Stocks Finish Lower on Profit-taking, Higher Energy Prices

Indices
S&P 500 1,548.71 -.84%
DJIA 13,984.80 -.77%
NASDAQ 2,780.05 -.91%
Russell 2000 829.36 -1.40%
Wilshire 5000 15,583.58 -.87%
Russell 1000 Growth 630.06 -.88%
Russell 1000 Value 861.87 -.78%
Morgan Stanley Consumer 745.48 -1.18%
Morgan Stanley Cyclical 1,078.60 -.95%
Morgan Stanley Technology 682.05 -.99%
Transports 4,888.99 -1.05%
Utilities 514.08 -1.02%
MSCI Emerging Markets 158.13 -.06%

Sentiment/Internals
Total Put/Call .80 +5.26%
NYSE Arms 1.18 +114.55%
Volatility(VIX) 19.25 +10.25%
ISE Sentiment 153.0 -6.71%

Futures Spot Prices
Crude Oil $86.29 +3.09%
Reformulated Gasoline 216.30 +3.74%
Natural Gas 7.46 +7.0%
Heating Oil 231.26 +2.95%
Gold 764.30 +1.39%
Base Metals 258.53 +1.76%
Copper 368.25 +.82%

Economy
10-year US Treasury Yield 4.68% unch.
US Dollar 78.08 -.17%%
CRB Index 338.15 +1.39%

Leading Sectors
Energy +1.0%
Biotech +.62%
Construction +.43%

Lagging Sectors
I-Banks -1.72%
REITs -2.14%
Homebuilders -2.75%

Evening Review
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In Play

Afternoon Recommendations
Oppenheimer:
- Rated (SXCI) Outperform, target $18.

Afternoon/Evening Headlines
Bloomberg:
-Saks Inc.(SKS) rose 3.7% after Women’s Wear Daily reported the luxury retailer was approached by at least one suitor in the past two weeks and may consider accepting an offer.
- Wilbur Ross, billionaire who specializes in resurrecting failed companies, is betting the US mortgage market will rise from the dead.
- Crude oil rose above $86/bbl. for the first time in NY on concern Turkish forces may pursue Kurdish militants in Iraq.
- Warren Buffett’s Berkshire Hathaway(BRK/A), which has built a 17% stake in railroad Burlington Northern Santa Fe Corp.(BNI), lowered its holding of carriers Union Pacific(UNP) and Norfolk Southern(NSC).
- Genentech Inc.(DNA) said profit climbed 21%, fueled by sales of the cancer drugs Avastin and Rituxan. The stock declined $.81/share in extended trading to $76.69.

Wall Street Journal:
- Shareholder lawsuits have been filed in the US against LDK Solar Co., which has been scrambling to protect its reputation since a former employee last month accused the Chinese solar-power company of accounting fraud.

BOTTOM LINE: The Portfolio finished lower today on losses in my Internet longs, Software longs and Biotech longs. I did not trade in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished substantially lower, sector performance was mostly negative and volume was about average. Measures of investor anxiety were above average into the close. Today's overall market action was bearish. Briefing.com is reporting that rumors have surfaced that Google (GOOG) could take a stake in Baidu (BIDU). This could account for the weakness in Google shares today. Baidu rebounded a bit on the news. Recent reports suggest that Google is making meaningful inroads against Baidu in China. As well, Baidu's valuation is in the stratosphere. I suspect this will remain nothing more than a rumor. Sectors related to housing or the consumer underperformed substantially today. However, the SOX was just slightly lower, with a number of semis rising. This is noteworthy considering their underperformance relative to other areas of tech this year. Broadcom (BRCM) has been incredibly strong of late, and it remains my favorite in the group. Given the headline losses in the major averages, I would have liked to have seen a bit more anxiety. The VIX did rise 9%, but the total put/call and ISE were showing some complacency by retail options traders regarding today's decline. Volatility is likely to remain somewhat elevated near term as earnings continue rolling in.