Thursday, June 29, 2006

Stocks Finish Sharply Higher on Bargain-Hunting and Short-Covering

Indices
S&P 500 1,272.87 +2.16%
DJIA 11,190.80 +1.98%
NASDAQ 2,174.38 +2.96%
Russell 2000 714.32 +3.82%
Wilshire 5000 12,808.90 +2.32%
S&P Barra Growth 588.56 +2.11%
S&P Barra Value 682.62 +2.20%
Morgan Stanley Consumer 609.99 +1.68%
Morgan Stanley Cyclical 824.80 +2.83%
Morgan Stanley Technology 496.30 +3.14%
Transports 4,890.23 +3.37%
Utilities 412.85 +1.03%
Put/Call .66 -20.48%
NYSE Arms .44 -43.94%
Volatility(VIX) 13.03 -17.48%
ISE Sentiment 105.00 -27.59%
US Dollar 86.00 -.73%
CRB 342.30 +1.22%

Futures Spot Prices
Crude Oil 73.64 +.15%
Unleaded Gasoline 229.10 -.17%
Natural Gas 6.11 -.33%
Heating Oil 198.76 +2.59%
Gold 600.10 +1.90%
Base Metals 214.04 +4.37%
Copper 333.65 +.47%
10-year US Treasury Yield 5.19% -.94%

Leading Sectors
Gold & Silver +6.97%
Restaurants +4.52%
Networking +4.30%

Lagging Sectors
Foods +1.05%
Utilities +1.03%
Hospitals +.97%

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
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Microsoft(MSFT) delayed the release of its new Office word processing, e-mail and spreadsheet program to make improvements to its performance and design.
- Futures traders trimmed bets that the Fed will continue lifting its target rate for overnight loans to 62% from 83% yesterday after policy makers increased the rate a quarter of a point for the 17th straight time.
- Apple Computer(AAPL) announced they were launching an internal probe into the backdating of stock options.
- Palm Inc.(PALM) maker of the Treo e-mail phones, said fourth-quarter profit rose 53% as demand for devices with full keyboards and business features increases.
- US Treasuries climbed as the Fed raised the benchmark interest rate as investors speculated inflation would remain contained.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Internet longs, Semi longs, Networking longs, Retail longs and Biotech longs. I covered some of my (EEM) shorts and all of my (IWM) and (QQQQ) shorts earlier in the day, thus leaving the Portfolio 100% net long. The tone of the market was very positive today as the advance/decline line finished substantially higher, every sector rose and volume was heavy. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was very bullish. The ISE Sentiment Index plunged 28% to 105.0, a depressed level, which is a big positive. Moreover, the 10-year yield finished near session lows. I sense many bears are trapped and bulls are underinvested, which should lead to more buying tomorrow as they scramble to stay ahead of benchmarks. The S&P 500 chart looks very similar to the pattern during the bottom last October. Subsequently, the index rose about 14% in less than seven months. Many of the exact same bear arguments were espoused during that October bottom. While I do expect another period of weakness over the coming months as the U.S. economy decelerates to average rates, I continue to believe most stocks have bottomed for the year and the major averages have put in place a meaningful bottom.

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