Friday Watch

Late-Night Headlines
Bloomberg:
- The US dollar is poised for a fifth weekly advance against the yen, the longest winning streak since May last year.
- Samsung Electronics forecast prices for liquid-crystal displays and mobile phones will rise as demand recovers after four quarters of declining profit.
- Crude oil in NY is falling a second day on expectations increased refinery output will help ensure adequate supplies of gasoline and heating fuel.

Nihon Keizai:
- Toyota Motor will release a gasoline-electric hybrid version of its new Lexus LS in 2007.

Standard:
- Playboy Enterprises is in talks with partners to develop casinos in Macau and London, citing Chairwoman and CEO Hefner.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on BSX.

Night Trading
Asian Indices are -.50% to -.25% on average.
S&P 500 indicated +.14%.
NASDAQ 100 indicated +.16%.

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
NDN/.11
PLB/.05
ACI/.29
BBT/.77
BSG/.18
BSX/.44
FDC/.60
GE/.44
HIB/.49
JBHT/.33
KRI/.66
OSI/.47
RFX/.23
SKS/-.20
UNH/.63

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Consumer Price Index for September is estimated to rise .9% versus a .5% increase in August.
- The CPI Ex Food & Energy for September is estimated to rise .2% versus a .1% increase in August.
- Advance Retail Sales for September are estimated to rise .5% versus a 2.1% decline in August.
- Retail Sales Less Autos for September are estimated to rise .8% versus a 1.0% increase in August.

9:15 am EST
- Industrial Production for September is estimated to decline .4% versus a .1% increase in August.
- Capacity Utilization for September is estimated to fall to 79.4% versus 79.8% in August.

9:45 am EST
- Preliminary Univ. of Mich. Consumer Confidence for October is estimated to rise to 80.0 versus a reading of 76.9 in September.

10:00 am EST
- Business Inventories for August are estimated to rise .2% versus a .5% decline in July.

2:30 pm EST
- The Monthly Budget Surplus for September is estimated to rise to $36.0B versus $24.6B in August.

BOTTOM LINE: Asian indices are mostly lower, spurred by losses in commodity producing companies in the region. I expect US equities to open mixed-to-lower and to rally modestly later in the day. The Portfolio is 75% net long heading into the day.

Stocks Finish Near Session Highs, Led by Tech

Indices
S&P 500 1,176.84 -.07%
DJIA 10,216.59 unch.
NASDAQ 2,047.22 +.48%
Russell 2000 623.28 +.28%
DJ Wilshire 5000 11,711.87 -.10%
S&P Barra Growth 567.12 +.13%
S&P Barra Value 605.53 -.26%
Morgan Stanley Consumer 574.85 +.17%
Morgan Stanley Cyclical 684.92 +.04%
Morgan Stanley Technology 486.80 +.46%
Transports 3,589.50 -1.03%
Utilities 389.11 -2.78%
Put/Call 1.30 unch.
NYSE Arms .73 -9.17%
Volatility(VIX) 16.47 +1.54%
ISE Sentiment 149.0 unch.
US Dollar 89.81 +.20%
CRB 328.92 -.96%

Futures Spot Prices
Crude Oil 62.93 -.24%
Unleaded Gasoline 175.00 -.45%
Natural Gas 13.06 -.29%
Heating Oil 198.85 -.42%
Gold 474.40 +.13%
Base Metals 132.03 -1.59%
Copper 177.00 +.28%
10-year US Treasury Yield 4.46% +.63%

Leading Sectors
Computer Hardware +2.22%
Semis +2.14%
Biotech +1.80%

Lagging Sectors
Energy -2.70%
Utilities -2.78%
Coal -3.12%

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 Outperform on COH.

Afternoon/Evening Headlines
Bloomberg:
- Samsung Electronics agreed to pay $300 million, the second largest criminal antitrust fine in US history, to settle charges it took part in a global scheme to fix the price of computer chips used in PCs, mobile phones and other electronic devices.
- Emerging-market stocks, bonds and currencies declined on expectations the Federal Reserve will raise the US benchmark lending rate through next year to curb inflation, sapping demand for riskier securities.
- Refco, reeling from the disclosure that its CEO hid unpaid debts, today blocked clients from withdrawing funds from one of its units that doesn’t have enough liquidity to keep doing business.
- Crude oil fell and gasoline plunged to a two-month low after an Energy Department report showed that US consumption of the motor fuel fell as refiners increased output.
- New hedge funds quadrupled in Asia this year as US firms, led by Citadel Investment Group LLC and Tremont Capital Management, took a bigger share of the region’s $85 billion market.
- GM and the UAW are “making progress” on the company’s request for contract changes to lower its $5.6 billion annual expense for health care, UAW President Ronal Gettelfinger said.
- Occidental Petroleum will buy Vintage Petroleum for $3.8 billion.

Reuters:
- The Federal Reserve is on alert for an acceleration of inflation and will take the steps that are necessary to ensure price stability, Federal Reserve Bank of Kansan City President Hoenig said. He also said core inflation around 2.2% is not alarming and that the steps needed to ensure price stability are still open to analysis.

Financial Times:
- Excessive patent and copyright protections are suppressing scientific investigation and artistic creativity, citing a group working for the Royal Society of Arts in London.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Computer longs, Semiconductor longs, Airline longs, Steel shorts and Energy-related 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 almost unchanged, most sectors rose and volume was about average. Measures of investor anxiety were mixed into the close. Overall, today’s market action was encouraging. It is a big positive to see the major averages hold up even with the losses in the commodity stocks. I want to see investors’ reaction to tomorrow’s economic data before getting more aggressive on the long side.

Stocks Higher, Led by Tech, on Further Declines in Energy Prices

Indices
S&P 500 1,176.72 -.07%
DJIA 10,215.63 unch.
NASDAQ 2,048.12 +.52%
Russell 2000 622.88 +.22%
DJ Wilshire 5000 11,718.82 -.04%
S&P Barra Growth 568.18 +.32%
S&P Barra Value 605.40 -.26%
Morgan Stanley Consumer 575.51 +.29%
Morgan Stanley Cyclical 684.11 -.06%
Morgan Stanley Technology 487.70 +.65%
Transports 3,588.02 -1.08%
Utilities 390.35 -2.47%
Put/Call 1.42 +9.23%
NYSE Arms .79 +.25%
Volatility(VIX) 16.43 +1.29%
ISE Sentiment 142.0 -5.33%
US Dollar 89.94 +.36%
CRB 328.98 -.94%

Futures Spot Prices
Crude Oil 63.15 -1.59%
Unleaded Gasoline 175.50 -3.97%
Natural Gas 13.10 -2.91%
Heating Oil 199.75 -.78%
Gold 473.30 -.69%
Base Metals 132.03 -1.59%
Copper 176.45 -1.62%
10-year US Treasury Yield 4.47% +.77%

Leading Sectors %
Computer Hardware +2.17%
Semis +1.89%
Biotech +1.71%

Lagging Sectors
Energy -2.20%
Oil Tankers -2.85%
Coal -3.30%

BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Computer longs, Airline longs, Semi longs, Steel shorts and Energy-related shorts. I covered some of my IWM and QQQQ shorts this morning, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is around even, most sectors are higher and volume is above average. Measures of investor anxiety are higher. Today’s overall market action is positive given the steep losses in commodity stocks. The AAII % Bulls fell to 38.96% this week from 50.0% the prior week; this reading is now below average levels. Likewise, the % Bears rose to 48.05% from 27.42% the prior week; this is now at elevated levels. I expect sentiment to weaken further next week which is a big positive for equities over the intermediate-term. I expect US stocks to trade modestly higher from current levels into the close on short-covering.

Trade Deficit Widens and Import Prices Rise on Hurricane-related Energy Spike, Jobless Claims Fall Slightly

- The Trade Deficit for August widened to -$59.0B versus estimates of -$59.5B and -$58.0B in July.
- The Import Price Index for September rose 2.3% versus estimates of a 1.0% increase and a 1.2% rise in August.
- Initial Jobless Claims for last week fell to 389K versus estimates of 360K and 391K the prior week.
- Continuing Claims for last week fell to 2873K versus estimates of 2939K and 2878K prior.

BOTTOM LINE: The US trade deficit widened to $59 billion in August as record crude oil prices caused imports to rise, Bloomberg reported. Both imports and exports were reached all-time highs during the month. Excluding petroleum, the US trade deficit narrowed to $38.4 billion, the smallest since March. US demand for foreign goods is a reflection of an economy that is growing faster than most of its biggest trading partners. The US economy is projected to grow 3.5% this year, almost 3 times faster than the 1.3 percent gain estimated for Europe. Japan’s economy is expected to growth 2%. The US dollar is breaking out today as overseas investors anticipate improving US deficits as energy prices decline.
Prices of goods imported into the US posted their biggest gain since 1990 in September, led by rising oil and natural gas prices after two hurricanes struck the US Gulf Coast, Bloomberg said. I expect Import Price increases to decelerate and eventually begin falling over the intermediate-term.
The number of Americans making first-time claims for jobless benefits fell less than expected last week as unemployment offices received a new wave of filings from workers displaced by the Gulf Coast hurricanes, Bloomberg reported. The four-week moving-average of claims fell to 395,750 from 404,500 the prior week. The insured employment rate, which tracks the US unemployment rate, fell to 2.2% from 2.3%. Initial jobless claims will likely continue trending lower through year-end as workers displaced by the hurricanes find work and rebuilding begins.

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

Thursday Watch

Late-Night Headlines
Bloomberg:
- Honda Motor’s Insight and Toyota Motor’s Prius, the first two gasoline-electric cars, again led a US government list of the most fuel-efficient 2006 vehicles, ahead of Volkswagen AG diesel cars.
- Taiwan Vice Premier Wu Rong-I said he won’t see reunification with China in his lifetime, unless China uses force, a situation he said is unlikely.

Wall Street Journal:
- A unit of Citigroup plans to introduce a credit card next week that will have no late fees for customers who use the card at least once a month.

AP:
- Senator Kennedy, Democrat from Massachusetts, said he would support Senator John Kerry over Senator Hillary Clinton if both seek the Democratic presidential nomination in 2008.
- AMR’s American Eagle said rising jet fuel costs forced the carrier to scrap 558 flights this month.

Financial Times:
- Companies are paying the biggest proportion of taxes in industrialized countries since the 1960s.
- The European Union’s high level of unemployment is proof that Europe’s “old” economic system “is not working,” citing UK Chancellor of the Exchequer Gordon Brown.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on ALL and MWV.

Night Trading
Asian Indices are -1.25% to -.25% on average.
S&P 500 indicated +.16%.
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
FCS/-.01
PII/1.11
PGR/1.59
TRB/.48

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Trade Deficit for August is estimated to widen to -$59.5B versus -$57.9B in July.
- The Import Price Index for September is estimated to rise 1.0% versus a 1.3% increase in August.
- Initial Jobless Claims are estimated to fall to 360K versus 390K the prior week.
- Continuing Claims are estimated to rise to 2947K versus 2905K prior.

BOTTOM LINE: Asian indices are lower, spurred by losses in commodity producing companies in the region. I expect US equities to open mixed and to rally modestly later in the day. The Portfolio is 25% net long heading into the day.