Today's Headlines

Bloomberg:
- US lawmakers may finish an agreement on a $286.5 billion highway bill today, ending a 22-month impasse on legislation that distributes gasoline taxes to states for road construction, House and Senate aides said.

Wall Street Journal:
- The US economy is in a stronger position than a few years ago, because of the economic policies pursued by President Bush, said Ben Bernanke, Alan Greenspan’s likely replacement.
- Investors in June withdrew about $2.3 billion from Standard & Poor’s Depository Receipts.
- Comcast may mount a challenge to Walt Disney’s ESPN.
- Coca-Cola, PepsiCo and other soft-drink companies may voluntarily restrict the sale of their beverages in schools.
- Boeing is doing such a good business that the company helped to reduce the US trade deficit by 6%, mostly on exports of aircraft and aircraft parts.

NY Times:
- The New York City Taxi and Limousine Commission yesterday said it supported a plan to introduce six hybrid taxicabs as early as this fall.

Reuters:
- China’s central bank “intervened” in the final minutes of trading today to push its currency to the lowest since the country revalued the yuan on July 21. The People’s Bank of China was demonstrating to investors that it doesn’t want the currency to rise further for now.

Durable Goods Orders Strong, New Home Sales Hit Another Record, Distillate Inventories Rise Again

- Durable Goods Orders for June rose 1.4% versus estimates of a 1.0% decline and an upwardly revised 6.4% increase in May.
- Durables Ex Transportation for June rose 2.6% versus estimates of a 1.0% gain and an upwardly revised .9% increase in May.
- New Home Sales for June rose to 1374K versus estimates of 1300K and 1321K in May.
- The EIA reported that crude oil inventories fell 2.25 million barrels vs. estimates of a 2.75 million barrel decline. Gasoline inventories fell 2.13 million barrels vs. estimates of a 700K barrel fall. Distillate inventories rose 3.14 million barrels vs. estimates of a 2.0 million barrel rise.

BOTTOM LINE: US durable goods orders rose in June after soaring the most in three years the prior month. Factories received more orders for defense equipment, computers and machinery. Orders for non-defense capital goods excluding aircraft, a proxy for future business investment, rose a brisk 3.8% last month, Bloomberg reported. This bodes well for future gauges of manufacturing activity.

Americans bought new homes at a historically strong pace last month as low mortgage rates and job growth made housing affordable. The median price fell 5.5% to $214,000, the lowest since September, reflecting a greater proportion of sales of less expensive homes. The biggest gains were for houses in the $150,000 to $199,999 range and declines for more expensive models. Sales rose 5.1% in the South, 2.8% in the West, 2.1% in the Midwest and 7.2% in the Northeast. The supply of homes for sale at the current pace fell to 4 months in June from 4.1 months the prior month. It is a positive to see more participation by families of lower income levels in the strong housing market.

Crude oil is not-reacting to relatively bearish inventory numbers for the commodity.

Links of Interest

Market Snapshot
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Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
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Option Dragon
Real-time Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Hynix Semiconductor, the world's second-largest maker of memory chips, posted a smaller-than-expected drop in profit in the second quarter and forecast prices will rebound.

Wall Street Journal:
- A group of Hollywood movie studios have agreed on technical standards related to making and showing digital films after more than three years of discussions.

NY Times:
- New York Governor George Pataki, a Republican, told aides last night at the governor's mansion that he won't run for a fourth term.

London-based Times:
- Terror suspects who failed to detonate devices on the London transport system on July 21 may be in possession of more explosives and may attempt another assault, citing Scotland Yard sources.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ENH, GE, DHR, UDR, LRY, X and HMA.
- Reiterated Underperform on CR, SLG and AKS.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated unch.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
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Macro Calls
Rasmussen Consumer/Investor Daily Indices
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Earnings of Note
Company/EPS Estimate
ACL/.94
AGN/.75
AHC/2.95
BUD/.81
BOL/.79
BA/.61
CHIR/.16
CL/.67
CA/.21
COP/2.02
DO/.29
ESRX/.57
HCA/.76
MCK/.53
NEM/.17
PHM/2.09
RCL/.57
FON/.36
SBUX/.30
TK/1.03
ZMH/.75

Upcoming Splits
None of note

Economic Releases
8:30 am EST
- Durable Goods Orders for June are estimated to fall 1.0% versus a 5.5% increase in May.
- Durables Ex Transportation for June are estimated to rise 1.0% versus a .3% decline in May.

10:00 am EST
- New Home Sales for June are estimated to rise to 1300K versus 1298K in May.

2:00 pm EST
- Fed's Beige Book

BOTTOM LINE: Asian indices are mostly higher on earnings optimism in the region. I expect US equities to open mixed and move modestly higher later in the day. The Portfolio is 75% net long heading into the day.

Stocks Continue Healthy Consolidation, Finish Mixed

Indices
S&P 500 1,231.16 +.17%
DJIA 10,579.77 -.16%
NASDAQ 2,175.99 +.43%
Russell 2000 674.58 +.54%
DJ Wilshire 5000 12,285.63 +.22%
S&P Barra Growth 590.72 +.17%
S&P Barra Value 636.04 +.18%
Morgan Stanley Consumer 584.63 +.04%
Morgan Stanley Cyclical 756.93 +.01%
Morgan Stanley Technology 499.00 +.56%
Transports 3,741.33 +.25%
Utilities 392.24 +.06%
Put/Call .84 +6.33%
NYSE Arms 1.02 -14.18%
Volatility(VIX) 10.99 -.99%
ISE Sentiment 181.00 +7.10%
US Dollar 90.05 +.54%
CRB 306.13 +.28%

Futures Spot Prices
Crude Oil 59.07 +.12%
Unleaded Gasoline 169.58 -.62%
Natural Gas 7.43 +2.13%
Heating Oil 160.37 -.18%
Gold 423.40 -.59%
Base Metals 124.16 -.61%
Copper 160.50 -.80%
10-year US Treasury Yield 4.22 -.46%

Leading Sectors
Steel +2.36%
Networking +2.34%
Airlines +2.13%

Lagging Sectors
Computer Hardware -1.44%
Gold & Silver -1.45%
Oil Tankers -2.82%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
GuruFocus.com
PM Market Call
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Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on PSSI, X and BAC.
- Reiterated Underperform on ELNK and GM.

Afternoon/Evening Headlines
Bloomberg:
- Take Two Interactive Software said the FTC is examining the company’s advertising for its No. 1-selling video game, “Grand Theft Auto: San Andreas,” which was found last week to have hidden sexual scenes.

AP:
- Hungry North Koreans are scavenging for ferns, acorns, grass and seaweed to eat as their government builds nuclear weapons.

Financial Times Deutshland:
- SAP AG may simplify it pricing system by reducing the number of parameters that determine the price of SAP programs.

Australian:
- Australia, the US, China, India and South Korea formed a regional accord on greenhouse emissions to replace the Kyoto climate protocol.

BOTTOM LINE: The Portfolio finished higher today on gains in my Semiconductor, Networking and Retail longs and Oil Tanker shorts. I did not trade in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market was slightly positive today as the advance/decline line finished higher, sector performance was mixed and volume was about average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was modestly positive. Even though the S&P 500 hasn't budged for about 10 days, the underlying tone of the market remains positive. I believe another upwards push will occur over the next few weeks.

Stocks Quietly Higher Mid-day, Led by Tech

Indices
S&P 500 1,233.07 +.33%
DJIA 10,608.50 +.11%
NASDAQ 2,178.10 +.53%
Russell 2000 675.29 +.64%
DJ Wilshire 5000 12,300.32 +.34%
S&P Barra Growth 591.82 +.36%
S&P Barra Value 636.54 +.26%
Morgan Stanley Consumer 585.79 +.24%
Morgan Stanley Cyclical 757.22 +.05%
Morgan Stanley Technology 499.30 +.61%
Transports 3,745.22 +.35%
Utilities 393.32 +.33%
Put/Call .85 +7.59%
NYSE Arms .88 -26.33%
Volatility(VIX) 11.02 -.63%
ISE Sentiment 155.00 -8.28%
US Dollar 89.98 +.46%
CRB 306.42 +.37%

Futures Spot Prices
Crude Oil 59.65 +1.10%
Unleaded Gasoline 169.80 -.49%
Natural Gas 7.43 +2.0%
Heating Oil 163.00 +1.46%
Gold 423.50 -.56%
Base Metals 124.16 -.61%
Copper 160.60 -.74%
10-year US Treasury Yield 4.23% -.23%

Leading Sectors
Steel +2.74%
Networking +2.37%
Airlines +2.02%

Lagging Sectors
Gold & Silver -1.30%
Computer Hardware -1.30%
Oil Tankers -2.13%

BOTTOM LINE: The Portfolio is higher mid-day on gains in my Semiconductor, Networking and Retail longs and Oil Tanker shorts. I added to my GILD long and OSG short this morning, thus leaving the Portfolio 75% net long. The tone of the market is modestly positive as the advance/decline line is higher, most sectors are higher and volume is below average. Measures of investor anxiety are mixed. Today’s overall market action is positive considering the rise in energy prices and disappointing consumer confidence reading. The Johnson Redbook Same-store-sales Index rose 4.3% year-over-year last week vs. a 4.2% rise the prior week. The last time weekly sales exceeded 4.0% for four consecutive weeks was June 2004. This week's gain is also up from a 1.5% increase in late April and the 12th week in a row the index has exceeded 3%. I expect stocks to trade mixed-to-higher into the afternoon on short-covering.