Thursday, March 22, 2007

Stocks Finish Mixed, Consolidating Yesterday's Sharp Gains

Indices
S&P 500 1,434.54 -.03%
DJIA 12,461.14 +.11%
NASDAQ 2,451.74 -.17%
Russell 2000 808.05 +.07%
Wilshire 5000 14,483.72 +.02%
Russell 1000 Growth 565.37 -.11%
Russell 1000 Value 828.54 +.07%
Morgan Stanley Consumer 706.99 +.02%
Morgan Stanley Cyclical 960.62 -.33%
Morgan Stanley Technology 563.86 -1.03%
Transports 4,891.63 -.04%
Utilities 497.31 +.11%
MSCI Emerging Markets 115.96 +.54%

Sentiment/Internals
Total Put/Call .94 -16.07%
NYSE Arms 1.11 +152.62%
Volatility(VIX) 12.93 +6.07%
ISE Sentiment 116.0 +16.0%

Futures Spot Prices
Crude Oil 61.76 +3.61%
Reformulated Gasoline 195.87 +3.22%
Natural Gas 7.33 +2.43%
Heating Oil 171.90 +3.27%
Gold 664.20 +.64%
Base Metals 248.96 +.71%
Copper 307.40 +1.82%

Economy
10-year US Treasury Yield 4.58% +4 basis points
US Dollar 83.06 +.35%
CRB Index 310.91 +1.50%

Leading Sectors
Energy +1.79%
Oil Service +1.60%
Telecom +.62%

Lagging Sectors
Steel -1.30%
Semis -1.50%
Airlines -2.82%

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 (ERTS), (THQI) Buy.

Afternoon/Evening Headlines
Bloomberg:
- Blackstone Group LP, the leveraged buyout firm that has spent $160 billion taking companies private in the past two decades, filed to raise as much as $4 billion in an IPO.
- Nike Inc.(NKE) said third quarter profit rose more than analysts anticipated on sales of new products such as the Air Force 25 and iPod-compatible shoes. The shares rose $1 after-hours to $109.60.
- Palm Inc.(PALM) posted a 61% drop in third quarter profit because of marketing and development spending to stem the loss of customers to Research In Motion’s(RIMM) BlackBerry. The shares rose .25 to $18.00 in after hours trading.
- Crude oil rose $2/bbl. on increased speculation by investment funds that demand will increase.

Wall Street Journal:
- Brian Hunter, the Amaranth Advisors LLC trader whose losses led to the biggest hedge-fund collapse in history, is seeking to raise money for new commodities funds. Hunter formed Solengo Capital and has hired colleagues from Amaranth and previous jobs. The firm, with offices in Calgary and Greenwich, Connecticut, wants to raise “hundreds of millions of dollars” from investors outside the US.

BOTTOM LINE: The Portfolio finished higher today on gains in my Medical longs, Retail longs and Telecom longs. 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 slightly higher, sector performance was mixed and volume was above average. Measures of investor anxiety were above-average into the close. Today's overall market action was bullish considering yesterday’s gains. Many stocks broke meaningfully higher today, building on yesterday's sharp gains. Intuitive Surgical (ISRG), Google Inc.(GOOG), Quanta Services (PWR) and Tractor Supply (TSCO) are three of my longs that surged again. I would buy all three at current levels. The ISE Sentiment Index continues to trade at low levels as retail options traders remain bearish. The ABX Subprime Indicies continue to trend higher from the scare of a couple of weeks ago. So far, this year is turning into one of the better I can remember for stockpickers. Many individual equities are trouncing the major averages. I wouldn't be surprised to see some profit-taking again tomorrow morning on the likely weaker-than-expected existing home sales report due to one of the coldest Februarys in history. A number of the many US stock market bears are pointing to the 30s as a guide for recent technical stock market action. From a technical standpoint, today's DJIA looks much more like 1983 than 1937, in my opinion. Take a look at this long-term DJIA chart. Moreover, the current macro backdrop is far better today than either of those periods. This corresponds with my belief that we experienced an "accelerated" secular bear market from 1998 through 2003. I say "accelerated" because the explosion of hedge funds, massive increase in market participants and much better information flow than during other secular bear periods sped up the cleansing process.

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