Stocks Finish Higher on Short-Covering, Bargain-Hunting Ahead of Fed

Indices
S&P 500 1,540.98 +.37%
DJIA 13,870.26 +.46%
NASDAQ 2,817.44 +.47%
Russell 2000 821.72 +.04%
Wilshire 5000 15,503.68 +.37%
Russell 1000 Growth 633.57 +.57%
Russell 1000 Value 848.05 +.34%
Morgan Stanley Consumer 746.66 +.48%
Morgan Stanley Cyclical 1,061.30 +.66%
Morgan Stanley Technology 673.22 +.56%
Transports 4,844.51 -.46%
Utilities 526.41 +.73%
MSCI Emerging Markets 165.36 +2.19%

Sentiment/Internals
Total Put/Call .85 +4.94%
NYSE Arms .76 +31.80%
Volatility(VIX) 19.87 +1.58%
ISE Sentiment 191.0 +20.13%

Futures Spot Prices
Crude Oil $93.58 +1.86%
Reformulated Gasoline 232.75 +2.35%
Natural Gas 7.27 +.71%
Heating Oil 246.65 +1.40%
Gold 793.50 +.76%
Base Metals 249.99 +.44%
Copper 352.50 -.35%

Economy
10-year US Treasury Yield 4.38% -2 basis points
US Dollar 76.83 -.25%
CRB Index 349.43 +1.03%

Leading Sectors
Networking +2.14%
Construction +1.56%
Semis +1.39%

Lagging Sectors
Banks -.48%
REITs -.96%
HMOs -1.38%

Evening Review
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In Play

Afternoon Recommendations
- None of note

Afternoon/Evening Headlines
Bloomberg:
- NY-based Somerset Partners LLC paid $509 million for 450 Park Ave., the most ever paid for a US office tower on a per-square-foot basis.
- The yen weakened the most in three weeks against the dollar as global stocks rose, encouraging investors to take on riskier bets financed with loans in Japan.
- Bill Gross, manager of the world’s biggest bond fund, expects the Fed to lower benchmark interest rates to 3.5%.

Financial News:
- Allianz SE’s Pacific Investment Management, known as Pimco, has bought more than $5 billion in mortgage-backed securities for its clients, citing Pimco fund manager Bill Gross in an interview. Gross “would buy up to an additional $2 billion” in mortgage-backed securities in the coming weeks.

BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Internet longs, Medical longs and Software longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was mildly positive today as the advance/decline line finished about even, most sectors rose and volume was around average. Measures of investor anxiety were around average into the close. Today's overall market action was bullish given the rise in oil and last week’s gains. Cyclicals and growth stocks outperformed throughout the day. Even as many pundits seem bent on talking us into recession, the odds of fourth-quarter U.S. growth turning negative are only 13%, according to Intrade.com. As well, as I posted earlier, third-quarter U.S. growth is estimated at 3.1%. This would be around trend and should boost overall economic sentiment a bit. The consumer confidence index, released tomorrow, will likely come in below estimates and could help pressure stocks modestly in the morning. However, near-term losses will likely remain mild ahead of Wednesday's Fed announcement. Strength could surface later in the day. Google (GOOG) quietly made another record high earlier in the day. I suspect the stock is beginning another meaningful push higher after a brief pause. I still don't think it is too late to buy the stock at current levels, and it remains my largest long position. Despite mild gains in the major averages and neutral breadth, there were many stocks on my monitor pages with 2% to 5% gains. This remains an excellent market for stockpicking. Overall, insider activity remains near levels normally associated with meaningful market bottoms, even as imminent recession predictions continue unabated. Here are some of the noteworthy insider buys over the last week.

• Thornbug Mortgage (TMA): 1,000,000 shares at $9.50
• First Horizon (FHN): 147,500 shares at $24.26
• General Electric (GE): 83,000 shares at $40.08
• DuPont Fabros Technology (DFT): 152,300 shares at $21.00
• SanDisk (SNDK): 50,000 shares at $40.76
• Smithfield Foods (SFD): 53,930 shares at $28.49
• MGIC Investment (MTG): 73,000 shares at $19.23
• Western Alliance Bancorp (WAL): 51,000 shares at $21.08
• Whirlpool (WHR): 10,000 shares at $84.33