Thursday, March 01, 2007

Stocks Finish Only Modestly Lower on Heavy Volume

Indices
S&P 500 1,403.17 -.26%
DJIA 12,223.34 -.28%
NASDAQ 2,404.21 -.49%
Russell 2000 791.03 -.29%
Wilshire 5000 14,177.23 -.26%
Russell 1000 Growth 554.25 -.34%
Russell 1000 Value 810.15 -.18%
Morgan Stanley Consumer 691.99 -.22%
Morgan Stanley Cyclical 933.57 -.27%
Morgan Stanley Technology 562.10 -.42%
Transports 4,855.47 -.17%
Utilities 480.69 +.31%
MSCI Emerging Markets 110.04 -1.35%

Sentiment/Internals
Total Put/Call 1.39 +26.36%
NYSE Arms 1.17 +22.79%
Volatility(VIX) 15.82 +2.59%
ISE Sentiment 107.0 -6.14%

Futures Spot Prices
Crude Oil 61.81 +.03%
Reformulated Gasoline 190.34 +1.58%
Natural Gas 7.33 +.48%
Heating Oil 177.62 -.11%
Gold 666.40 -.91%
Base Metals 244.60 +1.79%
Copper 275.20 unch.

Economy
10-year US Treasury Yield 4.55% -2 basis points
US Dollar 83.75 +.22%
CRB Index 312.24 -.05%

Leading Sectors
HMOs +1.11%
Oil Service +.65%
Gaming +.39%

Lagging Sectors
Networking -1.72%
Biotech -1.96%
Gold & Silver -2.15%

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:
- American Intl. Group(AIG), the world’s largest insurer, said fourth-quarter profit rose almost eightfold a year after the company paid $1.64 billion to settle probes of accounting and sales practices. The stock fell .30 after-hours.
- Berkshire Hathaway(BRK/A), run by billionaire Warren Buffett, said fourth-quarter profit fell 30% on lower investment gains.
- Senate Democrats “overwhelmingly” rejected a proposal to cut the Bush Administration’s war spending request for next year by $20 billion, according to Budget Committee Chairman Kent Conrad.
- Dell Inc.(DELL) posted fourth-quarter profit and sales that trailed analysts’ reduced estimates after the company lost customers to rivals over the holidays. The stock fell .40 after-hours.
- Kohl’s Corp.(KSS), the fourth-largest US dept.-store company, said fourth-quarter profit rose 29%, helped by sales of home goods. Earnings and sales beat estimates. The stock is rising $1.50 in after-hours trading.
- Dennis Gartman, economist, trader and editor of the Gartman Letter, sees gold falling to $630/oz. within a few weeks.

Reuters:
- TXU Corp.(TXU), the Texas power producer that agreed to a $45 billion buyout by KKR and Texas Pacific, will contract up to 60 companies to gauge their interest in submitting a rival offer, citing CEO John Wilder.

Canadian Broadcasting Corp.:
- Canadian Prime Minister Stephen Harper’s Conservative Party has widened its lead over the main opposition Liberal Party to 9 percentage points, citing a Decima Research survey.

BOTTOM LINE: The Portfolio finished about even today as gains in my Retail longs and Computer longs offset losses in my Medical longs. I did not trade in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was negative as the advance/decline line finished lower, sector performance was mixed and volume was heavy. Measures of investor anxiety were higher into the close. Today's overall market action was just mildly bearish as the major averages recouped much of this morning's substantial losses. My intraday gauge of investor angst finished the day again at an elevated level. I have heard many say they wish they had seen more panic the last few days, however my gauge registered very elevated levels of investor angst. The “whoosh” bottom that everyone looked for last year never materialized before the major averages ripped higher. I suspect the same will be the case this time as everyone looks for the exact same thing and the bearish camp is extraordinarily crowded given just slight losses in the major averages. A lot will depend on tonight's trading in Asia, but I have a feeling that U.S. stocks will build on today's sharp upside reversal tomorrow. While manufacturing data have been on the weak side of late, recent consumer-related data has been improving. The Conference Board's Consumer Confidence Index hit a cycle high last month, despite higher energy prices and the media's obsession with housing. Personal Income growth for January has only been exceeded 13 times over the last 20 years. Weekly retail sales have been trending higher the last few weeks. Personal spending, as evidenced in today's report, has also been trending higher. As well, all three US automakers reported better-than-expected sales for February, with GM reporting a 3.4% gain versus estimates of a 7% decline. Finally, can the consumer be weakening meaningfully when Mac sales soared 100% in January? Housing only matters to the extent that it significantly impacts the consumer, in my opinion. Manufacturing alone can't bring down the U.S. economy. Moreover, manufacturing should improve meaningfully over the course of the year as inventory rebuilding occurs and the auto sector improves markedly.

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