Market Week in Review

S&P 500 1,152.12 +.83%


Click here for the Weekly Wrap by Briefing.com.

BOTTOM LINE: Overall, last week's market performance was modestly positive, considering the rise in energy prices. The advance/decline fell slightly, sector performance was mixed and volume was above average. Small-cap, Cyclical and Tech shares all outperformed for the week as worries over a substantial economic slowdown diminished. As I stated last week, sentiment towards crude oil was too bearish for the underlying commodity to continuing declining at such a rapid pace. A retest of recent highs appears likely before the decline I see in the second half of the year. Measures of investor anxiety were mostly lower on the week. The fact that AAII % Bulls rebounded so strongly with the S&P 500 hitting a new yearly low on Wed. is a mild negative. Investors appear to be ratcheting down their future inflation expectations, even with last week's decline in the US dollar and rise in commodity prices. While I continue to believe the major indices have seen their lows for the year, Friday's action was disheartening for the bulls. However, volume was relatively light and most of the sell-off was related to news of a potential nuclear weapons test by N. Korea. If the lows are truly in, a bounce should be in order early next week.

Weekly Scoreboard*

Indices
S&P 500 1,152.12 +.83%
DJIA 10,157.71 +.70%
NASDAQ 1,932.19 +1.26%
Russell 2000 589.53 +1.51%
DJ Wilshire 5000 11,346.88 +.91%
S&P Equity Long/Short Index 1,005.66 -1.60%
S&P Barra Growth 557.78 +.76%
S&P Barra Value 589.99 +.91%
Morgan Stanley Consumer 574.37 -.79%
Morgan Stanley Cyclical 707.02 +2.04%
Morgan Stanley Technology 439.04 +3.32%
Transports 3,440.05 +1.69%
Utilities 366.35 +2.72%
Bloomberg Crude Oil % Bulls 41.0 +78.65%
Put/Call .92 -39.07%
NYSE Arms 1.44 -12.19%
Volatility(VIX) 15.38 -13.30%
ISE Sentiment 128.00 -9.86%
AAII % Bulls 36.84 +123.54%
US Dollar 83.50 -1.16%
CRB 307.29 +2.83%

Futures Spot Prices
Crude Oil 55.39 +6.32%
Unleaded Gasoline 165.23 +11.27%
Natural Gas 7.20 +2.93%
Heating Oil 154.51 +5.40%
Gold 436.10 +1.66%
Base Metals 126.42 +1.50%
Copper 148.10 +2.92%
10-year US Treasury Yield 4.24% unch.
Average 30-year Mortgage Rate 5.80% -1.86%

Leading Sectors
Steel +7.15%
Oil Service +6.39%
Networking +5.87%

Lagging Sectors
Drugs -1.49%
Broadcasting -2.17%
Hospitals -2.59%

*5-Day % Change

Mid-day Scoreboard

Indices
S&P 500 1,156.82 -.27%
DJIA 10,189.93 -.27%
NASDAQ 1,944.58 -.91%
Russell 2000 593.36 -.93%
DJ Wilshire 5000 11,400.74 -.27%
S&P Barra Growth 560.19 -.40%
S&P Barra Value 592.49 -.11%
Morgan Stanley Consumer 576.64 -.41%
Morgan Stanley Cyclical 711.72 -.53%
Morgan Stanley Technology 440.74 -.53%
Transports 3,461.54 -1.46%
Utilities 366.86 +.52%
Put/Call .79 -5.95%
NYSE Arms 1.07 +102.21%
Volatility(VIX) 14.66 +1.73%
ISE Sentiment 136.00 +7.94%
US Dollar 83.62 -.10%
CRB 307.58 +.28%

Futures Spot Prices
Crude Oil 55.55 +2.49%
Unleaded Gasoline 164.50 +1.54%
Natural Gas 7.21 +2.53%
Heating Oil 154.70 +.85%
Gold 435.40 +.23%
Base Metals 126.42 +.57%
Copper 148.80 +.30%
10-year US Treasury Yield 4.26% -.60%

Leading Sectors
Oil Service +1.12%
Energy +.92%
Restaurants +.62%

Lagging Sectors
Broadcasting -1.94%
Computer Hardware -2.09%
Airlines -4.20%

BOTTOM LINE: US stocks are lower mid-day on earnings worries and higher energy prices. The Portfolio is unchanged on mixed performance by my Tech longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is weak, most sectors are lower and volume is light. Measures of investor anxiety are mixed. Today’s overall market action is modestly negative, considering yesterday’s sharp gains, higher energy prices and earnings worries. So far, today’s action appears to be a healthy consolidation of yesterday’s gains. GOOG is currently my largest position and I expect this stock to reach $300 by year-end. I expect US stocks to trade modestly higher into the close on short-covering and bargain-hunting.

Today's Headlines

Bloomberg:
- Medtronic agreed to pay $1.35 billion to end a lawsuit by a surgeon over the use of his inventions.
- China welcomed comments made in Jakarta today by Japan’s Prime Minister Koizumi on the pain his country inflicted on neighboring nations before and during WW II.
- Crude oil is rising, heading for the biggest weekly rally in four months, on concern US gas demand will outpace domestic production and imports during the next five months, when consumption peaks.
- US 10-yr T-notes are rising as benchmark stock indices failed to extend their biggest one-day gain in more than a year, raising the attractiveness of fixed-income investments.

Wall Street Journal:
- Merck plans to use $675 million in funds to fight accusations the company’s Vioxx painkiller led to cardiac arrests.
- GM is marketing the H3 scaled-down version of the Hummer to women in a bid to reverse a 17% decline in sales of the gas-guzzling model.
- The NYSE’s purchase of Archipelago Holdings and its decision to transform itself into a publicly traded company, will put the Nasdaq Stock Market under pressure.
- A group of companies led by Nasdaq Stock Market is likely to announce today that it will buy Instinet Group, an electronic trader and brokerage firm valued at about $1.8 billion.
- The Fed’s Open Market Committee’s actions during the past year have affected the supply of money and countered the threat of inflation, former Fed board member Wayne Angell wrote.

NY Daily News:
- Spending on construction of housing, offices and public works in NYC may reach a record $19.9 billion this year.

Tradewinds:
- Transpacific container line operators got lower rate increases than planned from the biggest cargo owners such as Wal-Mart in this year’s rate negotiations.

NY Post:
- New York City will become the first city to make the so-called morning after pill available to women on prescription.

USA Today:
- Smuggling of the drug Ecstasy has declined in the wake of tighter airport security and better scrutiny of passengers after the Sept. 11, 2001, terrorist attacks.

AP:
- Americans are driving less, rearranging vacations and cutting other expenses as the price of gas advances, citing a poll by Ipsos-Public Affairs.

Sueddeutsche Zeitung:
- German Chancellor Gerhard Schroeder’s government will cut its 2005 growth forecast for Europe’s largest economy to between 1% and 1.2%.

Economic Releases

None of note

Links of Interest

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