Stocks Quietly Mixed Mid-day, Continuing Recent Consolidation

Indices
S&P 500 1,219.51 -.18%
DJIA 10,541.55 -.26%
NASDAQ 2,139.17 -.10%
Russell 2000 655.72 -.27%
DJ Wilshire 5000 12,151.91 -.18%
S&P Barra Growth 583.87 -.12%
S&P Barra Value 631.15 -.27%
Morgan Stanley Consumer 583.99 -.15%
Morgan Stanley Cyclical 737.86 -.72%
Morgan Stanley Technology 496.92 +.02%
Transports 3,674.41 -1.33%
Utilities 400.05 +.89%
Put/Call 1.09 +21.11%
NYSE Arms 1.20 +4.32%
Volatility(VIX) 13.55 +.97%
ISE Sentiment 219.00 +37.74%
US Dollar 88.06 -.10%
CRB 316.97 -.05%

Futures Spot Prices
Crude Oil 65.55 -.15%
Unleaded Gasoline 184.10 -1.11%
Natural Gas 9.63 +.69%
Heating Oil 181.90 +.41%
Gold 444.30 +.29%
Base Metals 130.96 -.44%
Copper 164.30 +.12%
10-year US Treasury Yield 4.17% -.78%

Leading Sectors
Networking +.66%
Utilities +.66%
Tobacco +.60%

Lagging Sectors
Homebuilders -1.27%
Oil Tankers -1.50%
Steel -2.60%

BOTTOM LINE: The Portfolio is higher mid-day on gains in my Medical and Semiconductor longs and Oil Tanker shorts. I added OS short this morning and added to existing longs, thus leaving the Portfolio 50% net long. I am using a $23 stop-loss on this position. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is light. Measures of investor anxiety are mostly higher. Today’s overall market action is slightly negative. The Johnson Redbook same-store sales index rose 3.90% year over year last week vs. a 3.8% rise the prior week. This week's gain is up from a 1.5% increase in late April and the 16th week in a row the index has exceeded 3%. I see very little evidence of any significant consumer weakness. Last month's "disappointing" retail reports were mostly a function of elevated expectations, near-record home sales, soaring auto sales and very hot weather. I am still looking to purchase shares of select retailers over the next few weeks for what I believe will be a strong year end. I expect US stocks to trade mixed-to-higher from current levels into the close on modestly lower interest rates and energy prices.

Today's Headlines

Bloomberg:
- Google may add a free service as early as this week that lets people send instant messages and make telephone calls through their computers.
- Boston Scientific shipped products that weren’t cleared for sale, including defective Taxus stents, US regulators said in a warning letter.
- Intel today will unveil a redesigned version of its Pentium desktop processors.
- Wal-Mart debuted ads in Vogue magazine to add more upscale shoppers and improve its image.
- US Treasuries are rising, pushing 10-year note yields to the lowest in a month.

Wall Street Journal:
- Americans are putting more of their pension money into mutual funds than ever before even after a scandal two years ago, citing data from the Investment Company Institute.
- The US is the only major industrialized nation with a birth rate high enough to keep the average age of its workforce stable, citing a study by Population Reference Bureau.
- The US is making progress with its goal of establishing the Middle East as a free-trade area and developing economies in the region to help prevent extremism.
- AS identity theft increases, individuals in the US are to get free copies of their credit reports annually from the three major credit-reporting agencies.
- Pfizer, Bristol-Myers Squibb and Johnson & Johnson are among companies testing drugs to treat alcoholism, as part of a trend that might change the way the condition is remedied.
- NY’s Metropolitan Transportation Authority has called for proposals to provide wireless service on 277 underground subway station platforms.
- Merck has “no intention” of reaching a global settlement of the thousands of lawsuits that claim damage from its Vioxx painkiller.

NY Times:
- US retail sales for back-to-school season may rise as much as 18% from a year earlier to $34 billion as students buy more denim items and electronic goods.
- US video stores such as those owned by Blockbuster and Movie Gallery can survive with smarter management, cost-cutting and more online offerings.

AP:
- Verizon Communications and Yahoo! will join to offer high-speed Internet service for $14.95 a month to woo cable and dial-up Web users.

Existing Home Sales Slow Modestly

- Existing Home Sales for July fell to 7.16M versus estimates of 7.25M and 7.35M in June.

BOTTOM LINE: US sales of previously owned homes slowed in July, leaving the rate of purchases at the third-highest on record as low interest rates and growing employment supported demand, Bloomberg reported. The median price of an existing home rose .5% to $218,000 in July. The median price is 14% above year-ago levels. Re-sales fell 7.5% in the West, 3.3% in the Northeast and 1.8% in the Midwest. The South was unchanged. The supply of homes for sale increased to 4.6 months’ worth, the highest since November 2003, from 4.4 months’ worth in June. I continue to believe the rate of home price appreciation will slow over the coming months, not plunge.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Newmont Mining, Phelps Dodge and Barrick Gold, faced with surging energy costs, are building their own power plants, locking in fuel prices and using bigger trucks to reduce expenses.

Financial Times:
- CSFB may win an advisory role in China Construction Bank’s $5 billion IPO.
- KPMG LLP may announce a settlement with the US authorizing authorities over past sales of tax avoidance schemes as soon as this week.

Automotive News:
- The US will announce new rules tomorrow to boost fuel economy requirements for sport-utility vehicles, pickup trucks and minivans by as much as 6%.

Telegraph:
- Former UK Chancellor of the Exchequer Ken Clarke said the euro has been “a failure” and there had never “been a time when the British could have joined with complete security and confidence.”

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on EBAY, AMLN and PFE.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated +.05%.
NASDAQ 100 indicated +.09%.

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
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
TTC/.69
WSM/.26
WIND/.06

Upcoming Splits
KIM 2-for-1

Economic Releases
10:00 am EST
- Existing Home Sales for July are estimated to fall to 7.25M versus 7.33M in June.

BOTTOM LINE: Asian indices are mixed, as gains in Japan are being offset by losses in Chinese shares. I expect US equities to open mixed as energy fears offset economic optimism. The Portfolio is 50% net long heading into the day.

Stocks Finish Slightly Higher as Oil Reverses

Indices
S&P 500 1,221.73 +.17%
DJIA 10,569.89 +.10%
NASDAQ 2,141.41 +.27%
Russell 2000 657.47 +.76%
DJ Wilshire 5000 12,173.35 +.21%
S&P Barra Growth 584.58 +.14%
S&P Barra Value 632.86 +.19%
Morgan Stanley Consumer 584.89 +.01%
Morgan Stanley Cyclical 743.27 +.30%
Morgan Stanley Technology 496.80 -.08%
Transports 3,725.32 +.18%
Utilities 396.67 +.55%
Put/Call .90 -13.46%
NYSE Arms 1.15 -.77%
Volatility(VIX) 13.42 unch.
ISE Sentiment 159.00 +32.50%
US Dollar 88.14 -.52%
CRB 317.12 +.62%

Futures Spot Prices
Crude Oil 65.40 -.38%
Unleaded Gasoline 185.60 -.30%
Natural Gas 9.56 unch.
Heating Oil 180.50 -.36%
Gold 442.80 -.05%
Base Metals 131.54 +1.95%
Copper 164.10 unch.
10-year US Treasury Yield 4.21% +.05%

Leading Sectors
Steel +2.18%
Semis +1.18%
Wireless +1.10%

Lagging Sectors
Tobacco -.69%
Internet -.75%
Oil Service -.80%

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
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Intel plans to use Research in Motion’s battery technology.
- Iraq’s lawmakers deferred for three days a final vote on a draft constitution, to narrow differences among Sunnis, Kurds and Shiites.
- Harrah’s Entertainment agreed to acquire the Imperial Palace Hotel & Casino on the Las Vegas Strip for $370 million to give it space to grow in the No. 1 gambling market.
- General Electric said its partnership with Rolls-Royce Group Plc won a $2.47 billion contract extension from the US Navy to develop an engine for the Joint Strike Fighter.

Australian Newspaper:
- Australian Treasurer Costello urged radical Muslim clerics to leave the country if they don’t share its values of democracy, a secular society and equality for women.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Medical longs offset losses in my Internet longs. I did not trade in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was modestly positive today as the advance/decline line finished 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 slightly negative. Overall, it was a pretty uninspiring, choppy day. I expect this to remain the case for several more weeks. However, the odds are increasing of a temporary spike in fear, which should provide the catalyst for a very positive fourth quarter. This possible temporary anxiety spike will likely be related to terrorism or oil, not earnings or economic data.