Tuesday, March 20, 2007

Stocks Finish Near Session Highs on Buyout Speculation and Diminishing Subprime Fears

S&P 500 1,410.94 +.63%
DJIA 12,288.10 +.51%
NASDAQ 2,408.21 +.58%
Russell 2000 793.60 +.83%
Wilshire 5000 14,245.49 +.66%
Russell 1000 Growth 556.97 +.51%
Russell 1000 Value 813.95 +.80%
Morgan Stanley Consumer 696.29 +.90%
Morgan Stanley Cyclical 953.08 +.58%
Morgan Stanley Technology 557.66 +.53%
Transports 4,842.54 +1.0%
Utilities 491.07 +1.38%
MSCI Emerging Markets 113.27 +.83%

Total Put/Call .91 +12.35%
NYSE Arms .90 +67.60%
Volatility(VIX) 13.27 -9.05%
ISE Sentiment 136.0 +6.25%

Futures Spot Prices
Crude Oil 56.73 +.25%
Reformulated Gasoline 194.88 -.47%
Natural Gas 6.92 +1.12%
Heating Oil 168.0 -.50%
Gold 659.10 +.73%
Base Metals 251.15 -.31%
Copper 302.10 -.02%

10-year US Treasury Yield 4.55% -2 basis points
US Dollar 83.08 -.37%
CRB Index 304.96 +.12%

Leading Sectors
Gaming +1.75%
Airlines +1.61%
Tobacco +1.52%

Lagging Sectors
HMOs +.13%
Hospitals -.17%
Oil Service -.93%

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
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
- Rated (ZMH) Overweight.

Afternoon/Evening Headlines
- Consumer and utility shares carried the S&P 500 to its best two-day gain since August after a home construction report reassured investors the economy is growing without fueling faster inflation.
- Oracle Corp.(ORCL), the world’s largest software maker, said profit rose 35% because of increased sales of programs that help companies manage finances and inventories. The stock is rising 4% in after-hours trading.
- Adobe Systems(ADBE), the world’s biggest maker of design software, said first-quarter profit jumped 37% from a year earlier when it had charges related to the $3.4 billion purchase of Macromedia Inc. The stock is surging 4% in after-hours trading.
- Halcyon Asset Management LLC, a $10 billion hedge-fund firm, hired Kyle Ransford to start a real-estate fund to take advantage of lower property prices.
- Claire’s Stores(CLE), the largest US retailer of costume jewelry for teens, agreed to be taken private by Apollo Management LP for $3.1 billion.
- The perceived risk of owning bonds of Motorola(MOT) rose to the highest in 22 months after CEO Zander canceled a speech amid a proxy battle with billionaire activist Carl Icahn, according to traders.
- Bill Gross, manager of the world’s biggest bond fund at PIMCO, said he expects the Fed to maintain its “tightening” policy bias.

Nikkei English News:
- Mazda Motor Corp. will increase domestic production and release a hydrogen-electric hybrid vehicle. The company will announce it’s making a vehicle that combines Mazda’s proprietary rotary engine and an electric motor. The engine won’t emit carbon dioxide because it runs on hydrogen.

BOTTOM LINE: The Portfolio finished higher today on gains in my Biotech longs, Medical longs, Retail longs and Energy-related shorts. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, almost every sector rose and volume was about average. Measures of investor anxiety were above-average into the close. Today's overall market action was bullish. Gaming stocks gained significant traction throughout the day, rising almost 2%, with the index breaking above its 50-day moving-average on volume. The International Copper Study Group is saying today that global copper demand rose 2.2% last year, while supplies surged 5%. Moreover, demand was flat in December. Overall, the copper surplus was 350,000 tons last year vs. a 100,000 ton deficit in 2005. Finally, copper demand actually fell 1% in China, the world's largest consumer of the metal. The recent gains in the metal are almost completely the function of short-covering, in my opinion. I would look to short copper on any significant gains from current levels.

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