Thursday Watch

Late-Night Headlines
Bloomberg:
- US authorities arrested more than 400 people and seized 18 tons of illegal drugs over the course of a 20-month investigation into a Mexican smuggling cartel.
- Motorola Inc.(MOT) said billionaire investor Carl Icahn plans to buy as much as $2 billion in shares of the company’s stock.
- Pakistan’s President Pervez Musharraf said his government will force terrorists to leave the tribal region bordering Afghanistan and appealed to the Pakistani people to help the operations of security forces.
- Inpex Holdings Inc., Japan’s largest oil explorer, said it will spend more than $1.7 billion annually to search and develop oil and gas fields over the next three to four years.
- Former Fed Reserve Chairman Alan Greenspan said a recession in the US is possible, though not probable this year as inventory problems in the economy are being addressed quickly.
- Global semiconductor sales will rise 6.7% this year, according to Gartner Inc. Gartner had earlier forecast that 2007 semiconductor sales would rise 9.2%.
- Talks between the US and North Korea next week will start a process aimed at normalizing relations between the countries, US Secretary of State Christopher Hill said.

Wall Street Journal:
- MasterCard Inc.(MA), a credit- and debit-card company, in June will change the fees it charges merchants that accept its cards.

Financial Times:
- The UK will support a 20% mandatory target for renewable power by 2020 at a European Union summit next week. France yesterday indicated it may also drop its opposition to the mandatory targets.
- Sony Corp.(SNE) will increase supplies of PlayStation 3 consoles in the US to catch up with demand, citing Jack Tretton, chief executive of Sony Computer Entertainment’s US division.
- India, where elections can be won or lost on the price of onions, is trying to ensure that measures to control runaway inflation don’t derail economic growth. Higher incomes have increased consumer demand for wheat, sugar, cooking oil and other food staples, pushing India’s key inflation rate to 6.73% last month. A separate measure of consumer prices among farmers is at an eight-year high of 8.94%, and urban price gains are at the highest levels in six years.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Sell on (FRO), target $26.
- Reiterated Buy on (MRK), target $50.

Night Trading
Asian Indices are -1.50% to -.50% on average.
S&P 500 indicated -.36%.
NASDAQ 100 indicated -.21%.

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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (AIG)/1.49
- (ILA)/-.05
- (CIEN)/.22
- (DLM)/.22
- (DELL)/.30
- (DISH)/.31
- (FAF)/.85
- (FLS)/.74
- (FLR)/.59
- (GPS)/.24
- (GM)/1.22
- (KSS)/1.42
- (MTZ)/.14
- (MDR)/.68
- (NOVL)/.00
- (OVTI)/.20
- (REV)/.10
- (SGMS)/.23
- (SFD)/.49
- (BID)/.97
- (SPLS)/.45
- (VIA/B)/.57
- (OATS)/.05

Upcoming Splits
- (ALB) 2-for-1

Economic Releases
8:30 am EST
- Personal Income for January is estimated to rise .3% versus a .5% gain in December.
- Personal Spending for January is estimated to rise .4% versus a .7% gain in December.
- PCE Core for January is estimated to rise .2% versus a .1% gain in December.
- Initial Jobless Claims for last week are estimated to fall to 325K versus 332K prior.
- Continuing Claims are estimated to rise to 2513K versus 2509K prior.

10:00 am EST
- ISM Manufacturing for February is estimated to rise to 50.0 versus a reading of 49.3 in January.
- ISM Prices Paid for February is estimated to rise to 54.0 versus a reading of 53.0 in January.
- Construction Spending for January is estimated to fall by -.5% versus a -.4% decline in December.

Afternoon:
- Total Vehicle Sales for February are estimated to fall to 16.2 million versus 16.7 million in January.
- Domestic Vehicle Sales for February are estimated to fall to 12.4 million versus 12.7 million in January.

BOTTOM LINE: Asian indices are lower, weighed down by commodity and automaker shares in the region. I expect US equities to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 50% net long heading into the day.

Stocks Finish Modestly Higher on Short-Covering, Bargain-Hunting

Indices
S&P 500 1,406.82 +.56%
DJIA 12,268.63 +.43%
NASDAQ 2,416.13 +.34%
Russell 2000 793.30 +.08%
Wilshire 5000 14,213.87 +.49%
Russell 1000 Growth 556.15 +.50%
Russell 1000 Value 811.61 +.58%
Morgan Stanley Consumer 693.52 +.58%
Morgan Stanley Cyclical 936.13 +.19%
Morgan Stanley Technology 564.47 +.43%
Transports 4,863.52 unch.
Utilities 479.19 -.06%
MSCI Emerging Markets 111.54 -.39%

Sentiment/Internals
Total Put/Call 1.10 -34.91%
NYSE Arms .95 -93.30%
Volatility(VIX) 15.42 -15.78%
ISE Sentiment 114.0 +2.70%

Futures Spot Prices
Crude Oil 61.72 +.42%
Reformulated Gasoline 184.76 +1.73%
Natural Gas 7.26 -3.50%
Heating Oil 178.04 +.06%
Gold 673.10 -2.05%
Base Metals 240.29 -1.02%
Copper 277.0 -1.95%

Economy
10-year US Treasury Yield 4.56% +5 basis points
US Dollar 83.56 +.12%
CRB Index 312.39 -.28%

Leading Sectors
Steel +8.3%
Telecom +1.97%
Computer Hardware +1.19%

Lagging Sectors
Airlines -.39%
Hospitals -.55%
Homebuilders -.69%

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

Raymond James:
- Upgraded (DLTR) to Outperform.

Afternoon/Evening Headlines
Bloomberg:
- Treasuries fell for the first time in four days as Federal Reserve Chairman Ben S. Bernanke said the economy may strengthen by mid-year.
- The House of Representatives voted today to revise rules for foreign investments in the US.
- DuPont Co., the third-largest US chemical maker, said a federal grant of as much as $80 million awarded to partner Broin Cos. will speed up the opening of a plant for making ethanol from corn waste by three years.
- Mitsui, Japan’s second-largest trading company, agreed to acquire US metals producer Steel Technologies(STTX) in a transaction valued at about $396 million in cash.

BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Retail longs, Computer longs and Telecom longs. I did not trade today, thus leaving the Portfolio 50% net long. The tone of the market was mildly positive as the advance/decline line finished modestly higher, most sectors rose and volume was heavy. Measures of investor anxiety were mostly lower into the close. Today's overall market action was just mildly bullish. considering yesterday's losses. Breadth was only modestly positive. Several sectors declined further. Mid- caps continue to be this year's star performers and are still up about 3.5% on average this year, despite yesterday's losses. While I suspect emerging market declines will lead to more choppiness in U.S. stocks in the near-term, I continue to believe any meaningful pullback in U.S. shares will present investors with excellent long entry points. This will likely coincide with a spike in "bear market" calls by the herd.

Stocks Higher into Final Hour on Bargain-Hunting and Short-Covering

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Retail longs, Computer longs and Telecom longs. I have not traded today, thus leaving the Portfolio 50% net long. The tone of the market is modestly positive as the advance/decline line is modestly higher, most sectors are rising and volume is heavy. Much has been made over the Shanghai Composite's almost 10% plunge two days ago. However, India's Sensex Index is the BRIC that began to crack before shanghai. It began rolling over a couple of weeks ago. The Sensex is down 9% over the last five days, finishing last night down 4% at session lows. It is now down 11% in about three weeks and down 6.1% year to date, which is the worst performance of any major country index I follow. I continue to believe the mania for emerging market stocks is in the process of ending and that developed markets will substantially outperform them this year. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting.

Today's Headlines

Bloomberg:
- Treasuries are declining for the first time in four days as Federal Reserve Chairman Ben Bernanke said the economy may strengthen by mid-year.
- Shares of Fremont General Corp., the third-largest provider of sub-prime US mortgages through brokers, slumped to a three-year low after the company postponed the release of fourth-quarter earnings.
- Pfizer Inc.(PFE) and Merck & Co.(MRK) reported positive findings on experimental drugs that promise to spur a change in HIV treatment, helping thousands of patients who have stopped responding to older medicines.
- The perceived risk of owning low-rated sub-prime mortgage bonds lessons for the first time in nine days, derivatives suggest, after Fed Reserve Chairman Ben S. Bernanke said the overall home loan market is healthy.
- Yesterday’s sell-off in US equities presents a “good buying opportunity” given the outlook for economic and earnings growth, according to UBS AG strategists.
- Copper prices fell the most in more than three weeks on the London Metal Exchange and zinc posted the largest drop since Feb. 2, on concerns over a further slowing of demand.
- Gold is falling another $14.50/oz. as speculators anticipate slowing demand from emerging economies and lower inflation.

Wall Street Journal:
- American Family Mutual Insurance Co., the nation’s 10th largest car insurer, plans to offer some of its customers camera that can record driving by teenagers.
- Exchange-traded funds following stocks in Asia were hurt yesterday after Chinese markets lost about 9% on concerns about slower economic growth.
- The US FDA advisory panel may approve a heart monitor capable of being checked by the Internet, the first in a coming wave of implantable sensors.

NY Times:
- A scientific study on stem cells that concluded cells taken from an adult could change into any of the body’s major tissue types is being re-evaluated after inconsistent data was discovered.

News-Press of Fort Myers:
- A Florida legislator has proposed a bill that would prohibit government agencies and officials from using the phrase “illegal alien” when referring to a person that broke the law to gain entrance into the US. Senator Frederica Wilson, a Democrat who represents Miami, said she considers an alien to be from outer space.

Etemaad:
- Several Iranian parliamentary members criticized a recent comment by President Mahmoud Ahmadinejad comparing the country’s nuclear program to a “train with no brakes,” citing lawmakers.

El Universal:
- Shortages in Venezuela of antibiotics and medicines for diabetes and high blood pressure are growing because of government delays in approving requests for dollars to pay for imports, citing Edgard Salas, president of the Venezuelan Pharmaceutical Assoc.

4Q GDP Revised Down on Inventory De-Stocking, Inflation Measure Decelerates, Chicago PMI Declines, New Home Sales Fall

- Preliminary 4Q GDP rose 2.2% versus estimates of a 2.3% gain and a prior estimate of a 3.5% increase.
- Preliminary 4Q Personal Consumption rose 4.2% versus estimates of a 4.2% increase and prior estimates of a 4.4% gain.
- Preliminary 4Q GDP Price Index rose 1.7% versus estimates of a 1.5% gain and prior estimates of a 1.5% increase.
- Preliminary 4Q Core PCE rose 1.9% versus estimates of 2.1% and prior estimates of a 2.1% increase.
- The Chicago Purchasing Manager for February fell to 47.9 versus estimates of 50.0 and a reading of 48.8 in January.
- New Home Sales for January fell to 937K versus estimates of 1080K and 1123K in December.

BOTTOM LINE: The US economy grew at an annual rate of 2.2% in the fourth quarter, slower than first estimated, as companies stepped up efforts to curb inventories, Bloomberg reported. For all of last year, the US economy grew at an above-average 3.3% versus a 3.2% gain in 2005. Inventory de-stocking was the main reason for last quarter’s reduced growth rate. Companies added to inventories at an annual rate of $17.3 billion versus a $35.3 billion pace reported Jan. 31 and a $55.4 billion rate reported in 3Q. The decline took away 1.35 percentage points from GDP. The core pce, the Fed’s favorite inflation gauge, rose 1.9% y-o-y last quarter versus a 2.1% prior estimate. Incomes grew at a 4.8% annual pace during 4Q, more than twice most measures of inflation. I continue to expect significant inventory de-stocking to result in below trend 1Q GDP growth. However, subsequent quarters should see a boost from inventory rebuilding as companies gain confidence in the sustainability of the current expansion as demand remains relatively robust.

A gauge of US business activity unexpectedly fell for a second month as companies curbed production, Bloomberg reported. However, the New Orders component of the index rose to 48.7 from 46.3 the prior month. The Prices Paid component rose to 63.2 versus 54.9 the prior month. The Employment Component of the index surged to 50.6 versus 42.8 the prior month. I expect this gauge to show expansion next month.

New-home sales in the US fell last month more than expectations, Bloomberg reported. The median price of a new home fell to $239,800 from $244,900 a year earlier. The supply of new homes at the currents sales pace rose to 6.8 months’ worth versus 5.7 months the prior month. New Home sales fell 37.4% in the West, 18.7% in the Northeast, 9.7% in the South and 8.1% in the Mid-west. The NAR reported yesterday that Existing Home Sales, which account for about 85% of the market, unexpectedly rose 3% last month. As well, weekly mortgage applications rose 3.2% this week. While I continue to believe housing is stabilizing at relatively high levels, construction will remain muted throughout the year as homebuilders continue to work down inventories.

Links of Interest

Market Snapshot
Detailed Market Summary
Quick Summary
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Mark Mobius, who oversees about $30 billion in emerging-market equities at Templeton Asset Management says Chinese shares will decline further.
- Shares in Nikko Cordial Corp., Japan’s third-largest brokerage, plunged 15% after the Nikkei English News reported the Tokyo Stock Exchange is preparing to de-list the stock.
- Japan’s industrial production declined 1.5%, the most in almost three years, in January, signaling growth may slow in the world’s second-largest economy.
- Centro Properties Group, Australia’s second-largest shopping center owner, agreed to buy New Plan Excel Realty Trust(NXL) for $3.7 billion in cash to become the fifth-biggest mall owner in the US.
- Crude oil is falling $1.12/bbl. in NY as speculators pare bets on worries over slower Chinese and US demand.
- Singapore’s stocks are dropping 5.4%, sending the Straits Times Index to its biggest drop in 5 ½ years.
- Toyota Motor’s(TM) plan to build a $1.3 billion assembly plant in Mississippi brings it a step closer to a goal of building more vehicles in North America and cutting down on imports from Japan.
- China, the world’s largest coal producer and consumer, suspended the granting of coal exploration rights to avoid excess production capacity.
- Japan, the world’s largest consumer of oil after the US and China, said crude oil imports fell .6% in January.
- India’s copper production surged 26% to 521,953 tons in the ten months ended Jan. 31, from 414,731 tons a year earlier, the Ministry of Mines said.
- India, the world’s second largest producer of wheat and rice, banned futures trading in the two commodities to curb the fastest inflation in two years.
- Indonesia’s rupiah and the Philippine peso led declines in Asian currencies as fund managers dumped emerging market assets.

Shanghai Securities News:
- China’s stock sell-off yesterday shows that the country’s market is entering a phase of “painful” transformation, Hou Ning wrote. China’s equity investors were speculating on liquidity and sentiments, while often downplaying earnings.

Financial News:
- China needs to prevent its stock market from surging “too rapidly” and should stop funds from flowing into the market “too fast.” Most Chinese listed companies have become “overpriced” over the past year as funds “crazily” speculated on the market to gain profits, said the official newspaper, an affiliate of the People’s Bank of China.

South China Morning Post:
- Three Chinese carmakers including Shanghai Automotive Industry Corp. have started talks with DaimlerChrysler AG to buy its US-based Chrysler unit.

China Securities Journal:
- China’s stock market decline yesterday was a “rational revaluation,” and shares remain overvalued, citing analysts. China’s stocks had their biggest one-day plunge in a decade yesterday on concern that a government crackdown on investments made with borrowed money will end a rally that drove benchmark indexes to records.

Late Buy/Sell Recommendations
Citigroup:
- Various indicators suggest that things should calm down in the future such as the VIX, the ARMS index near record levels, a plunge in bullishness readings, and a rise in put/call ratios. Declines in the major averages of greater than 3% in a day have generated an impressive record of market recovery with a near 80% investment success rate within three months. Adding (KLAC) and (COH) to the Recommended List, increasing our exposure to tech and consumer discretionary.

Night Trading
Asian Indices are -6.0% to -3.0% on average.
S&P 500 indicated +.19%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (BRL)/.74
- (DLTR)/.93
- (DBRN)/.24
- (EV)/.29
- (IPG)/.23
- (IRM)/.17
- (JOYG)/.62
- (LINTA)/.31
- (LIZ)/.96
- (LTD)/1.09
- (MSO)/.25
- (MRX)/.21
- (NRG)/.45
- (PSUN)/.39
- (PETM)/.56
- (S)/.29
- (SPW)/1.18
- (STN)/.45
- (VSE)/.20
- (WPO)/10.48

Upcoming Splits
- (ALB) 2-for-1

Economic Releases
8:30 am EST
- Preliminary 4Q GDP is estimated at 2.3% versus a prior estimate of 3.5% growth.
- Preliminary 4Q Personal Consumption is estimated at 4.2% versus a prior estimate of 4.4%.
- Preliminary 4Q GDP Price Index is estimated to rise 1.5% versus a prior estimate of a 1.5% gain.
- Preliminary 4Q Core PCE is estimated to rise 2.1% versus a prior estimate of a 2.1% gain.

9:45 am EST
- The Chicago Purchasing Manager for February is estimated to rise to 50.0 versus a reading of 48.8 in January.

10:00 am EST
- New Home Sales for January are estimated to fall to 1080K versus 1120K in December.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 2,000,000 barrels versus a 3,694,000 barrel increase the prior week. Gasoline supplies are expected to fall by -1,500,000 barrels versus a -3,041,000 barrel decline the prior week. Distillate inventories are expected to fall by -2,600,000 barrels versus a -5,037,000 barrel decline the prior week. Finally, Refinery Utilization is expected to rise by .23% versus a -1.42% fall the prior week.

BOTTOM LINE: Asian indices are sharply lower, weighed down by commodity and technology shares in the region. I expect US equities to open lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Finish Sharply Lower on Emerging Market and Economic Worries

Indices
S&P 500 1,399.04 -3.47%
DJIA 12,216.24 -3.29%
NASDAQ 2,487.07 -3.86%
Russell 2000 792.67 -3.77%
Wilshire 5000 14,189.97 -3.10%
Russell 1000 Growth 553.39 -3.42%
Russell 1000 Value 806.90 -3.41%
Morgan Stanley Consumer 689.50 -2.82%
Morgan Stanley Cyclical 934.38 -3.86%
Morgan Stanley Technology 562.03 -3.94%
Transports 4,863.76 -3.43%
Utilities 479.48 -2.88%
MSCI Emerging Markets 112.0 -4.67%

Sentiment/Internals
Total Put/Call 1.69 +65.69%
NYSE Arms 14.22 +1,432%
Volatility(VIX) 18.31 +64.22%
ISE Sentiment 111.0 +15.63%

Futures Spot Prices
Crude Oil 60.34 -1.69%
Reformulated Gasoline 179.30 +.86%
Natural Gas 7.43 -3.53%
Heating Oil 175.20 -.24%
Gold 664.30 -3.70%
Base Metals 242.76 +1.00%
Copper 275.50 -4.01%

Economy
10-year US Treasury Yield 4.51% -11 basis points
US Dollar 83.49 -.52%
CRB Index 313.26 -.58%

Leading Sectors
Defense -2.45%
Drugs -2.47%
Homebuilders -2.73%

Lagging Sectors
Alternative Energy -5.80%
Steel -6.85%
Gold & Silver -6.96%

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
AG Edwards:
- Rated (BKC) Buy.

Afternoon/Evening Headlines
Bloomberg:
- The price of gold plunged 4% today despite its status as an investment safe haven.
- Great Atlantic & Pacific Tea, the owner of A&P and Food Emporium supermarket chains, is in talks to acquire Pathmark Stores(PTMK) for $652.5 million.
- Asian stocks may slide for a second day after a plunge in Chinese shares sparked a global sell-off. New Zealand NZX 50 Index, Asia’s first market to open, tumbled the most in more than four years. The Nikkei 225 futures are trading down 4.25%.
- Dow Jones(DJ) said its Dow Jones Industrial Average failed to keep up with stock trades for part of the day, making it appear as though the market plunged suddenly once computer problems were fixed about an hour before the close.
- Emerging-market bonds and currencies fell as a tumble in Chinese stocks curbed investor demand for riskier assets.
- Federated Dept. Stores(FD) reported higher fourth-quarter profit as customers shopped at Macy’s stores, and Target Corp.’s(TGT) net income rose on sales of consumer electronics and groceries.
- Treasuries posted the biggest gains since June 2005 as a rout in global stocks and bonds bolstered demand for the safest debt.
- Latin stocks fell the most since Sept. 11, 2001, as a plunge in Chinese shares prompted foreign investors to shed emerging market equities.
- Copper dropped 4% today as speculators cut long bets on concerns that demand from the US and China will slow further.

Financial Times:
- TXU Corp.(TXU), the Texas power producer being acquired fro $45 billion by KKR and Texas Pacific Group, is gauging interest from private equity groups and energy companies in a rival bid.

Vedomosti:
- Polo Ralph Lauren Corp.(RL) will open its first three stores in Moscow this year under a franchise agreement with Russia’s Mercury Group.

BOTTOM LINE: The Portfolio finished lower today on losses in my Retail longs, Computer longs, Biotech longs and Telecom longs. I added to my (EEM) short and added large (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 50% net long. The tone of the market was extraordinarily negative as the advance/decline line finished substantially lower, every sector fell and volume was very heavy. Measures of investor anxiety were very elevated into the close. Today's overall market action was very bearish. Panicky trading was prevalent throughout the day. The VIX soared the most ever in a day, rising 64%. The NYSE Arms hit 15.95 today, the highest since Bloomberg began tracking it in 1998. As well, the CBOE total put/call was elevated throughout the day. My proprietary gauge of investor angst finished at a very elevated level. Today's losses were the most extreme in emerging market and commodity stocks. Chinese commodity stocks were hit the hardest. If in fact the bubble in Shanghai shares is bursting, U.S. stocks will likely see further downside in the near-term. However, longer-term, an end to the emerging market and commodity manias has hugely positive implications for U.S. stocks, specifically growth stocks. While today's losses were substantial, the Value Line Geometric Index, the best gauge of the broad market, is still 2% higher year-to-date, which is still a very good start to the year. Moreover, the average mid-cap stock is still about 3% higher ytd.

Durable Goods Orders Fall, Consumer Confidence Jumps to Cycle Highs, Existing Home Sales Surge

- Durable Goods Orders for January fell -7.8% versus estimates of a -3.0% decline and a 2.8% rise in December.
- Durables Ex Transports for January fell -3.1% versus estimates of a -.2% decline and a 2.6% increase in December.
- Consumer Confidence for February rose to 112.5 versus estimates of 108.5 and 110.2 in January.
- Existing Home Sales for January rose to 6.46M versus estimates of 6.24M and an upwardly revised 6.27M in December.

BOTTOM LINE: Orders placed with US factories for durable goods fell more than forecast in January, Bloomberg reported. Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, fell 6%, the biggest decline since January 2004. I continue to believe manufacturing activity will improve from current levels as companies gain confidence in the sustainability of the current expansion and rebuild depleted inventories.

Confidence among US consumers unexpectedly rose to the highest in more than five years this month, lifted by rising wages and an expanding job market, Bloomberg said. The percentage of people who said jobs are hard to get declined to the lowest since August 2001. The Present Situation component of the index surged to 139.0 from 133.9 the prior month. The Expectations component rose to 94.8 versus 94.4 in December. The percentage of those saying jobs are hard to get fell to 17.5% in January versus 19.7% in December. Wages rose 4% in January, near the strongest in six years. As well, gas prices are down to $2.30/gallon from $3.03/gallon in August of last year. The S&P 500 has risen 18.2% in just over eight months. I expect the Univ. of Mich. Consumer Confidence reading to join this one in making cycle highs before year-end as gas prices fall further, stocks rise more, interest rates remain low, housing stabilizes at relatively high levels, inflation decelerates further and the job market remains healthy.

Sales of previously owned homes in the US rose more than forecast in January to a seven-month high as lower prices and warm weather brought out more buyers, Bloomberg said. The report suggests that housing may be less of a drag on growth this year, according to economists. The Case-Schiller Home Price Index showed the average home has increased in price by .5% over the last 12 months. I continue to believe that housing is in the process of stabilizing at relatively high levels.

Links of Interest

Market Snapshot
Detailed Market Summary
Quick Summary
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Japan’s industrial production probably fell the most in almost three years in January, signaling growth may slow in the world’s second-largest economy.
- China Agri-Industries Holdings Ltd., the nation’s largest rice exporter, will invest $359 million to expand fuel ethanol production capacity 600% over two years as the government promotes cleaner energy sources.
- Honda Motor(HMC) raised production to a record for January as its sold more Civic and Fit compact cars in North America. Toyota Motor(TM) and Honda are increasing their production in the US, as their fuel-efficient compact cars win sales from General Motors(GM).
- China’s stocks fell 5% as some investors judged a key index’s climb to an all-time high was excessive relative to earnings potential. Citic Securities, the nation’s biggest publicly traded brokerage, fell 8%. However, the stock is almost 600% higher over the last 12 months.

Chronicle of Philanthropy:
- Warren Buffett’s $43.5 billion donation to the Bill & Melinda Gates Foundation last year led the largest-ever field of Americans giving $100 million or more to charity.

Economic Daily News:
- Acer Inc. expects personal-computer sales to rise as much as 40% this year from 2006, citing Chairman JT Wang. Low inventory levels at the company’s retail outlets and the introduction of Windows Vista, Microsoft’s(MSFT) new operating system, will help boost sales, the repot said, citing Wang.

South China Morning Post:
- EBay Inc.(EBAY) will invest $105 million for a 33% stake in a Chinese electronic payment venture.

Shanghai Securities News:
- PetroChina Daqing Oilfield Co., a unit of the nation’s largest oil company, discovered as much as 1 billion tons of oil reserves in Hailaer in northern China. The Tamuchage field in Inner Mongolia Autonomous Region may have 800 million tons to 1 billion tons of oil reserves.

Late Buy/Sell Recommendations
Citigroup:
- Upgraded (MCO) to Buy, target $77.
- Reiterated Buy on (WLP), target $99.
- Reiterated Buy on (ERTS), target $64.
- Reiterated Buy on (HON), target $52.

Night Trading
Asian Indices are -1.0% to -.50% on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.07%.

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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (ADSK)/.46
- (AZO)/1.45
- (BBI)/.10
- (CVC)/-.05
- (CBS)/.47
- (DECK)/1.33
- (DWA)/-.44
- (DYN)/-.05
- (EP)/.19
- (FD)/1.55
- (FTO)/.58
- (HANS)/.33
- (HET)/.64
- (HNZ)/.62
- (HGSI)/-.40
- (KCP)/.39
- (OSG)/2.41
- (PZZA)/.46
- (PSA)/.08
- (NX)/.47
- (RSH)/.43
- (RRI)/-.20
- (RDC)/.70
- (RRD)/.65
- (SAFM)/-.11
- (TGT)/1.27
- (THC)/-.04
- (TXU)/1.20
- (VNO)/1.18
- (WPI)/.29
- (WCI)/-1.11
- (WYNN)/.46

Upcoming Splits
- (RYAAY) 2-for-1
- (MWE) 2-for-1ncal

Economic Releases
8:30 am EST
- Durable Goods Orders for January are estimated to fall -3.0% versus a 2.9% gain in December.
- Durables Ex Transportation for January are estimated to fall -.2% versus a 2.7% gain in December.

10:00 am EST
- Consumer Confidence for February is estimated to fall to 108.5 versus 110.3 in January.
- Existing Home Sales for January are estimated to rise to 6.24M versus 6.22M in December.

BOTTOM LINE: Asian indices are lower, weighed down by financial shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Finish Only Slightly Lower on Another Afternoon Rebound

Indices
S&P 500 1,449.37 -.13%
DJIA 12,632.26 -.12%
NASDAQ 2,504.52 -.42%
Russell 2000 823.69 -.36%
Wilshire 5000 14,644.24 -.16%
Russell 1000 Growth 573.00 -.30%
Russell 1000 Value 835.38 -.03%
Morgan Stanley Consumer 709.49 +.04%
Morgan Stanley Cyclical 971.90 +.12%
Morgan Stanley Technology 585.07 -.63%
Transports 5,036.72 -2.37%
Utilities 493.71 +2.63%
MSCI Emerging Markets 117.43 -.46%

Sentiment/Internals
Total Put/Call 1.02 -28.17%
NYSE Arms .92 -29.62%
Volatility(VIX) 11.15 +5.39%
ISE Sentiment 96.0 -4.95%

Futures Spot Prices
Crude Oil 61.49 +.57%
Reformulated Gasoline 178.0 +.96%
Natural Gas 7.54 -2.68%
Heating Oil 175.55 +.29%
Gold 690.50 +.55%
Base Metals 245.22 +1.58%
Copper 286.80 +.60%

Economy
10-year US Treasury Yield 4.62% -5 basis points
US Dollar 83.94 -.13%
CRB Index 315.10 +.15%

Leading Sectors
Utilities +2.63%
Papers +2.06%
Homebuilders +1.48%

Lagging Sectors
Oil Tankers -1.03%
Airlines -1.20%
I-Banks -1.64%

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
Piper Jaffray:
- Rated (BLDR) and (HWCC) Outperform.

Afternoon/Evening Headlines
Bloomberg:
- Nordstrom(JWN) said fourth-quarter profit rose by 22%, less than analysts estimated, on increased sales of women’s clothing. The stock fell 3.2% after-hours.
- The Bush administration wants Congress to give it the authority to speed up the process for issuing power-consumption standards for items ranging from refrigerators to traffic lights, Energy Secretary Bodman said.
- Natural gas declined 2.3% today in New York on speculation that demand for the furnace fuel will ebb as winter’s chill eases and spring approaches with inventories at very high levels.
- Brocade Communications(BRCD), the world’s largest maker of switches for data-storage networks, said first-quarter profit more than tripled on increased demand for storage systems. The stock surged 6% after-hours.

CNBC:
- Sandy Weil, former Chairman and CEO of Citigroup(C), said the US sub-prime mortgage market is not big enough to hurt the overall economy.

AP:
- Iraqi Prime Minister Nuri al-Maliki said today his Cabinet endorsed a draft version of a long-awaited oil law and the measure will now be sent to parliament for approval.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Retail longs and Energy-related shorts. I did not trade this afternoon, thus leaving the Portfolio 100% net long. The tone of the market was mildly negative as the advance/decline line finished modestly lower, sector performance was mixed and volume was below average. Measures of investor anxiety were mostly higher into the close. Today's overall market action was just mildly bearish. REITs recouped about half of their morning losses, however the I-Banks finished near session lows. The fact that oil only rose .25 today despite many scary Iran headlines and snow storms is interesting. Apple (AAPL) just said it is delaying its Apple TV launch until mid-March. This stock is only a bit lower on the report. A number of "growth stocks" I follow rose today despite the mild losses in the major averages. The underlying tone of the overall market remains very constructive despite the many calls for a correction. As of mid-February, NYSE short interest stood at 9,600,000,000 shares. This is only 1.5% below the all-time high of 9,744,698,000 shares set in October of last year, despite the 20.1% gain in the S&P 500 since June 13. Moreover, since June of last year when the bull market began to pick up steam, short interest has actually risen by 5.6% or 512,690,000 shares. Finally, the S&P 500 has soared 96.6% since the October 2002 bottom, yet NYSE short interest has actually jumped 17.0% since then. It is also interesting to note that the second-largest overall short position on the NYSE as of mid-February was the iShares Russell 2000 Index Fund (IWM) at 158,547,715 shares, up from 130,408,917 shares in mid-January. Short-selling has been rising in the IWM this year notwithstanding the fact that it is one of the best-performing major averages, already gaining 5.1% year-to-date. I continue to believe the many bears remain stunningly complacent and that a meaningful short-covering rally will occur at some point later this year.

Stocks Lower into Final Hour on Lingering Sub-Prime, Iran Concerns

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Retail longs and Energy-related shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is modestly lower, most sectors are declining and volume is below average. My intraday gauge of investor angst is now elevated for the fourth consecutive day considering the mixed performance in the major averages. If this week's economic data somehow come in around or above estimates, I wouldn't be surprised to see some upside fireworks in the averages. I think most investors believe economic data will come in below consensus estimates. The 10-year yield is near session lows, falling another 5 basis points. I expect US stocks to trade mixed-to-higher into the close from current levels as lower long-term rates, stable energy prices and buyout speculation offsets lingering sub-prime and Iran concerns.

Today's Headlines

Bloomberg:
- Morgan Stanley and Apax Partners Worldwide LLP agreed to buy Chicago-based Hub Intl. Ltd. for $1.8 billion in the second buyout of a US insurance brokerage in six weeks.
- Mirant Corp.(MIR) and Dynegy Inc.(DYN) are among power producers that may lure private equity firms after KKR agreed to buy TXU Corp.(TXU) in the biggest-ever leveraged buyout, Stephan Truffer of EIC Partners AG said.
- Temple-Inland(TIN), pressured by billionaire investor Carl Icahn, will spin off its real-estate and financial-serves units and sell timberlands to focus on packaging and building products. The shares jumped 16%.

Wall Street Journal:
- France’s state-run postal service is replacing the bulk of its 48,000-vehicle fleet of mail-delivery vans with electric cars.
- The US strategy to quell sectarian violence in Baghdad and help Iraqi forces set up permanent bases in Sunni and Shiite neighborhoods is starting to take hold, Senator Joe Lieberman wrote. Though time will be needed to see if the strategy proves a success over the longer term, many Congressional opponents of the war aren’t interested in giving it a chance, he wrote. “Cutting off support for further US troop deployment in Iraq, however, would be a “terrible mistake” and would have “devastating consequences,” Lieberman said.
- Governors of California, Arizona, New Mexico, Oregon and Washington today plan to propose a regional strategy to reduce greenhouse-gas emissions.
- US mutual funds that concentrate of growth stocks are ahead of value funds so far this year, citing Morningstar Inc.
- Advanced Micro Devices(AMD), Intel Corp.(INTC), Microsoft Corp.(MSFT), Intl. Business Machines(IBM) and rivals have joined to mitigate the rising cost of energy of server systems and data centers. A technology-industry group, comprised of 11 companies sand known as the Green Grid, plans to disclose its program today.

NY Times:
- Google Inc.(GOOG) plans to distribute content from Dow Jones, Sony BMG Music Entertainment, Conde Nast and other large content media companies to strengthen its position as an advertising platform.
- Hollywood studios are using digital downloading pioneer BitTorrent to help make movies and television shows legally available through the Internet.

NY Daily News:
- Fidelity Investments is planning to expand its program of charging higher management fees for better-performing funds to 19 more mutual funds.

USA Today:
- Lawmakers have continued to take trips funded by outside sources after new congressional travel restrictions were approved aimed at restricting such travel.

CNBC:
- The National Basketball Assoc. will show game highlights on Google’s(GOOG) YouTube Web site in a deal to be announced today.

Financial Times:
- Beer drinkers may find prices rising as a worldwide expansion in growth of corn, soybeans and rapeseed for renewable fuel production is crowding out barley farming.
- The number of hedge funds grew by more than two-thirds last year as the amount of new starters rose and more funds registered information publicly, citing a survey by Pertrac Financial Solutions. The NYC-based firm found more than 13,600 firms in 2006.

Valor Economico:
- Mitsui, Japan’s second-largest trading company, and Petroleo Brazileiro SA plan to invest in at least 3 ethanol mills in Brazil to supply the biofuel to the Asian country.

Nikkei English News:
- Toyota Motor(TM) is building a factory in Mississippi to assemble sport-utility vehicles, a facility that will cost $829 million.

Economic Releases

- None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Quick Summary
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Intraday Chart/Quote

Monday Watch

Weekend Headlines
Bloomberg:
- Citigroup(C) plans to name American Express’(AXP) Gary Crittenden as CFO as soon as today, ending a monthlong search for Sallie Krawcheck’s successor.
- President Bush said his “market-based principles” have helped improve the nation’s Medicare system, and they can improve access to health insurance as well. Bush called for changes in the nation’s tax code to encourage more Americans to buy health insurance.
- KKR and Texas Pacific Group plan to include TXU Corp.(TXU) CEO C. John Wilder in their buyout of the largest power producer in Texas for as much as $44 billion.
- Caremark RX(CMX) today said it mailed to shareholders supplemental disclosures ordered by a judge, paving the way for a March 16 meeting to allow investors to vote on a merger with CVS Corp.(CVS).
- Secretary of State Condoleezza Rice said Iran’s continued defiance of international demands that it stop uranium enrichment is stirring dissent within the Persian Gulf nation that is adding to diplomatic pressure.
- Hugo Chavez’s spending spree has turned the Venezuelan Bolivar into the world’s worst performing currency. Venezuelans and foreign companies are pulling money out of the country as a 200% increase in government spending over the past two years fuels the highest inflation rate in Latin America. Venezuelans have moved $8 billion out of the country on average every year since Chavez took office in 1999.
- The professionals most familiar with the so-called oil shortage know there’s an estimated 3 trillion barrels under land and sea. That’s why they’re making their biggest bets in drilling rigs where the scarcity is no illusion. The oil left underground in the US alone is enough to replace every barrel pumped from Iran for the next 20 years.
- The Democratic governors of West Virginia and Montana said Congress should establish a price floor for crude oil to assure investment in alternative energy supplies. The governors represent coal producing states and are supporters of technology that uses coal to produce transportation fuel, known as coal-to-liquid.
- Gilead Sciences(GILD) said its experimental HIV treatment in a new class of medication works in combination with other drugs as well as older therapies.
- Lam Research(LRCX), the maker of semiconductor manufacturing equipment, said it plans to buy back as much as $750 million worth of its stock.

Wall Street Journal:
- Station Casinos(STN) has accepted a revised $5.5 billion offer from a group led by the company’s founding family and Colony Capital LLC.
- The Tribune Co.’s(TRB) board is leaning toward a restructuring plan instead of a sale.

Chicago Tribune:
- Sam Zell, the Chicago billionaire who sold Equity Office Properties Trust(EOP) for $39 billion, may participate in the buyout of Tribune Co.(TRB) through an employee stock option plan.

NY Times:
- Iraqi Shiite Muslim cleric Moqtada al-Sadr appears to be cooperating with the effort to restore order in Baghdad and aiding the Iraqi-US campaign against parts of his Mahdi Army militia. Sadr has signaled which militia members should be arrested and told others to flee.

Washington Post:
- Congressional Democrats, after campaigning against Republican ties to corporate lobbyists in the November elections, have mounted a major fundraising offensive featuring their key committee chairmen. The drive, which helps the Democrats build a reserve of funds as they try to increase narrow majorities in the House and Senate in the 2008 elections, includes a late-March event featuring House Speaker Nancy Pelosi and 10 of the top panel chairmen. The ticket price for the March 21 dinner is $28,500 per couple and is designed to raise funds for the Democratic Congressional Campaign Committee.
- Citgo Petroleum Corp., a unit of Venezuela’s state-owned oil company, is running ads in the US that some critics say promote Venezuelan President Hugo Chavez. Chavez is seizing oil and telecom assets to transform his country into a socialist state.
- Microsoft(MSFT) Chairman Bill Gates said the US must improve its education system and boost immigration of highly skilled workers in order to maintain an edge in innovation.

San Francisco Chronicle:
- San Francisco’s new $144 million federal building has been designed to create a healthy environment for workers while reducing the use of energy and natural resources.

San Jose Mercury News:
- Sun Microsystems(SUNW), Intel Corp.(INTC) and Hewlett-Packard(HPQ) are among large technology companies moving support jobs closer to the US as part of a growing trend known as “nearshoring,” citing business professors and corporate executives.

AP:
- Kurdish authorities have agreed to support a draft law to manage and share Iraq’s vast oil wealth, citing Massoud Barzani, president of the self-governing Kurdish administration in the north.

LA Times:
- Proposed laws to stop airlines from keeping passengers on grounded airplanes indefinitely may result in even longer waits for US travelers, citing industry analysts.

Financial Times:
- DaimlerChrysler AG(DCX) may take a minority stake in General Motors(GM) as payment for its Chrysler division.

London-based Sunday Express:
- Dow Chemical(DOW) may receive a takeover offer worth as much as $54 billion from private equity investors within the next few weeks.

Economic Daily News:
- Texas Instruments(TXN) may jointly develop new chip production technologies with a semiconductor maker in Taiwan, citing the company’s chief technology officer.
- Asustek Computer’s first-quarter sales may more than double from a year earlier to $6 billion because of rising shipments of game consoles and motherboards. Asustek is the world’s largest maker of computer motherboards.

Yonhap News:
- North Korea’s leader Kim Jong Il is preparing a collective leadership to rule the Stalinist country after his death, citing diplomats in Beijing. Kim no longer plans to hand over power directly to his eldest son Kim Jong Nam, who’s not interested in the role.

Weekend Recommendations
Barron's:
- Made positive comments on (UEIC), (WAG), (BAM), (FITB), (SAI), (RJET) and (NT).
- Made negative comments on (APPB).

Citigroup:
- Reiterated Buy on (YHOO), target $35.
- Reiterated Buy on (HUM), target $80.

Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated +.12%.
NASDAQ 100 indicated +.18%.

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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/Estimate
- (BRCD)/.13
- (FLS)/.74
- (FMCN)/.51
- (GTRC)/1.07
- (MVL)/.10
- (MRVL)/.09
- (MRT)/.29
- (NTES)/.28
- (JWN)/.90
- (URI)/.63
- (WRNC)/.49
- (XMSR)/-.66

Upcoming Splits
- (RYAAY) 2-for-1

Economic Releases
- None of note

BOTTOM LINE: Asian Indices are mostly higher, boosted by metal and technology shares in the region. I expect US stocks to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the week.

Weekly Outlook

Click here for The Week Ahead by Reuters
Click here for Stocks in Focus for Monday by MarketWatch

There are a few economic reports of note and several significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - None of note

Tues. - Durable Goods Orders, Consumer Confidence, Richmond Fed Manufacturing, Existing Home Sales, weekly retail sales

Wed. - MBA Mortgage Applications, Preliminary 4Q GDP, Preliminary 4Q Personal Consumption, Preliminary GDP Price Index, Preliminary 4Q Core PCE, Chicago Purchasing Manager, New Home Sales, EIA energy inventory data

Thur. - Challenger Job Cuts, Personal Income, Personal Spending, PCE Core, Initial Jobless Claims, ISM Manufacturing, ISM Prices Paid, Construction Spending, Total Vehicle Sales

Fri. - Univ. of Mich. Consumer Confidence

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

Mon. - Marvel Entertainment(MVL), GlobalSantaFe(GSF), Forest Oil(FST), Nordstrom(JWN), Brocade Communications(BRCD), Marvel Tech(MRVL), Netease.com(NTES), XM Satellite Radio(XMSR)

Tues. - Papa Johns(PZZA), Human Genome Sciences(HGSI), Deckers Outdoor(DECK), Federated Dept. Stores(FD), Sirius Satellite(SIRI), El Paso Corp.(EP), Dynegy Inc.(DYN), Kenneth Cole Productions(KCP), Hansen Natural(HANS), Conseco(CNO), CBRL Group(CBRL), Target Corp.(TGT), AutoZone(AZO), AutoDeck(ADSK), American Power Conversion(APCC), Cablevision SystemsCVC), Rowan Companies(RDC), Harrah’s Entertainment(HET), Vornado Realty Trust(VNO), Public Storage(PSA), TXU Corp.(TXU), Radio Shack(RSH), HJ Heinz(HNZ)

Wed. - Dollar Tree Stores(DLTR), Dress Barn(DBRN), Eaton Vance(EV), Forest Oil(FST), Liz Claiborne(LIZ), Ltd Brands(LTD), Martha Stewart(MSO), PetSmart(PETM), Sprint Nextel(S), SPX Corp.(SPW), Station Casinos(STN)

Thur. - Ciena Corp.(CIEN), Del Monte Foods(DLM), Dell Inc.(DELL), EchoStar Communications(DISH), First American Corp.(FAF), Flour Corp.(FLR), Gap Inc.(GPS), General Motors(GM), Hovnanian Enterprises(HOV), Kohl’s Corp.(KSS), Mastec Inc.(MTZ), McDermott Intl.(MDR), Omnivision Tech(OVTI), Pall Corp.(PLL), Revlon Inc.(REV), Smithfield Foods(SFD), Sotheby’s(BID), Staples(SPLS), Viacom Inc.(VIA/B), Wild Oats(OATS)

Fri. - Genesco Inc.(GCO), Novell Inc.(NOVL), Trex Co(TWP)

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

Mon. - JPMorgan SMID Cap Conference, (HON) Investor Conference, (BAC) Investor Day, (SNDK) Analyst Meeting, Fed’s Bies speaking

Tue. - Goldman Sachs Tech Symposium, Merrill Lynch Communications Forum, CSFB Networking/Comm. Equipment & Opticals Conference, Bear Stearns Healthcare Conference, Bear Stearns Retail/Restaurants/Consumer Conference

Wed. - Merrill Lynch Communications Forum, Keefe Bruyette & Woods Regional Bank Conference, UBS Nat Gas & Utilities Conference, Goldman Sachs Tech Symposium, Robert Baird Business Solutions Conference, Jeffries Internet Conference, Bear Stearns Retail/Restaurants/Consumer Conference, (NVLS) Mid-quarter Update, (UTX) Analyst Meeting, (HD) Analyst Meeting, Fed’s Geithner speaking

Thur. - CIBC Israeli Tech Equities Conference, UBS Nat Gas & Utilities Conference, CSFB Truck Builders Conference, Robert Baird Business Solutions Conference, Bear Stearns Retail/Restaurants/Consumers Conference, Wachovia Homebuilding Conference, CE Unterberg Towbin Healthcare & Tech Days, Needham Displays & Emerging Electronics Conference, Goldman Sachs Tech Symposium, Keefe Bruyette & Woods Regional Bank Conference, (COF) Annual Investor Conference

Fri. - CE Unterberg Towbin Healcare & Tech Days, Wachovia Homebuilding Conference, Fed’s Bernanke speaking

BOTTOM LINE: I expect US stocks to finish the week modestly higher on mostly positive earnings reports, buyout speculation, lower energy prices, short-covering and stable long-term rates. My trading indicators are still giving bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,451.19 -.39%*



Click here for the Weekly Wrap by Briefing.com.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,451.19 -.39%
DJIA 12,647.48 -.92%
NASDAQ 2,515.10 +.72%
Russell 2000 826.64 +1.37%
Wilshire 5000 14,667.34 -.07%
Russell 1000 Growth 574.74 -.04%
Russell 1000 Value 835.61 -.48%
Morgan Stanley Consumer 709.24 -.70%
Morgan Stanley Cyclical 970.76 +.58%
Morgan Stanley Technology 588.78 +.33%
Transports 5,158.93 +1.16%
Utilities 481.06 +1.27%
MSCI Emerging Markets 117.98 +.61%

Sentiment/Internals
NYSE Cumulative A/D Line 67,281 +1.0%
Bloomberg Crude Oil % Bulls 44.0 +84.8%
CFTC Oil Large Speculative Longs 168.334 -2.0%
Total Put/Call 1.42 +86.8%
NYSE Arms 1.31 +16.96%
Volatility(VIX) 10.58 +3.52%
ISE Sentiment 101.0 -19.20%
AAII % Bulls 53.85 +13.2%
AAII % Bears 22.31 -28.2%

Futures Spot Prices
Crude Oil 61.14 +4.0%
Reformulated Gasoline 176.31 +9.96%
Natural Gas 7.75 +4.97%
Heating Oil 175.05 +7.22%
Gold 685.70 +1.82%
Base Metals 241.40 +3.8%
Copper 285.10 +6.6%

Economy
10-year US Treasury Yield 4.67% -2 basis points
4-Wk MA of Jobless Claims 328,000 +.4%
Average 30-year Mortgage Rate 6.22% -8 basis points
Weekly Mortgage Applications -5.2%
Weekly Retail Sales +2.7%
Nationwide Gas $2.30/gallon +.05
US Heating Demand Next 7 Days 4.0% above normal
ECRI Weekly Leading Economic Index 139.30 +.29%
US Dollar Index 84.05 unch.
CRB Index 314.63 +3.56%

Leading Sectors
Semis +3.08%
Oil Service +2.51%
Disk Drives +2.03%
Steel +1.96%
Networking +1.40%

Lagging Sectors
I-Banks -1.55%
Drugs -1.56%
Airlines -2.0%
REITs -2.04%
Homebuilders -2.19%

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

*5-Day Change

Stocks Continue Healthy Consolidation, Slightly Lower into Final Hour

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly negative as the advance/decline line is modestly lower, most sectors are declining and volume is about average. The last seven trading days have seen the major averages make their daily lows early in the day and then surge modestly into the close. This is healthy consolidating action. My intraday gauge of investor angst has been elevated all day, considering the mild losses in the broad market. Given a stabilizing 10-year and a reversal lower in oil, I wouldn't be surprised to see day No. 8 of this type of action. I continue to believe cyclicals, which have been this years' best performers, will underperform for a few months as gains are digested, 4Q economic growth is revised lower and 1Q growth comes in below average rates. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, lower long-term rates, stable energy prices and more optimism in the technology sector.

Today's Headlines

Bloomberg:
- Home prices are likely to remain around current levels rather than drop, according to Morgan Stanley economists.
- US Treasuries are rising, pushing the benchmark 10-year note’s yield to a five-week low.
- Motorola’s(MOT) biggest shareholders increased their stakes in recent months, signaling confidence in a company that is grappling with the exit of its mobile-phone unit head and demands by activist Carl Icahn.
- Goldcorp. Inc.(GG), the world’s third-largest gold producer by market value, said gold production in 2007 will rise 54% to 2.6 million ounces.

Wall Street Journal:
- Nymex Holdings(NMX), which operates the NY Merc, palns a share sale that might raise more than $1 billion for its owners.
- A growing number of US doctors are using computer software and getting rid of nurses, receptionists and waiting rooms to curtail costs to maintain basic traditional practices on their own.
- Global terrorism has added legal tactics to its armory to gain an edge in national and international courts and a moral advantage over opponents, David Rivkin and Lee Casey wrote. An al-Qaeda training manual instructs detained fighters to claim torture or abuse, a tactic used by detainees at Guantanamo Bay to generate demands from European and other officials to close the camp and release the inmates. So-called “lawfare” is also being used to discredit the legality of US military action and undermine domestic support for the war on terror, Rivkin and Casey wrote.
- Vietnam’s stock market index rose 145% in 2006 and it’s up another 44% so far this year, bringing the total market value of quoted companies in the Southeast Asian country to more than $15 billion. That’s still not much, but it’s been enough to attract the attention of a swarm of hedge funds. The funds have been buying into Vietnam-oriented closed-end funds, pushing some premiums above 50%. Vietnam’s stock boom is, however, showing signs of a bubble and foreign purchases of stocks in Vietnam last month exceeded those in Taiwan.
- Some mutual fund companies are hunting for leveraged buyout candidates, a practice which lets small investors profit from the private-equity boom.

NY Times:
- Air conditioners in India and southern China, which use refrigerants banned in Europe and being phased out in the US, are causing the ozone hole to remain larger than it otherwise would.

Washington Post:
- US Democrats want to ask the Senate next week to repeal the 2002 resolution authorizing the ousting of dictator Saddam Hussein and use of force in Iraq.
- Former US President Bill Clinton got paid $40 million in speaking fees during the past six years, citing financial disclosure statements.

NY Daily News:
- Crime in NYC has declined 10% this month, which may make it the safest February since monthly tracking began 13 years ago, citing Police Commissioner Raymond Kelly.

Times-Picayune:
- Marathon Oil(MRO) announced the contractors who will expand its Garyville, Louisiana, refinery’s capacity by 180,000 barrels a day to 425,000 barrels a day.

Economic Releases

- None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Quick Summary
Economic Commentary
Movers & Shakers
Today in IBD
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Intraday Chart/Quote

Friday Watch

Late-Night Headlines
Bloomberg:
- The yen headed for the biggest weekly drop in more than two years against the euro after the Bank of Japan suggested it won’t accelerate the pace of interest-rate increases this year.
- H&R Block(HRB) posted a fiscal third-quarter after setting aside an additional $111 million to cover losses on sub-prime loans made by its Option One mortgage business. The stock surged 4.4% after-hours.
- Osaka-based Sanyo Electric Co., bailed out last year by Goldman Sachs(GS) and two Japanese banks, said regulators are investigating whether it failed to fully disclose losses. The shares plunged 29% in Tokyo trading.
- South Korean President Roh Moo Hyun said he will leave the ruling Uri Party this month to help members settle conflicts before December’s presidential election.
- Gold sold by mining companies in forward contracts in 2006 fell the most in two years, Mitsui & Co. said in its annual global survey of 118 producers. Sales dropped 13.4 million ounces, or 25%, to 40.2 million ounces, led by a reduction in hedges by Barrick Gold Corp.(ABX) “Barrick continues to set the pace in de-hedging,” said Edel Tully, head of precious metals research at Mitsui. “While de-hedging in 2007 is not expected to be of a similar magnitude, little appetite exists for new hedging.”
- Exxon Mobil(XOM) will take a 10% stake in Qatar’s Barzan gas field.
- Tractor Supply(TSCO), a retail farm-supply chain with 676 stores in 37 states, said it plans to buy back as much as $200 million of common stock over a three-year period.
- New government rules limiting emissions of carbon-dioxide aren’t likely to hurt Canadian oil-sands projects, according to Suncor Energy(SU), the world’s second-largest producer of oil from the tar-like deposits.
- Billionaire investor Carl Icahn says a preference for “out-of-favor” companies led him to buy shares of Lear Corp.(LEA) and WCI Communities(WCI), burning so-called short sellers who bet the stocks would fall.
- The Bank of Japan will gradually raise interest rates as the economy expands, Governor Toshihiko Fukui said, two days after his policy board increased the key lending rate to .5% to prevent investment bubbles.
- Billionaire Warren Buffett said Berkshire Hathaway will keep its stake in PetroChina Co., rejecting appeals to sell because of China’s investments in Sudan, accused by the US of human rights abuses.
- Rio Tinto Group(RTP) will invest $2 billion in Indonesia for its first nickel-mining project in the country.

Wall Street Journal:
- DaimlerChrysler AG’s(DCX) Chrysler unit plans to spend as much as $6 billion a year to develop new products.

CNBC:
- Billionaire real estate mogul Sam Zell, who just sold Equity Office Properties, the nation's largest office landlord, to Blackstone for $39 billion, said the office property market is still going strong and the broader housing market is also in good shape. "The overall market is much better than the press portrays it as." Zell said.

Guardian:
- The UK government will say Feb. 26 it plans to deploy over 1,000 extra troops and equipment to Afghanistan.

Late Buy/Sell Recommendations
Business Week:
- UnitedHealth Group(UNH) was popular with analysts before Warren Buffett’s Berkshire Hathway(BRK/A) bought 1 million shares of the largest US medical insurer earlier this month. Sarat Sethi of investment firm Douglas C. Lande & Assoc. said the company should trade at $70.
- Epix Pharmaceuticals(EPIX) shares may more than double in a year, citing George Fulop of Needham & Co.

Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.03%.

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Earnings of Note
Company/EPS Estimate
- (CCO)/.16
- (DPZ)/.49
- (LOW)/.37
- (GAS)/.97
- (CCU)/.40
- (CTV)/.37
- (DDS)/1.08

Upcoming Splits
- None of note

Economic Releases
- None of note

BOTTOM LINE: Asian indices are slightly higher, boosted by technology and commodity shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish Mixed on Healthy Consolidation of Recent Gains

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