Stocks Finish Mostly Higher, Consolidating Recent Gains

Indices
S&P 500 1,222.21 +.23%
DJIA 10,513.89 -.06%
NASDAQ 2,143.15 +.36%
Russell 2000 670.79 -.14%
DJ Wilshire 5000 12,202.97 +.21%
S&P Barra Growth 584.58 +.30%
S&P Barra Value 633.36 +.16%
Morgan Stanley Consumer 578.56 +.08%
Morgan Stanley Cyclical 736.98 -.20%
Morgan Stanley Technology 494.93 +.73%
Transports 3,596.99 -.72%
Utilities 396.36 +.50%
Put/Call .77 -2.53%
NYSE Arms .84 +17.54%
Volatility(VIX) 10.95 -2.93%
ISE Sentiment 191.00 +6.70%
US Dollar 88.35 -1.24%
CRB 311.68 +.90%

Futures Spot Prices
Crude Oil 60.73 +3.07%
Unleaded Gasoline 178.00 +2.77%
Natural Gas 7.84 +4.60%
Heating Oil 175.10 +4.11%
Gold 427.60 +.30%
Base Metals 123.73 -.52%
Copper 153.90 -1.41%
10-year US Treasury Yield 4.14 +1.19%

Leading Sectors
Networking +2.13%
Oil Tankers +1.99%
Oil Service +1.52%

Lagging Sectors
Broadcasting -.99%
Hospitals -1.22%
Airlines -1.90%

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Afternoon Recommendations
Goldman Sachs:
- None of note

Afternoon/Evening Headlines
Bloomberg:
- US Treasuries may benefit as the government reduces its borrowings amid a narrower budget deficit, according to Tony Crescenzi, chief bond market strategist at Miller Tabak.
- Police found explosives in a car parked near a railway station in the town of Luton north of London, citing the British Press Assoc.
- US Treasuries fell, with the 10-year note falling the most in a week, as economists increased their growth forecasts, reinforcing expectations the Federal Reserve will keep raising its interest-rate target.
- Oil prices rose for the first session in four on worries that hurricanes would cut supply.

AFP:
- Iranian negotiators said the country will resume uranium enrichment and reject any European Union plan that doesn’t recognize Iran’s right to carry out nuclear activity.

BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Retail and Networking longs. I took profits in an existing long in the afternoon and added NOK long, thus leaving the Portfolio 100% net long. I am using a $17 stop-loss on this position. The tone of the market was slightly positive today as the advance/decline line finished modestly higher, sector performance was mixed and volume was below average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was positive. Here is a summary of Platts' Energy Inventory Estimates for tomorrow:
• Crude Stocks: -3.5 million barrels
• Gasoline Stocks: -950,000 barrels
• Distillate Stocks: +2.5 million barrels
• Refinery Utilization: -1.5% to 96.6%.
I expect traders to continue to focus on the distillate number as the perception that 4Q demand will exceed supply persists.

Stocks Slightly Higher Mid-day, Led by Tech and Energy

Indices
S&P 500 1,224.25 +.39%
DJIA 10,536.30 +.16%
NASDAQ 2,146.71 +.53%
Russell 2000 672.90 +.17%
DJ Wilshire 5000 12,221.31 +.36%
S&P Barra Growth 585.66 +.49%
S&P Barra Value 634.20 +.29%
Morgan Stanley Consumer 579.40 +.23%
Morgan Stanley Cyclical 739.11 +.08%
Morgan Stanley Technology 496.05 +.95%
Transports 3,599.80 -.65%
Utilities 396.89 +.64%
Put/Call .86 +8.86%
NYSE Arms .70 -1.51%
Volatility(VIX) 11.16 -.89%
ISE Sentiment 179.00 unch.
US Dollar 88.40 -1.18%
CRB 311.70 +.91%

Futures Spot Prices
Crude Oil 60.70 +3.02%
Unleaded Gasoline 177.90 +2.71%
Natural Gas 7.93 +5.80%
Heating Oil 175.10 +4.11%
Gold 427.10 +.19%
Base Metals 123.73 -.52%
Copper 153.90 -1.41%
10-year US Treasury Yield 4.12% +.86%

Leading Sectors
Networking +2.42%
Oil Service +2.21%
Software +1.23%

Lagging Sectors
Broadcasting -.85%
Hospitals -1.20%
Airlines -2.43%

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my Retail, Semiconductor and Networking longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is modestly positive, sector performance is mixed and volume is below average. Measures of investor anxiety are mostly higher. Today’s overall market action is positive considering the rise in energy prices and recent gains. The Johnson Redbook Same-store-sales Index rose 4.2% year-over-year last week vs. a 4.4% rise the prior week. This is the strongest back-to-back weekly performance since early July 2004. This is also up from a 1.5% gain in late April and the tenth week in a row the index has exceeded 3%. The Morgan Stanley Retail Index has risen 14.1% this year and is up 30.4% over the last 12 months. The S&P 500 has risen 1.5% and 11.4% over the same time periods. I expect US stocks to trade mixed-to-higher into the close on short-covering and bargain hunting.

Today's Headlines

Bloomberg:
- Alcatel SA, the world’s biggest broadband Internet equipment supplier, said second-quarter earnings were higher than expected amid increased demand for networks used for mobile communications and by businesses.
- Infosys Technologies, India’s second-largest software company, posted a smaller-than-expected 37% gain in its first-quarter profit after raising wages to retain employees.
- Toronto-Dominion Bank, Canada’s second-biggest lender, agreed to buy Hudson United Bancorp for $1.9 billion in cash and stock to expand its TD Banknorth unit in the NY City area.
- Intel was raided by European Union antitrust regulators today in a probe spurred by competitor Advanced Micro Devices.
- Crude oil prices are rising for the first session in four on concerns over hurricane disruptions.
- The US dollar is falling, heading for its biggest two-day decline against the euro since August, on speculation a government report tomorrow will show no shrinkage in the US trade deficit.

Wall Street Journal:
- AnnTaylor Stores is trying to restore luster to its dressier namesake collections without cutting sales of its hipper Loft line.
- Bear Stearns signaled that it might pay $200 million or more to settle charges by US regulators that it helped hedge funds to trade improperly in mutual-fund shares.
- California’s choice real estate neighborhoods such as Atherton, one of Silicon Valley’s most elite residential locations, are getting a boost from investors who made money on Google’s stock offering.
- Concern among investors that Wachovia CEO Thompson is preparing to make another big acquisition have pushed the shares to their lowest level relative to peers since 2001.
- Citigroup, Morgan Stanley, CSFB and UBS Securities are among companies considering buying a stake in the Philadelphia Stock Exchange.
- Walt Disney may be seeking a buyer for its $3 billion radio station and network group, and it is considering a process that would take out cash and make the move a tax-free spin-off to shareholders.
- Drugs sold by Bristol-Myers Squibb, GlaxoSmithKline and Eli Lilly may help keep people with early symptoms of diabetes from developing the full-blown disease.

NY Times:
- US Senate Minority Leader Harry Reid of Nevada said that Democrats were unlikely to use a filibuster against President Bush’s Supreme Court justice nominee to replace the retiring Sandra Day O-Connor.

LA Times:
- IHOP is changing its menu to lure more diners to lunch and dinner.

AP:
- Comcast plans to offer residential customers the chance to double the speed of their Internet service at a cost of $10 more per month if they already have cable television service.

Financial Times Deutschland:
- Microsoft plans to replace products by Siebel Systems with its own version of software to help manage customer contacts.

Economic Releases

None of note

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