Thursday, January 04, 2007

Stocks Finish Near Session Highs, Led by Strong Gains in Tech and Biotech Shares as Commodities Fall Again

Indices
S&P 500 1,418.34 +.12%
DJIA 12,480.69 +.05%
NASDAQ 2,453.43 +1.25%
Russell 2000 789.95 +.32%
Wilshire 5000 14,222.54 +.16%
S&P Barra Growth 653.26 +.31%
S&P Barra Value 763.50 -.06%
Morgan Stanley Consumer 699.12 +.32%
Morgan Stanley Cyclical 893.36 -.22%
Morgan Stanley Technology 579.06 +1.81%
Transports 4,673.07 +.48%
Utilities 455.56 -.46%
Put/Call .82 -3.53%
NYSE Arms 1.19 -.36%
Volatility(VIX) 11.51 -4.40%
ISE Sentiment 132.0 +6.45%
US Dollar 84.35 +.51%
CRB 292.61 -1.97%

Futures Spot Prices
Crude Oil 55.78 -4.36%
Reformulated Gasoline 148.70 -4.0%
Natural Gas 6.13 -.54%
Heating Oil 154.60 -2.65%
Gold 623.80 -.95%
Base Metals 221.84 -.19%
Copper 261.0 -1.47%
10-year US Treasury Yield 4.60% -1.15%

Leading Sectors
Wireless +2.33%
Internet +2.32%
Semis +2.01%

Lagging Sectors
Gold & Silver -1.85%
Coal -2.13%
Oil Service -2.90%

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:
- UnitedHealth Group(UNH) said former CEO McGuire along with other current and former executives entered into an options re-pricing agreement with the company on Dec. 29.
- US Treasuries rose the most in five weeks after falling commodity prices diminished inflation concerns.
- New York Times(NYT) agreed to sell its nine US television stations to Oak Hill Capital Partners for $575 million to focus on its newspapers and Web sites.
- Bill Gross, manager of the world’s biggest bond fund, says the Fed will lower its benchmark interest rate by 100 basis points this year.
- Canadian stocks had their steepest two-day decline in six months, led by commodity producers including Suncor Energy and First Quantum Minerals.
- The CRB Commodities Index fell to a 20-month low as near-record speculation continues to reverse course. The CRB Index is now down 19.9% since May of last year.
- Maple Resources, the second-largest natural gas producer in Peru, plans to invest $100 million to produce ethanol in the country to meet growing demand for alternative fuels in the US.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Semi longs, Computer longs, Biotech longs and Commodity shorts. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was modestly positive today as the advance/decline line finished higher, sector performance was mixed and volume was above average. Measures of investor anxiety were mostly lower into the close. Today's overall market action was bullish. I believe today's type of action will repeatedly occur throughout the year as true growth stocks outperform, while the most cyclical over-owned stocks underperform substantially. The Oil Service sector, which was the most loved heading into the new year, is already 8.4% lower year-to-date. Moreover, the Gold & Silver sector is down 5.4%, Energy is down 6.3%, Coal is 6.7% lower and steel is 3.8% lower for the year. Conversely, Airlines are up 4.1%, Networkers are up 3.1%, Wireless is up 2.8% and Internets are up 2.6% already this year. I suspect performance anxiety is beginning to resurface and the year has just begun. I expect today's rally to strengthen over the next few days and would use any early weakness related to a weaker-than-expected employment report tomorrow to add to favorite growth-oriented long positions. I continue to believe January will be a very good month for most U.S. stocks, especially growth stocks, as economic concerns continue to diminish, inflation decelerates further, long-term rates remain low and the mania for commodities continues to reverse course. The herd, which is currently very bearish given recent gains, will likely not begin to jump on the bull bandwagon until the second half of the year.

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