BETWEEN THE HEDGES

Tuesday, September 27, 2005

Wednesday Watch

Posted by Gary .....at 9:38 PM

Late-Night Headlines
Bloomberg:
- Mississippi Governor Haley Barbour proposed moving casinos moored on the Mississippi River or along the state’s coast inland, in response to Hurricane Katrina damage.

Financial Times:
- SanDisk Corp., the world’s biggest flash-memory card maker, and music company EMI Group Plc have developed a music storage card that may replace CDs and DVDs.
- Deutsche Post AG’s DHL package-delivery unit may plan to start a chain of retail outlets in the US.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on BC and PAYX.
- Reiterated Underperform on HCC and MKL.

Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated +.02%.
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
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
MKC/.34
RHAT/.07
RECN/.28

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Durable Goods Orders for August are estimated to rise .7% versus a 4.9% decline in July.
- Durables Ex Transportation for August are estimated to rise 1.0% versus a 3.2% decline in July.

10:30 am EST
- Platt's estimates weekly crude inventories fell 2.7 million barrels, gasoline inventories fell 3.25 million barrels, distillate inventories declined 2.25 million barrels and refinery utilization dropped 9.5%.

BOTTOM LINE: Asian indices are higher, boosted by Financial companies in the region after S&P raised their debt ratings. I expect US equities to open mixed. However, stocks may rally later in the afternoon on short-covering ahead of quarter’s end. The Portfolio is 75% net long heading into the day.

Stocks Finish Mixed in Choppy Trading

Posted by Gary .....at 6:43 PM

Indices
S&P 500 1,215.66 unch.
DJIA 10,456.21 +.12%
NASDAQ 2,116.42 -.24%
Russell 2000 659.17 -.16%
DJ Wilshire 5000 12,139.58 -.02%
S&P Barra Growth 581.57 +.15%
S&P Barra Value 629.88 -.13%
Morgan Stanley Consumer 579.07 +.42%
Morgan Stanley Cyclical 721.72 -.01%
Morgan Stanley Technology 494.84 -.47%
Transports 3,617.49 +.05%
Utilities 424.65 +.41%
Put/Call .79 -35.77%
NYSE Arms .94 -5.09%
Volatility(VIX) 12.76 -2.15%
ISE Sentiment 200.00 +21.95%
US Dollar 89.60 +.55%
CRB 327.03 +.03%

Futures Spot Prices
Crude Oil 64.90 -.26%
Unleaded Gasoline 217.75 +.51%
Natural Gas 12.67 +.11%
Heating Oil 206.90 +.02%
Gold 466.40 +.04%
Base Metals 130.67 -.39%
Copper 172.60 -.12%
10-year US Treasury Yield 4.28% -.09%

Leading Sectors
HMOs +1.07%
Foods +.84%
Defense +.68%

Lagging Sectors
Computer Hardware -1.12%
Semis -1.23%
Gold & Silver -1.62%

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:
- Reiterated Underperform on SIRI.

Afternoon/Evening Headlines
Bloomberg:
- NBC’s television audience shrank in the first week of the season after new programs such as Martha Stewart’s reality show failed to stem viewer defections.
- Michael Brown, the former head of FEMA, defended the federal government’s response to Hurricane Katrina before a congressional committee and called the state and local governments in Louisiana “dysfunctional.”
- Pfizer said US regulators approved its cholesterol-lowering drug Lipitor to reduce risk of stroke and heart attack in patients with Type 2 diabetes.
- GM faces a “50-50” chance of a strike by the Canadian Auto Workers at midnight as the two sides negotiate.

BOTTOM LINE: The Portfolio finished slightly unchanged today as gains in my Medical longs offset losses in my Semiconductor longs. I covered my IWM and QQQQ shorts in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market was slightly negative today as the advance/decline line finished modestly lower, most sectors were lower and volume was slightly below average. Measures of investor anxiety were lower into the close. Overall, today’s market action was slightly positive. Treasury-note yield reversed on Greenspan's comments and finished at session lows of 4.28%. I still have part of my iShares Lehman 20+ Year Treasury Bond (TLT) long and I am considering adding back to it.

Stocks Mixed Mid-day as Lower Oil Prices Offset Weaker Economic Data and Hawkish Fed Comments

Posted by Gary .....at 2:42 PM

Indices
S&P 500 1,215.09 -.04%
DJIA 10,452.94 +.09%
NASDAQ 2,116.70 -.22%
Russell 2000 658.09 -.32%
DJ Wilshire 5000 12,132.38 -.08%
S&P Barra Growth 581.10 +.07%
S&P Barra Value 629.81 -.15%
Morgan Stanley Consumer 578.66 +.35%
Morgan Stanley Cyclical 721.38 -.06%
Morgan Stanley Technology 495.08 -.42%
Transports 3,603.20 -.34%
Utilities 424.45 +.31%
Put/Call .81 -34.15%
NYSE Arms .98 -.45%
Volatility(VIX) 12.88 -1.30%
ISE Sentiment 230.00 +40.24%
US Dollar 89.62 +.57%
CRB 326.34 -.18%

Futures Spot Prices
Crude Oil 64.75 -1.55%
Unleaded Gasoline 216.00 +1.45%
Natural Gas 12.51 +.56%
Heating Oil 204.50 -.78%
Gold 465.90 -.77%
Base Metals 130.67 -.39%
Copper 172.30 -.78%
10-year US Treasury Yield 4.30% +.41%

Leading Sectors %
HMOs +1.18%
Foods +.76%
Defense +.55%

Lagging Sectors
Coal -1.0%
Semis -1.10%
Gold & Silver -2.19%

BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Medical longs are offsetting losses in my Semiconductor longs. I added back QQQQ and IWM shorts this morning, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are lower and volume is below average. Measures of investor anxiety are lower. Today’s overall market action is neutral given the decline in energy prices and worse-than-expected economic data. The Johnson Redbook same-store sales index rose 3.1% year-over-year last week vs. a 3.2% rise the prior week. This week's gain is up from a 1.5% increase in late April and the 21th week in a row the index has risen 3% or more. The Morgan Stanley Retail Index has stabilized over the last few days, but is still below its 200-day moving-average. Investors continue to anticipate a substantial drop-off in consumer spending that has yet to develop. I expect US stocks to trade mixed-to-higher from current levels into the close on short-covering.

Today's Headlines

Posted by Gary .....at 1:13 PM

Bloomberg:
- Golfers will be allowed to hone the accuracy of their shots by using laser-guided distance-measuring devices in competitions next year.
- Byron Wien, Morgan Stanley’s senior stock market strategist, is leaving to join hedge fund Pequot Capital Management.
- Oil refineries near Port Arthur, Texas, and Lake Charles, Louisiana, hit head-on by Hurricane Rita may be shut for a month, heightening the threat of shortages in an industry that has yet to recover from Katrina.
- Google is charging advertisers more for the ability to maintain their ads in prominent positions.
- The US dollar is rising to a two-month high against the euro and yen after Fed Reserve Bank of Kansas City President Hoenig added to speculation the central bank will keep raising interest rates.
- US Treasuries were little changed before a speech by Alan Greenspan in which the Federal Reserve chairman may reiterate that the economy is resilient and inflation remains a threat.
- Intel won its first ever order for a new mobile-phone processor in a contract to sell chips for Research in Motion’s Blackberry devices.

Wall Street Journal:
- Home Depot, Time Warner, Wal-Mart Stores and other big-name US stocks may be in the “bargain bin,” or trading at earnings multiples lower than they have in several years.
- DreamWorks SKG ended talks over a sale to General Electric’s NBC Universal studios.
- Wal-Mart has begun selling digital-photo prints for 15 cents at its retail stores and 13 cents at its members-only Sam’s Club stores.

NY Times:
- WellPoint, the largest US health-insurance provider, is close to an agreement to buy WellChoice, the biggest NY state health insurer, for about $6.5 billion.
- Genentech’s Avastin, which is approved to treat colorectal cancer, is being used by many specialists to treat age-related macular degeneration.

NY Post:
- The NYSE got a bid from private equity groups Bain Capital LLC and Blackstone Group for 30% of the exchange in late June.

Rocky Mountain News:
- EchoStar Communications will begin selling portable video players next month.

Financial Times Deutschland:
- Royal Philips Electronics NV, Europe’s biggest maker of televisions, expects the price decline for flat-panel televisions to end because of higher demand.

New Home Sales Fall, Consumer Confidence Plunges on Katrina Worries

Posted by Gary .....at 11:42 AM

- New Home Sales for August fell to 1237K versus estimates of 1350K and 1373K in July.
- Consumer Confidence for September fell to 86.6 versus estimates of 95.0 and a reading of 105.5 in August.

BOTTOM LINE: US new home sales last month fell by the most since November, Bloomberg reported. The average price of a new home rose last month to $220,300 from $215,000 the prior month. Today’s report puts new home sales for the year on pace to beat last year’s all-time record. The supply of new homes for sale at the current pace rose to 4.7 months from 4.1 months in July. New Home Sales in August declined 2.2% in the South, 18% in the West, 11% in the Midwest and 22% in the Northeast. New home sales will fall again next month as the full brunt of Katrina and Rita is felt.

Consumer confidence in the US dropped by the most in 15 years in September after Hurricane Katrina devastated the Gulf Coast and pushed gas prices to a record, Bloomberg said. The percentage of consumers that saw jobs as hard to get rose to 25.4% from 23.1%. The expectations component of the index fell to 71.7 from 93.3. Consumer Confidence will likely bounce back sharply in the fourth quarter.