DJIA Closes at Another Record High on Oil Price Decline and Buyout Speculation

Indices
S&P 500 1,486.30 +.27%
DJIA 13,136.14 +.56%
NASDAQ 2,531.53 +.26%
Russell 2000 816.25 +.21%
Wilshire 5000 14,949.24 +.23%
Russell 1000 Growth 586.45 +.31%
Russell 1000 Value 853.94 +.21%
Morgan Stanley Consumer 734.99 +.33%
Morgan Stanley Cyclical 1,020.56 +2.0%
Morgan Stanley Technology 596.17 +.46%
Transports 5,034.33 -.06%
Utilities 524.53 +1.02%
MSCI Emerging Markets 121.71 +.17%

Sentiment/Internals
Total Put/Call 1.12 +19.15%
NYSE Arms .94 -34.88%
Volatility(VIX) 13.51 -4.99%
ISE Sentiment 114.0 -5.79%

Futures Spot Prices
Crude Oil 64.47 -1.89%
Reformulated Gasoline 224.78 -.51%
Natural Gas 7.71 -1.92%
Heating Oil 188.67 -.43
Gold 675.90 -1.11%
Base Metals 272.32 +.70%
Copper 362.25 +1.86%

Economy
10-year US Treasury Yield 4.64% +2 basis points
US Dollar 81.63 +.23%
CRB Index 311.58 -.36%

Leading Sectors
Restaurants +1.27%
Homebuilders +1.05%
Medical Equipment +1.04%

Lagging Sectors
Gold -.71%
REITs -.78%
Alternative Energy -1.09%

Evening Review
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Afternoon Recommendations
Bank of America:
- Upgraded (CME) to Buy, target $622.

Afternoon/Evening Headlines
Bloomberg:
- OPEC should increase production to assure adequate supplies in case of terrorist attacks and other disruptions, the Intl. Energy Agency said.
- The average gasoline pump price in the US is likely to rise to a record this summer because of refinery “disruptions,” Energy Secretary Samuel Bodman said.
- Cotton in NY fell to the lowest price in 20 months on speculation unsold supplies in the US will rise more than estimated as exports slump.
- OPEC’s compliance with output reductions set last year rose to 70% in April, from 65% in March, OPEC’s secretary general said.

Wall Street Journal:
- Shareholders with a slight majority of Dow Jones(DJ) stock don’t support News Corp.’s(NWS/A) $5 billion takeover bid.

Sparkspread.com:
- Dynegy Corp.(DYN) and US Power Generating Co. are considering bids for Mirant Corp.(MIR), citing officials familiar with the proposals.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Retail longs and Telecom longs. I exited my (LVLT) long and took profits in a trading short in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was neutral today as the advance/decline line finished slightly lower, most sectors rose and volume was heavy. Measures of investor anxiety were above average into the close. Today's overall market action was mildly bullish as the major averages finished near session highs, reversing morning losses, on heavy volume. Oil is down $1.22 per bbl. on little news. As well, gold fell $7.50 per ounce and continues to trade poorly, considering all the recent potential upside catalysts. The 10-year yield finished off session highs, rising 1 basis point. Today was another very frustrating day for the bears considering the below-expectations housing report and weak retail sales reports. Given the market's overbought state and heavy volume today, I suspect even more investors and traders are trapped leaning too heavily bearish.