectors, led all gainers, both rising over 3%. I especially like the way stocks ground higher throughout the day rather than gapping up on the open. Today's action bodes well for further gains over the near-term and a successful breakout to new highs for the year in the major averages.
Posted by: Gary / 5:54 PM

Stocks Sharply Higher Mid-day on Fall in Oil and Long-term Rates 

Indices
S&P 500 1,239.11 +.64%
DJIA 10,705.65 +.29%
NASDAQ 2,209.09 +.97%
Russell 2000 664.68 +1.54%
DJ Wilshire 5000 12,377.91 +.77%
S&P Barra Growth 593.60 +.40%
S&P Barra Value 641.11 +.85%
Morgan Stanley Consumer 592.26 +.45%
Morgan Stanley Cyclical 754.87 +1.05%
Morgan Stanley Technology 522.64 +1.52%
Transports 4,064.28 +1.57%
Utilities 396.49 +1.29%
Put/Call .78 +1.30%
NYSE Arms .79 -6.72%
Volatility(VIX) 11.75 -4.16%
ISE Sentiment 180.00 +20.0%
US Dollar 91.93 -.43%
CRB 313.28 -.64%

Futures Spot Prices
Crude Oil 56.20 -2.40%
Unleaded Gasoline 145.75 -1.72%
Natural Gas 11.94 -3.16%
Heating Oil 169.50 -1.98%
Gold 486.30 +1.50%
Base Metals 139.01 +.14%
Copper 194.50 +.52%
10-year US Treasury Yield 4.45% -.39%

Leading Sectors
Homebuilders +3.14%
Airlines +2.59%
Networking +2.31%

Lagging Sectors
Oil Service -.08%
Tobacco -.48%
Energy -.58%
BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Medical longs, Retail longs, Medical Information System longs and Internet longs. I covered the rest of my IWM and QQQQ shorts this morning and added to my PWR, BBY and MDRX longs, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is slightly above average. Measures of investor anxiety are mostly lower. Overall, today’s market action is positive considering the strong breadth readings and mixed economic data. A stronger dollar, weakening commodity prices, healthy growth and lower long-term rates are boosting small-caps. The Russell 2000 has slightly underperformed over the last three months. However, the index is up 1.5% today vs. a .6% gain for the S&P 500. I expect small caps to regain their leadership role over the intermediate term on a continuation of recent trends. I expect US stocks to trade mixed-to-higher from current levels into the close as lower long-term rates and falling energy prices more than offset profit-taking.
Posted by: Gary / 3:07 PM

Today's Headlines 

Bloomberg:
- Don Voelte, chief executive of Australia’s Woodside Petroleum Ltd., said oil prices at $60 a barrel were unsustainable.
- GM may use up most of its $19.2 billion in cash reserves in the event of a strike at Delphi, its largest auto-parts supplier, analysts said.
- Google shares are rising above $400 for the first time, propelled by soaring growth in online advertising and investors’ expectations that the company will continue to diversify its products beyond Internet search.
- US House Republican leaders dropped some cuts to the Medicaid health program in a $50 billion plan to reduce spending.
- Hedge funds that chase macroeconomic trends by investing in the stock, bond, currency and commodity markets posted their worst returns of the year in October as managers bet wrongly that the US dollar would drop in value.
- Gold in NY is rising to a 17-year high on investor demand for alternatives to the European currency and oil.
- Pennsylvania Congressman John Murtha, the senior Democrat on the House Defense Appropriations Subcommittee, called for the immediate withdrawal of US troops from Iraq.
- Manufacturing in the Philadelphia area expanded in November as companies began rebuilding depleted inventories to meet rising consumer demand.

Wall Street Journal:
- Ranbaxy Laboratories Ltd., the Indian generic-drugmaker, is talking with Roche Holding AG about licensing the rights to make the antiviral drug, Tamiflu.
- Nestle SA is focusing on making containers easier to open in response to one of its biggest complaints from consumers.
- Stirling Energy Systems, a Phoenix-based energy company, plans to place 20,000 solar dishes over four square miles of the Mohave Desert in California to collect and ship energy 80 miles south to Los Angeles.
- Silicon Labs, Intel, Texas Instruments and other semiconductor makers are producing single chips that put the key parts of a mobile telephone into one place.
- Sprint Nextel’s music download service functions well and marks a new advance for the music industry.
- EBay aims to offer a link between people and local services of all kinds.

Cnet:
- Sony began offering a free video-phone service for Internet users yesterday.

BBC:
- Saddam Hussein, the deposed Iraqi dictator, was punched several times by two court clerks after he insulted two of Shia Islam’s saints, citing Iraqi television.

Chicago Tribune:
- Tribune’s Chicago Tribune will cut about 100 jobs and vacant positions won’t be filled to help cut costs and compensate for a decline in circulation.

NY Post:
- NY City’s Department of Transportation has installed parking meters that accept credit cards in midtown Manhattan.

Washington Post:
- A US commander in Iraq yesterday decried calls by Democratic US senators to set a deadline for troop withdrawal, saying “setting a date would mean that the 221 soldiers I’ve lost this year, that their lives will have been lost in vain.”
Posted by: Gary / 1:10 PM

Housing Starts Fall, Jobless Claims Plunge, Industrial Production Rebounds 

- Housing Starts for October fell to 2014K versus estimates of 2070K and an upwardly revised 2134K in September.
- Building Permits for October fell to 2071K versus estimates of 2160K and an upwardly revised 2219K in September.
- Initial Jobless Claims for last week will fall to 303K versus estimates of 324K and 328K the prior week.
- Continuing Claims rose to 2793K versus estimates of 2790K and 2790K prior.
- Industrial Production for October rose .9% versus estimates of a 1.0% increase and a 1.3% decline in September.
- Capacity Utilization for October rose to 79.5% versus estimates of 79.6% and 78.9% in September.
BOTTOM LINE: US housing starts fell in October and building permits dropped, suggesting higher mortgage rates are chipping away at home construction after four straight years of record sales, Bloomberg reported. Starts fell 10.8% in the West, 10.5% in the Mid-West, 7.5% in the Northeast and .5% in the South. Backlogs are 15% high than a year earlier, which suggests a substantial slowdown is unlikely.

The number of Americans filing first-time claims for state unemployment benefits fell to a seven-moth low of 303,000 last week, evidence of an improving labor market, Bloomberg reported. Consumer spending rose last month which suggests increased hiring is raising incomes. 333,500 people a week have filed claims so far this year versus 343,000 last year. The four-week moving average of claims fell to 321,500 from 335,000 the prior week. The unemployment rate of people eligible for benefits which tracks the US unemployment rate held steady at 2.2%. The upcoming jobs report should exceed expectations.

US industrial production rose .9% in October, the most since May 2004, as manufacturers recovered from the Gulf Coast hurricanes and a strike ended at Boeing, Bloomberg said. The mining component of industrial production, which includes oil and gas production, fell .5%. I expect production to remain strong over the coming months as more energy production, shut-in from the hurricanes, comes back on-line. Capacity Utilization is still below the long-term average of 81.0. Historically, inflationary pressures do not become worrisome until utilization approaches 85.0.
Posted by: Gary / 11:44 AM

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
Posted by: Gary / 9:40 AM

Wednesday, November 16, 2005

Thursday Watch 

Late-Night Headlines
Bloomberg:
- China will sell $80 million of copper from inventories next week amid speculation the government is seeking to drive down prices and limit losses from an investment by one of its traders.
- US House leaders, seeking support for a budget-cutting plan, dropped from a transportation measure the designation of $442 million for Alaska projects, including one dubbed a “bridge to nowhere.”
- Taiwan is a “sovereign country” and is concerned China will use “military hegemony” to reunify the two, Taiwan’s representative said at a summit of Asia-Pacific leaders in South Korea.

Financial Times:
- China stopped plans to let foreign news publications print inn the mainland on concerns news about the “color revolutions” in the West may undermine political order.


AP:
- The LA Times plans to cut about 85 newsroom jobs, or 8% of its editorial staff, before the end of the year.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Underperform on AMAT, APU and HCCC.

Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated -.09%.

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
ARO/.46
ADSK/.30
BKS/-.02
BEAS/.10
PLCE/.91
CLE/.35
FL/.42
GPS/.24
HRB/-.16
HPQ/.46
HUG/.67
LTD/-.03
MRVL/.33
JWN/.35
TSA/.09
SBUX/.15
DIS/.18
WSM/.30

Upcoming Splits
SWN 2-for-1

Economic Releases
8:30 am EST
- Housing Starts for October are estimated to fall to 2070K versus 2108K in September.
- Building Permits for October are estimated to fall to 2160K versus 2219K in September.
- Initial Jobless Claims for last week are estimated to fall to 324K versus 326K the prior week.
- Continuing Claims are estimated to fall to 2790K versus 2818K prior.

9:15 am EST
- Industrial Production for October is estimated to rise 1.0% versus a 1.5% decline in September.
- Capacity Utilization for October is estimated to rise to 79.6% versus 79.0% in September.

12:00 pm EST
- Philly Fed for November is estimated to fall to 15.3 versus a reading of 17.3 in October.

BOTTOM LINE: Asian indices are mostly higher, boosted by exporters in the region. I expect US equities to open mixed and to trade modestly higher later in the day. The Portfolio is 75% net long heading into the day.
Posted by: Gary / 11:50 PM

Stocks Finish Slightly Lower Even as Long-term Rates Fall 

Indices
S&P 500 1,231.21 +.18%
DJIA 10,674.76 -.11%
NASDAQ 2,187.93 +.05%
Russell 2000 654.64 -.24%
DJ Wilshire 5000 12,283.90 +.14%
S&P Barra Growth 591.20 +.33%
S&P Barra Value 635.69 +.04%
Morgan Stanley Consumer 589.64 -.22%
Morgan Stanley Cyclical 747.02 -.08%
Morgan Stanley Technology 514.76 +.30%
Transports 4,001.65 -.11%
Utilities 391.45 +.84%
Put/Call .77 -6.10%
NYSE Arms .85 -1.37%
Volatility(VIX) 12.26 +.25%
ISE Sentiment 150.00 -8.54%
US Dollar 92.33 +.26%
CRB 315.31 +.82%

Futures Spot Prices
Crude Oil 57.82 -.10%
Unleaded Gasoline 148.80 +.34%
Natural Gas 12.36 +.25%
Heating Oil 173.08 +.09%
Gold 479.90 +.17%
Base Metals 138.82 -.20%
Copper 193.30 -.10%
10-year US Treasury Yield 4.47% -1.76%

Leading Sectors
Gold & Silver +5.96%
Oil Service +2.92%
Energy +2.39%

Lagging Sectors
Alternative Energy -.94%
I-Banking -.97%
Broadcasting -1.45%

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 IMCL, GILD, WEC and ACN.
- Reiterated Underperform on SGP.

Afternoon/Evening Headlines
Bloomberg:
- US Treasuries rose, led by the biggest gain in 10-year notes since June, after government reports showed consumer prices increased in October at the slowest pace in four months and foreign demand for US assets soared.
- Ford Motor introduced discounts combining reduced prices and rebates two days after competitor GM rolled out new sales incentives.

Financial Times:
- VNU NV, the owner of market researcher ACNielsen, may say tomorrow it will abandon its plan to buy IMS Health for $7 billion.

NY Times:
- The SEC is investigating whether a Wachovia Corp. analyst was fired for refusing to alter securities recommendations to win i-banking business.

AP:
- Irving “Irv Gotti” Lorenzo, founder of the hip-hop recording label Murder Inc., and his brother Christopher went on trial in NY yesterday on racketeering charges, including allegedly laundering money for a drug dealer.
BOTTOM LINE: The Portfolio finished unchanged today as gains in my Internet longs, Retail longs and Computer longs offset losses in my Energy-related shorts. I did not trade in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished lower, sector performance was mixed and volume was average. Measures of investor anxiety were mixed into the close. Overall, today's market action was slightly negative. I expect the Fed to make increasingly more dovish comments by early next year as housing continues to slow to more healthy levels and energy prices remain far weaker than most expect. Investors should begin anticipating this soon. I continue to believe U.S. economic growth is slowing to average levels from vigorous rates before the hurricanes and that inflation has peaked for this cycle. This "Goldilocks" economic environment will boost U.S. stock prices.
Posted by: Gary / 6:25 PM

Stocks Slightly Lower Mid-day on Rising Energy Prices and Worries Over Slowdown in Housing 

Indices
S&P 500 1,229.10 unch.
DJIA 10,657.95 -.27%
NASDAQ 2,182.68 -.19%
Russell 2000 652.00 -.64%
DJ Wilshire 5000 12,257.54 -.08%
S&P Barra Growth 590.15 +.15%
S&P Barra Value 634.27 -.19%
Morgan Stanley Consumer 588.59 -.40%
Morgan Stanley Cyclical 745.03 -.35%
Morgan Stanley Technology 513.21 +.01%
Transports 3,986.30 -.50%
Utilities 391.43 +.84%
Put/Call .83 +1.22%
NYSE Arms .80 -7.86%
Volatility(VIX) 12.53 +2.37%
ISE Sentiment 159.00 -3.05%
US Dollar 92.33 +.26%
CRB 315.67 +.96%

Futures Spot Prices
Crude Oil 58.05 +2.0%
Unleaded Gasoline 149.20 +2.44%
Natural Gas 12.37 +7.07%
Heating Oil 174.00 +3.52%
Gold 479.20 +2.17%
Base Metals 138.82 -.20%
Copper 193.50 +.16%
10-year US Treasury Yield 4.48% -1.51%

Leading Sectors
Gold & Silver +5.51%
Oil Service +2.22%
Energy +1.95%

Lagging Sectors
I-Banks -1.20%
Networking -1.36%
Broadcasting -1.38%
BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my Medical longs, Medical Information System longs and Energy-related shorts. I covered some of my 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 falling and volume is average. Measures of investor anxiety are mostly higher. Overall, today’s market action is slightly negative considering the fall in long-term rates, the rise in energy prices, recent gains and positive economic data. Yahoo! (YHOO) is rising 5.4% today on above-average volume and is within .15 of levels last seen during 2000. This bodes well for Google (GOOG), which is preparing an assault on $400. Google remains my largest long position. I expect US stocks to trade mixed-to-higher from current levels into the close as lower long-term rates more than offsets profit-taking.
Posted by: Gary / 2:48 PM

Today's Headlines 

Bloomberg:
- American Express CEO Chenault said fourth-quarter earnings won’t be as high as some analysts estimate.
- Tyco International CEO Breen said the conglomerate’s board is considering splitting up the company, unraveling the acquisition strategy of his predecessor, Dennis Kozlowski.
- The US Senate Banking Committee approved Ben Bernanke’s nomination as Federal Reserve chairman and sent it to the full Senate, clearing the way for his confirmation before Alan Greenspan retires Jan. 31.
- US Treasuries are rising, pushing the yield on the 10-year note to the lowest this month, after a government report showed consumer prices increased in October at the slowest pace since June.

Wall Street Journal:
- Some Nasdaq stocks will soon be listed with one-, two- or three-letter symbols compared with the current four.
- The US’s largest broadcasters will appear at a news conference in NY today in an attempt to persuade advertisers that digital video recorders, which allow viewers to skip commercial breaks, may not be the threat many think they are.
- Web sites, such as Yahoo!, are increasingly barring new customers from their most popular pages and raising advertising rates.
- US school vouchers that allow use of public money to pay for private education are gaining support in Louisiana after parochial schools began accepting students while public schools stay closed.
- Rising prices of copper, iron ore and other basic commodities have meant two lucrative years for mining companies, but as they open new mines to meet demand, they’re facing cost pressures.
- The UN war crimes tribunal today acquitted the former chief of staff of the Muslim-led Bosnian army over his alleged involvement in the killings of dozens of Bosnian Croat civilians in 1993.

NY Times:
- The NFL is looking for a partner to create an all-sports network that would show regular-season games and help increase viewers for the NFL Network.
- Some US celebrities might be putting themselves in legal jeopardy by signing endorsement deals with online casinos.
Posted by: Gary / 12:54 PM

Consumer Prices Subdued, Inventories at Record Lows, International Investors' Appetite for US Assets at Record High Levels 

- The Consumer Price Index for October rose .2% versus estimates of an unchanged reading and a 1.2% gain in September.
- The CPI Ex Food & Energy for October rose .2% versus estimates of a .2% increase and a .1% gain in September.
- Business Inventories for September rose .5% versus estimates of a .3% increase and a .4% gain in August.
- Net Foreign Security Purchases for September rose to $101.9B versus estimates of $75.0B and $89.0B in August.
BOTTOM LINE: Prices paid by US consumers in October rose at the slowest pace in four months as energy prices receded from records a month earlier, Bloomberg said. Core prices are now rising at a 2.1% annual rate versus a 2.2% gain at this time last year. The cost of all goods including cars, apparel and food fell .5% last month after rising 2.4% in September. Gas prices fell 4.5%, computer prices fell .8% and the cost of clothing fell .4%. I continue to believe inflation fears have peaked, with gauges decelerating over the intermediate-term.

US business inventories rose more than expected in September, as auto dealers rebuilt stocks depleted by discounting earlier this year, Bloomberg reported. Inventories are at record lows relative to sales. I continue to believe inventory rebuilding will boost economic growth over the next few months.

International investors added to their net holdings of US assets by a record $101.9 billion in September as the world’s largest economy outpaced other developed nations, Bloomberg reported. The US dollar is approaching a two-year high as the report led traders to believe the US has no problems attracting capital to cover the current account deficit. International investors added $24.6 billion to net stock holdings, the largest increase in almost 5 years. Caribbean holdings, which are linked to hedge funds in the region, fell by $500 million. As I predicted a few months ago, international investors’ demand for US assets is increasing and will continue to remain strong over the intermediate-term.
Posted by: Gary / 10:55 AM

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
Posted by: Gary / 9:29 AM

Tuesday, November 15, 2005

Wednesday Watch 

Late-Night Headlines
Bloomberg:
- Oracle said the US Justice Department approved its proposed $5.85 billion acquisition of Siebel Systems, which will make the company the world’s largest maker of customer-service software.
- Liu Qibing, the deputy head of imports and exports at a Chinese government agency, was placed on leave in October, people who know him said, amid speculation he made losing bets on copper prices.

Financial Times:
- French Employment Minister Gerard Larcher said multiple marriages may be one factor behind more than two weeks of riots in French cities.

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

Night Trading
Asian Indices are unch. to +.25% 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
AMAT/.14
CHRS/.08
DHI/1.63
INTU/-.30
HP/.71
NTAP/.18
MDT/.54
PETM/.19
CRM/.04
TYC/.46

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Consumer Price Index for October is estimated to rise 0.0% versus a 1.2% increase in September.
- The CPI Ex Food & Energy for October is estimated to rise .2% versus a .1% gain in September.
- Business Inventories for September are estimated to rise .3% versus a .4% gain in August.

9:00 am EST
- Net Foreign Security Purchases for September are estimated to fall to $70.0B versus $91.3B in August.

1:00 pm EST
- The NAHB Housing Market Index for November is estimated to fall to 66 versus a reading of 67 in October.

BOTTOM LINE: Asian indices are mostly higher, boosted by exporters in the region after oil prices fell again. I expect US equities to open mixed and to trade modestly lower later in the day on further profit-taking. The Portfolio is 50% net long heading into the day.
Posted by: Gary / 11:33 PM

Stocks Finish Lower on Profit-taking 

Indices
S&P 500 1,229.01 -.39%
DJIA 10,686.44 -.10%
NASDAQ 2,186.74 -.65%
Russell 2000 656.23 -1.16%
DJ Wilshire 5000 12,267.12 -.46%
S&P Barra Growth 589.26 -.13%
S&P Barra Value 635.46 -.63%
Morgan Stanley Consumer 590.94 -.16%
Morgan Stanley Cyclical 747.59 -.49%
Morgan Stanley Technology 513.21 -.48%
Transports 4,006.16 -1.31%
Utilities 388.18 +.44%
Put/Call .82 -9.89%
NYSE Arms .86 +11.24%
Volatility(VIX) 12.23 +.41%
ISE Sentiment 178.00 -3.26%
US Dollar 92.00 -.14%
CRB 312.73 -.75%

Futures Spot Prices
Crude Oil 56.98 -1.23%
Unleaded Gasoline 146.55 -2.05%
Natural Gas 11.51 -.79%
Heating Oil 168.50 -2.62%
Gold 469.00 -.02%
Base Metals 139.10 -.66%
Copper 193.00 +.86%
10-year US Treasury Yield 4.55% -1.03%

Leading Sectors
Hospitals +1.25%
HMOs +.75%
Utilities +.44%

Lagging Sectors
Airlines -2.52%
Retail -2.61%
Oil Tankers -3.40%

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 AIG.

Afternoon/Evening Headlines
Bloomberg:
- The US Senate Finance Committee dropped provisions that would have extended the 2004 tax cuts on capital gains and dividends from its tax-cut package, in an effort to get the legislation before the full chamber where Republicans plan to attach the tax breaks.
- Cisco Systems plans to sell a wireless fidelity, or Wi-Fi, product to take advantage of rising demand from cities for high-speed wireless networks.

AP:
- Jordan’s national security adviser and 10 other top officials resigned today following last week’s bombings in the capital Amman.
BOTTOM LINE: The Portfolio finished lower today on losses in my Internet longs, Retail longs, Software longs and Medical Information Systems longs. I took some profits in longs and added to my IWM and QQQQ shorts in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished substantially lower, most sectors fell and volume was average. Measures of investor anxiety were mostly higher into the close. Overall, today's market action was negative. The CRB Index fell again today to 312.73. This is down about 7% since Sept. 1. The index is approaching its 200-day moving-average at around 311. It has not touched this level since January. Moreover, the long-term uptrend that began in the fourth quarter of 2001 would be broken at around 300. I expect both these key technical levels to give way before year-end, which bodes very well for decelerating inflation readings and lower long-term rates going forward.
Posted by: Gary / 4:46 PM

Stocks Lower Mid-day on Profit-taking after Recent Gains 

Indices
S&P 500 1,229.40 -.35%
DJIA 10,684.52 -.12%
NASDAQ 2,188.59 -.56%
Russell 2000 657.55 -.96%
DJ Wilshire 5000 12,280.85 -.34%
S&P Barra Growth 589.61 -.07%
S&P Barra Value 636.18 -.51%
Morgan Stanley Consumer 591.04 -.14%
Morgan Stanley Cyclical 747.84 -.47%
Morgan Stanley Technology 513.83 -.35%
Transports 4,008.78 -1.24%
Utilities 388.57 +.55%
Put/Call .72 -20.88%
NYSE Arms .83 +6.53%
Volatility(VIX) 12.35 +1.40%
ISE Sentiment 178.00 -3.26%
US Dollar 92.21 +.09%
CRB 312.69 -.78%

Futures Spot Prices
Crude Oil 57.10 -.94%
Unleaded Gasoline 146.10 -2.35%
Natural Gas 11.55 -.49%
Heating Oil 169.00 -2.28%
Gold 469.00 -.02%
Base Metals 139.10 -.66%
Copper 193.00 +.86%
10-year US Treasury Yield 4.55% -1.16%

Leading Sectors
Hospitals +1.32%
HMOs +.85%
Utilities +.42%

Lagging Sectors
Retail -2.32%
Oil Tankers -2.37%
Disk Drives -2.67%
BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet longs, Retail longs, Software longs and Medical Information System longs. I 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 substantially lower, most sectors are falling and volume is average. Measures of investor anxiety are mixed. Overall, today’s market action is negative considering the fall in long-term rates, the decline in energy prices and positive economic data. The Johnson Redbook same-store sales index rose 3.8% year-over-year this week vs. a 4.2% rise the prior week. This week's gain is up from a 1.5% increase in late April and the 28th week in a row the index has risen 3% or more. This is impressive considering recent depressed consumer sentiment readings and unseasonably warm weather. I expect US stocks to trade mixed-to-lower from current levels into the close on profit-taking.
Posted by: Gary / 2:54 PM

Today's Headlines 

Bloomberg:
- Allergan , the maker of the Botox wrinkle treatment, offered to buy Inamed for $3.2 billion in cash and shares, beating a bid by Medicis Pharmacuticals.
- The US dollar is rising to a two-year high against the euro after the ZEW Center for European Economic Research said German investor confidence unexpectedly fell and a US retail sales report exceeded estimates.
- Johnson & Johnson and Guidant said today that they have entered into a revised merger agreement with a net value of $19 billion.
- Ben Bernanke, the White House adviser nominated to be Federal Reserve chairman, pledged to carry on Greenspan’s interest-rate policies and to move toward more openness if the Senate confirms him for the job.
- United Nations Secretary-General Kofi Annan has rescinded his dismissal of Joseph Stephanides, the only official fired for wrongdoing in the Iraq oil-for-food program, while continuing to say he violated UN rules.
- US Treasuries are rising after Ben Bernanke said long-run price stability is essential for the economy.

Wall Street Journal:
- Genzyme, Amgen and Genentech and other biotech drugmakers have built booming business in the market for so-called “orphan” drugs used to treat rare illnesses.
- The number of US home-purchase contracts signed last month declined 8% from a year earlier at 48 large real-estate brokers, citing a survey by the real-estate consulting company Real Trends.
- US tax burdens have increases as federal and local tax rates rise, citing recent surveys.
- US officials are trying to prevent unscrupulous dealers from selling cars damaged in Hurricanes Katrina or Rita.
- US congressional negotiators have approved additional funding for veterans medical care.

NY Times:
- Officials of Medicare said performance-based bonuses help increase the quality of care given to patients at hospitals.
- Microsoft plans to offer software that will give scientists and engineers a way to gain high-performance computing from their existing desktop computers.

CNBC:
- UTStarcom, the biggest supplier of wireless-telephone systems in China, was awarded a contract, potentially worth billions of dollars, to provide Internet-protocol television to the city of Shanghai.

Edaily:
- Samsung Electronics, Hynix Semiconductor and Toshiba Corp. will soon sign “large” contracts to supply Apple Computer with NAND flash memory chips.
Posted by: Gary / 1:23 PM

Core Producer Prices Fall, Retail Sales Strong, Manufacturing Healthy 

- The Producer Price Index for October rose .7% versus estimates of unchanged and a 1.9% increase in September.
- The PPI Ex Food & Energy for October fell .3% versus estimates of a .2% increase and a .3% gain in September.
- Advance Retail Sales for October fell .1% versus estimates of a .7% fall and a .3% rise in September.
- Retail Sales Less Autos for October rose .9% versus estimates of a .3% gain and an upwardly revised 1.4% increase in September.
- Empire Manufacturing for November rose to 22.8 versus estimates of 15.5 and a reading of 12.1 in October.
BOTTOM LINE: Core producer prices declined by the most in more than two years in October, reflecting cheaper cars, computers, food and clothes, Bloomberg reported. Core prices are now rising at a 1.8% annual pace versus a 2.1% rate at this time last year. Companies have had little success passing higher raw materials costs on to consumers. Car prices fell 3% in October, the largest fall in 4 years. As well, clothing prices declined .4%, the greatest drop in almost 4 years. I continue to believe inflation fears for this cycle peaked in September during the hurricanes.

Sales at US retailers fell less than expected last month as pre-holiday shopping at chain stores helped blunt a drop-off at auto dealerships, suggesting that consumers are largely unfazed by higher energy prices, Bloomberg reported. Sales at clothing and accessory stores rose 3.1%, the largest increase in 3 years, even with unseasonably warm weather. Last month was the 17th warmest October in US history. Moreover, sales at gas stations dropped .8% versus a 5.1% gain the prior month as the average price of gasoline fell to $2.77 from $2.95. This holiday shopping season is shaping up to be much better-than-expected.

Manufacturing in NY state expanded more than economists expected and executives were more optimistic about the future, Bloomberg reported. The prices paid component of the index rose to 60.6 from 57.3 in October. The employment component of the index rose to 16.9, the best level this year, from 9.3 the prior month. Optimism for the next six months soared to 46.9 from 32.6 in October. I continue to believe manufacturing will boost US growth over the next few months as inventory rebuilding continues.
Posted by: Gary / 11:32 AM

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
Posted by: Gary / 9:42 AM

Monday, November 14, 2005

Tuesday Watch 

Late-Night Headlines
Bloomberg:
- Amazon.com will replace AT&T in the S&P 500 index on Nov. 18.
- Richard Fisher, president of the Federal Reserve Bank of Dallas, said the US economy is growing “very nicely” and he sees no signs that inflation is “running rampant.” “Globalization and competition from abroad is acting as a disinflationary force,” he said.
- GM has begun another round of incentives to lure US buyers after a sharp drop in October sales. Ford Motor said it will announce its own promotion tomorrow.
- Billionaire George Soros’s hedge fund bought stakes in the third quarter in technology companies including Intel, IBM, Amazon and Apple Computer.

Korea Economic Daily:
- Samsung Electronics will make mobile phone chips for Qualcomm of the US as part of a strategic alliance.

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

Night Trading
Asian Indices are -.75% to unch. on average.
S&P 500 indicated -.19%.
NASDAQ 100 indicated -.15%.

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
ANF/.80
AEOS/.46
ADI/.34
BJ/.36
DKS/.07
GME/.14
HD/.68
JCP/.92
SPLS/.32
TJX/.34

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Producer Price Index for October is estimated to rise 0.0% versus a 1.9% increase in September.
- The PPI Ex Food & Energy for October is estimated to rise .2% versus a .3% increase in September.
- Advance Retail Sales for October are estimated to fall .7% versus a .2% increase in September.
- Retail Sales Less Autos for October are estimated to rise .3% versus a 1.1% gain in September.
- Empire Manufacturing for November is estimated to rise to 15.5 versus a reading of 12.1 in October.

BOTTOM LINE: Asian indices are mostly lowed, weighed down by financial shares in the region. I expect US equities to open mixed and rally modestly later in the afternoon. The Portfolio is 100% net long heading into the day.
Posted by: Gary / 11:53 PM

Stocks Finish Mixed on Light Volume Ahead of Inflation Data 

Indices
S&P 500 1,233.76 -.08%
DJIA 10,697.17 +.10%
NASDAQ 2,200.95 -.07%
Russell 2000 663.93 -.41%
DJ Wilshire 5000 12,323.20 -.09%
S&P Barra Growth 590.03 -.12%
S&P Barra Value 639.47 -.03%
Morgan Stanley Consumer 591.86 -.50%
Morgan Stanley Cyclical 751.127 +.93%
Morgan Stanley Technology 515.66 unch.
Transports 4,059.21 -.34%
Utilities 386.48 -.40%
Put/Call .91 +35.82%
NYSE Arms .78 +20.54%
Volatility(VIX) 12.18 +4.73%
ISE Sentiment 184.00 +9.52%
US Dollar 92.11 +.14%
CRB 315.08 -.16%

Futures Spot Prices
Crude Oil 57.85 +.28%
Unleaded Gasoline 150.00 +.26%
Natural Gas 11.61 +.07%
Heating Oil 173.25 +.12%
Gold 468.60 -.11%
Base Metals 140.02 +.16%
Copper 191.00 -.18%
10-year US Treasury Yield 4.60% +.91%

Leading Sectors
Papers +6.18%
Oil Service +1.26%
Semis +.56%

Lagging Sectors
Broadcasting -1.70%
Steel -1.83%
Coal -1.86%

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:
- US airlines must modify fuel tanks on jet aircraft to reduce the risk of explosions like the one that downed TWA Flight 800 in 1996, the FAA said.
- Martha Stewart’s “Apprentice” reality show, in last place in its timeslot, will end after its first season.
- Ben Bernanke’s nomination to succeed Alan Greenspan as Federal Reserve chairman is likely to proceed “quickly” after a confirmation hearing before the Senate Banking Committee tomorrow.
- Berkshire Hathaway doubled its stake in Tyco International and sold shares of Pier 1 imports.
- Target said November comparable store sales may fall below its forecast of 4% to 6%.
BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Medical longs, Semi longs and Medical Information Systems longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was slightly negative today as the advance/decline line finished lower, sector performance was mixed and volume was light. Measures of investor anxiety were mostly higher into the close. Overall, today's market action appeared to be a healthy low volume consolidation of recent gains. The negativity bubble continues to inflate. These graphs of public short sales illustrate how much negativity has permeated the psyche of the general public with respect to U.S. stocks.
Posted by: Gary / 5:22 PM

Stocks Mixed Mid-day on Healthy Consolidation of Recent Gains 

Indices
S&P 500 1,233.38 -.11%
DJIA 10,687.24 +.01%
NASDAQ 2,199.07 -.16%
Russell 2000 662.33 -.65%
DJ Wilshire 5000 12,314.11 -.16%
S&P Barra Growth 590.04 -.12%
S&P Barra Value 639.03 -.10%
Morgan Stanley Consumer 591.91 -.49%
Morgan Stanley Cyclical 750.52 +.83%
Morgan Stanley Technology 515.24 -.08%
Transports 4,047.33 -.64%
Utilities 386.82 -.31%
Put/Call .96 +43.28%
NYSE Arms .72 +11.57%
Volatility(VIX) 12.25 +5.33%
ISE Sentiment 183.00 +8.93%
US Dollar 92.09 +.12%
CRB 314.62 -.29%

Futures Spot Prices
Crude Oil 57.60 +.03%
Unleaded Gasoline 149.50 +.67%
Natural Gas 11.62 -.79%
Heating Oil 173.00 +.52%
Gold 469.10 -.06%
Base Metals 140.02 +.16%
Copper 191.35 +.42%
10-year US Treasury Yield 4.59% +.65%

Leading Sectors
Papers +6.16%
Oil Service +1.41%
Semis +.72%

Lagging Sectors
Coal -1.50%
Airlines -1.56%
Steel -1.89%
BOTTOM LINE: The Portfolio is higher mid-day on gains in my Internet longs, Semi longs, Medical longs and Medical Information System longs. I added ELOS long this morning and added to existing shorts, thus leaving the Portfolio 100% net long. The tone of the market is slightly negative as the advance/decline line is lower, sector performance is mixed and volume is light. Measures of investor anxiety are mostly higher. Overall, today’s market action is positive considering recent gains and the rise in rates. Sanford C. Bernstein is out with a report today saying that prime brokerage fees from hedge funds will top $7.5 billion this year, up 32% in two years. Bernstein estimates these fees will rise by another 33% by 2009. According to Hedge Fund Research Inc., hedge fund assets have risen 2,650% to $1.1 trillion since 1990. These facts underscore my point last week that there has been a massive shift of capital from institutional and high-net-worth investors since the bursting of the bubble in 2000. Assets have shifted from long-only strategies into strategies that are negatively correlated or have a low correlation with the U.S. equity market, which could in turn spur a substantial short-covering rally over the intermediate term.
Posted by: Gary / 2:09 PM

Today's Headlines 

Bloomberg:
- A NYSE membership, known as a seat, sold for a record $3.025 million today, bolstering the Big Board’s defense against critics of its plan to purchase electronic exchange Archipelago Holdings.
- Hedge funds will pay Wall Street record fees this year for brokerage services, a business dominated by Morgan Stanley, Bear Stearns and Goldman Sachs.
- The French government approved extending the nation’s sate of emergency as curfews and bans on public meetings in Paris and Lyon brought calm to areas hit more than two weeks of violence.

Wall Street Journal:
- Google has contacted at least one publisher to gauge interest in a possible service that allows consumers to “rent” books online.
- The computer industry’s unceasing drive to improve performance has encountered an obstacle, in that the latest hardware uses too much electricity and generates too much heat.
- A Chinese government copper trader is missing after he took a big short position on the London Metal Exchange.
- President Bush’s administration is looking to trade easier foreign investment in US airlines in exchange for improved entry rights for US carriers to London’s Heathrow Airport.
- Negotiations over a possible sale of Computer Sciences to Lockheed Martin and three private-equity firms have broken down over the structure of the transaction.
- Archipelago Holdings intends to start an exchange-traded fund focusing on technology, an area of the market in which there’s already plenty of competition.
- A plan to make a $100 laptop computer has attracted the interest of computer companies and governments.

NY Times:
- The US record industry says it loses most sales to so-called “casual piracy” or the copying and sharing of CD’s by friends.
- In some Arab countries, such as Jordan, secret police are a hindrance to democratic reform.
- A coalition of US liberal groups plans a television campaign against Judge Samuel Alito, the Supreme Court nominee, seeking to move attention from his record on abortion to other issues.
- EBay may announce today that it will stop charging fees to people who develop Internet and software programs that direct customers to its Web site.
- Members of the Writers Guild of America and the Screen Actors Guild want to create rules that restrict how commercial products can be incorporated into the story lines of television shows.

Crain’s New York Business:
- Many of New York’s wine and liquor wholesalers are eliminating discounts to stores and restaurants in response to an investigation by state Attorney General Eliot Spitzer.

AP:
- The number of US prisoners sentenced to death and those executed fell last year as the country’s death row population declined.

Profil:
- EBay’s $2.6 billion purchase of Skype Technologies will make it easier for the online auctioneer to sell more expensive products such as new cars and real estate, CEO Whitman said.
Posted by: Gary / 12:04 PM

Economic Releases 

- None of note
Posted by: Gary / 10:13 AM

Links of Interest 

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
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Posted by: Gary / 9:30 AM

Sunday, November 13, 2005

Monday Watch 

Weekend Headlines
Bloomberg:
- France banned all public gatherings in central Paris that might create disorder, to head off calls for increased violence in the capital after two weeks of rioting in French suburbs that has led to a total of 2,440 arrests. 502 cars were torched around the country last night.
- Wal-Mart said November sales at its US stores are rising within its forecast.
- The US dollar rose to a two-year high against the euro this week on speculation the gap between the strength of the US economy and Europe will widen further after widespread violence in France.
- Advantest Corp., the world’s biggest maker of memory-chip testing equipment, said operating profit will rise 67% in three years, helped by sales of machines that can be adapted to check different types of semiconductors.
- Georgia-Pacific agreed to be bought by closely held Koch Industries for $13.2 billion in cash.
- Gold’s surge to a 17-year high is prompting the biggest miners of the metal to seek new deposits from Mali to Russia.
- US private donations to aid hurricane relief may reach a record, topping private charity after Sept. 11.

Wall Street Journal:
- The US government filed a “statement of interest” in a US court, asking to keep its BlackBerry devices running in case a court orders Research In Motion Ltd. to shut them down.
- Toyota Motor Corp. is seeking a site in the US to build a new engine and transmission plant over the next few years to keep up with production demands in the area.

NY Times:
- Many Arabs view Israel as their enemy, which diverts their attention from social, political, religious and economic issues.
- The Chinese government is struggling to maintain people’s confidence in the legal system even after changes in 1996 that permitted a shift toward an adversarial trial process.
- The US Defense Department on Monday will urge suppliers to adopt radio-identification tags like those used by Wal-Mart Stores to track inventory.

Washington Post:
- The experience at the Federal Reserve of Ben Bernanke should dispel any doubts he would effectively work with financial markets.
- Viacom is changing almost all of the Web sites for its CBS and UPN networks to include a search tool that displays sponsored advertising links along with news.
- The Democratic National Committee under the chairmanship of Howard Dean trails Republicans in campaign fundraising by a two-to-one margin, prompting concern among party strategists the party will be at a disadvantage in the 2006 midterm elections.

Crain’s Chicago Business:
- Motorola Inc. is lobbying the US government to convert to digital television from the analog standard, freeing up broadcast airwaves for use by new devices and creating a “multibillion-dollar opportunity” for the company.

Detroit News:
- GM, which posted a sales decline of 26% last month after ending steep discounts, plans to offer more incentives beginning tomorrow to spur sales.

Star-Ledger:
- A $6 billion urban school construction program in New Jersey was crippled by waste, poor management and political favors.

Financial Times:
- Google will offer a free service analyzing the effectiveness of Web sites and online advertising, citing Google engineering director Paul Moret.
- Wal-Mart may provide facilities in its stores for customers to download feature films on to portable discs.

Economist.com:
- After losing $43 billion in five years, airlines are at the beginning of a massive boom.

Business:
- Acambis Plc, a UK vaccine-maker, will this week say its experimental flu vaccine, which could protect against avian influenza, is ready to start clinical trials.

Times of London:
- Thames River Capital, a London-based hedge fund with more than $7 billion of assets, may ask its US customers to leave rather than register with the SEC.
- Queen Elizabeth II’s security has been tightened after the British monarch was described by a senior al-Qaeda official in a video message as “one of the severest enemies of Islam.

Weekend Recommendations
Barron's:
- Had positive comments on AVII, NOK, MSFT, ACN, SAPE, SAY, INFY, IBM, SAP, S and PNC.

Goldman Sachs:
- Reiterated Outperform on AMGN.

Night Trading
Asian indices are unch. to +.50% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.15%.

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
A/.37
AIG/.78
LOW/.77
TSN/.30
WMT/.57

Upcoming Splits
- None of note

Economic Releases
- None of note

BOTTOM LINE: Asian Indices are mostly higher, boosted by technology stocks in the region after an optimistic outlook by Advantest. I expect US stocks to open mixed. The Portfolio is 100% net long heading into the week.
Posted by: Gary / 11:41 PM

Weekly Outlook 

There are some important economic reports and significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - None of note
Tues. - Producer Price Index, Advance Retail Sales, Empire Manufacturing
Wed. - Consumer Price Index, Business Inventories, Net Foreign Security Purchases, NAHB Housing Market Index
Thur. - Housing Starts, Building Permits, Initial Jobless Claims, Industrial Production, Philadelphia Fed.
Fri. - None of note

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

Mon. - Agilent Technologies(A), American International Group(AIG), Lowe’s(LOW), Tyson Foods(TSN), Wal-Mart Stores(WMT)
Tues. - Abercrombie & Fitch(ANF), American Eagle Outfitters(AEOS), Analog Devices(ADI), Dick’s Sporting Goods(DKS), GameStop(GME), Home Depot(HD), Staples(SPLS), TJX(TJX)
Wed. - Applied Materials(AMAT), Borders Group(BGP), DR Horton(DHI), Intuit(INTU), Medtronic(MDT), Petsmart(PETM), Tyco International(TYC)
Thur. - Autodesk(ADSK), Barnes & Noble(BKS), Gap Inc.(GPS), H&R Block(HRB), Hewlett-Packard(HPQ), Marvell Technology(MRVL), Nordstrom(JWN), Sears Holdings(SHLD), Sports Authority(TSA), Starbucks Corp.(SBUX), Walt Disney(DIS), Williams-Sonoma(WSM)
Fri. - AnnTaylor Stores(ANN), Freddie Mac(FRE)

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

Mon. - Banc of America Energy Conference
Tue. - UBS Global Communications Conference, Merrill Lynch Banking & Financial Services Conference, Banc of America Energy Conference, Pacific Growth Top Tech Conference, the Fed’s Fisher speaking, the Fed’s Moskow speaking, CSFB Insurance Conference
Wed. - Merrill Lynch Banking & Financial Services Conference, CSFB Healthcare Conference, Lehman Brothers Small-cap Conference, UBS Global Communications Conference, the Fed’s Santomero speaking, CSFB Insurance Conference
Thur. - UBS Global Communications Conference, Merrill Lynch Banking & Financial Services Conference, the Fed’s Moskow speaking, the Fed’s Pianalto speaking, CSFB Healthcare Conference, Lehman Brothers Small-cap Conference, Semi Book-to-Bill, Deutsche Bank Hospitality & Gaming Conference, Lehman Brothers Small-cap Conference
Fri. - Lehman Brothers Small-cap Conference, CSFB Healthcare Conference

BOTTOM LINE: I expect US stocks to finish the week mixed, as lower energy prices, lower long-term rates, healthy retail data and decelerating inflation readings offset profit-taking. My trading indicators are giving bullish signals and the Portfolio is 100% net long heading into the week.
Posted by: Gary / 2:30 PM

The positions and strategies discussed on Between the Hedges are offered for entertainment purposes and are in no way intended to serve as personal investing advice. Readers should not make any investment decision without first conducting their own thorough due diligence. Readers should assume the editor holds a position in any securities discussed, recommended or panned. While the information provided is obtained from sources believed to be reliable, its accuracy or completeness cannot be guaranteed, nor can this publication be, in any way, considered liable for the future investment performance of any securities or strategies discussed.

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