Wednesday, May 31, 2006

Stocks Finish Higher on Short-covering, Bargain Hunting and Lower Energy Prices

S&P 500 1,270.09 +.81%
DJIA 11,168.31 +.67%
NASDAQ 2,178.88 +.65%
Russell 2000 721.01 +1.40%
Wilshire 5000 12,802.45 +.92%
S&P Barra Growth 587.72 +.65%
S&P Barra Value 680.63 +.97%
Morgan Stanley Consumer 605.49 +.59%
Morgan Stanley Cyclical 835.13 +1.06%
Morgan Stanley Technology 501.91 +.48%
Transports 4,669.65 +1.98%
Utilities 406.17 +1.44%
Put/Call .92 -21.37%
NYSE Arms .57 -74.29%
Volatility(VIX) 16.44 -11.90%
ISE Sentiment 90.00 -13.46%
US Dollar 84.67 +.46%
CRB 344.87 -.87%

Futures Spot Prices
Crude Oil 71.36 +.10%
Unleaded Gasoline 209.50 -.03%
Natural Gas 6.40 +.33%
Heating Oil 199.73 +.10%
Gold 650.50 +.23%
Base Metals 230.41 -1.05%
Copper 361.70 -.19%
10-year US Treasury Yield 5.12% +.87%

Leading Sectors
Oil Service +3.13%
Airlines +2.81%
Steel +2.34%

Lagging Sectors
REITs +.01%
Homebuilders -.02%
Networking -.08%

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
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
- Upgraded (T) to Sector Outperformer, target $35.

Deutsche Bank:
- Rated (DTAS) Buy, target $15.
- Rated (FWRD) Buy, target $42.

Afternoon/Evening Headlines
- Futures traders raised bets that the Fed will increase its benchmark interest rate to 5.25% in June after minutes of the central bank’s May 10 meeting said inflation was more than the Fed expected.
- US Treasuries fell as minutes of the Fed’s most recent meeting on monetary policy increased concern that policy makers may continue hiking the benchmark Fed Funds rate.

BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Networking longs, Medical longs and Retail longs. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was positive today as the advance/decline line finished higher, almost every sector rose and volume was about average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was mildly bullish. While the major averages finished with decent gains, I would like to see healthier underlying action. Trading was choppy and incoherent throughout most of the day. The concerns I spoke of in my prior post still persist. The 10-year yield finished near session highs at 5.12%. On the positive side, the ISE Sentiment Index made a 52-week low of 89.0. The CRB Index is back below its 50-day moving-average. The SOX finished with a 1.77% gain and Small-caps outperformed the broad market, rising 1.4%.

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