Wednesday, December 13, 2006

Stocks Mixed into Final Hour on Another Healthy Consolidation of Recent Gains

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Biotech longs, Medical longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is neutral as the advance/decline line is slightly lower, most sectors are rising and volume is below average. The 10-year yield is at session highs, rising 8 basis points to 4.57%. I think this is a result of bond investors finally acknowledging that an imminent recession is a remote possibility. Equity investors are so far ignoring this morning's positive economic data as many large funds continue to position right now for a pullback in stocks, thus adding to the massive bull firepower available on the sidelines. The DJIA hit another all-time high this morning. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, buyout speculation and portfolio manager performance anxiety.

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