Tuesday Watch

Late-Night Headlines
Bloomberg:
- Billionaire investor Carl Icahn said he owns 9.3% of Fairmont Hotels & Resorts and wants the luxury-hotel operator to boost returns to shareholders by selling properties.
- Australian police arrested 17 people in Sydney and Melbourne for allegedly stockpiling explosive chemicals and planning a “catastrophic” terrorist attack.
- The euro is falling to a two-year low against the dollar in Asia on concern rioting that has escalated in France over the past week will spread to other parts of Europe.
- Google and Yahoo! are expanding the content they offer on mobile phones, a further sign of the growing connection between the Web and wireless services.
- Crude oil is trading near a three-month closing low in NY as warmer-than-normal weather in the northern US is further reducing demand for heating fuel.

Financial Times:
- Anheuser-Busch has set up it first spirit-making subsidiary, Long Tail Libations, to meet a fall in demand for beer.

Shanghai Securities News:
- China and the US today will sign an agreement in Geneva to cap growth in imports of Chinese textiles for the next three years, resolving a dispute between the two nations.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on EBAY.
- Reiterated Underperform on HRB.

Night Trading
Asian Indices are -.25% to +.50% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.06%.

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Earnings of Note
Company/EPS Estimate
AL/.48
AQNT/.10
CVC/-.08
CMX/.51
DISH/.47
ENER/-.13
FSH/.88
FOSL/.28
HW/.81
IDTI/.06
IVX/.22
MBI/1.38
MCK/.48
PIXR/.11
SOHU/.20
TOL/1.58
RIG/.47

Upcoming Splits
- None of note

Economic Releases
- None of note

BOTTOM LINE: Asian indices are mostly higher, spurred by gains in exporters in the region after oil fell to a three-month low. I expect US equities to open mixed-to-higher as stocks continue to consolidate recent gains before what I believe will be another push higher. The Portfolio is 100% net long heading into the day.

***Alert***

I am unable to post the Monday Close due to a scheduling conflict. I finished the day 100% net long. I will post the Tuesday Watch later this evening.

Stocks Higher Mid-day on Another Fall in Energy Prices and Increasing Optimism

Indices
S&P 500 1,222.97 +.24%
DJIA 10,581.65 +.49%
NASDAQ 2,179.52 +.47%
Russell 2000 661.43 +.50%
DJ Wilshire 5000 12,227.58 +.27%
S&P Barra Growth 585.86 +.25%
S&P Barra Value 632.97 +.22%
Morgan Stanley Consumer 586.60 +.20%
Morgan Stanley Cyclical 738.48 +.85%
Morgan Stanley Technology 512.57 +.45%
Transports 3,978.78 +1.11%
Utilities 393.59 +.17%
Put/Call .88 +2.33%
NYSE Arms 1.10 +27.80%
Volatility(VIX) 12.92 -1.90%
ISE Sentiment 144.00 -23.8%
US Dollar 91.44 +.20%
CRB 316.89 -.59%

Futures Spot Prices
Crude Oil 59.30 -2.11%
Unleaded Gasoline 155.50 -3.30%
Natural Gas 11.62 +1.80%
Heating Oil 178.00 -.90%
Gold 460.40 +.55%
Base Metals 136.26 -.15%
Copper 184.75 +.08%
10-year US Treasury Yield 4.64% -.35%

Leading Sectors %
Homebuilders +1.64%
Tobacco +1.47%
Oil Tankers +1.22%

Lagging Sectors
Disk Drives -1.05%
Broadcasting -1.10%
Energy -1.31%

BOTTOM LINE: The Portfolio is higher mid-day on gains in my Internet longs, Software longs, Steel shorts and Energy-related shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, sector performance is mixed and volume is below average. Measures of investor anxiety are mostly higher. After doing some checks, I found the demand for the Xbox 360 seems greater than even optimistic projections. Notwithstanding its $300 price, I am hearing that it is virtually impossible to pre-order the device. Gamestop and Electronics Boutique have quit taking orders and say they won't even take your name for the next shipment because they "don't want to make the customer mad" and they "don't know when it will be available." The lack of supply may be disappointing in the short run, but it bodes well for a number of companies in the longer term. Microsoft (MSFT), GameStop (GME), Best Buy (BBY), Circuit City (CC), Activision (ATVI), THQ (THQI) and Electronic Arts (ERTS) should all benefit over the coming months from this very strong replacement cycle. Can the consumer really be anything but strong considering a $300 toy is in such strong demand six weeks before the holiday season? I expect US stocks to trade modestly higher from current levels into the close on more optimism and short-covering.

Today's Headlines

Bloomberg:
- Warren Buffett’s Berkshire Hathaway reduced a bet against the US dollar after losing more than $900 million on the incorrect trade this year.
- The compensation of recent business school graduates from Harvard, Dartmouth and Stanford rose at least 9.5% from a year earlier, fueling by increased hiring at investment banks and consulting firms.
- Alec Litowitz, a former trading executive at hedge fund company Citadel Investment Group LLC, raised $1.7 billion for his first fund even as industry returns lag behind the S&P’s 500 Index.
- EnCana Corp., Canada’s largest natural-gas producer, said it could increase production from its oil-sands deposit 12-fold in the next decade and has received approaches from companies seeking to join the development.
- Guidant Corp. sued to force Johnson & Johnson to complete a $25.4 billion purchase of the troubled medical-devices maker and reported a plunge in quarterly profit.
- Crude oil, heating oil and natural gas are falling again on higher-than-normal temperatures and a demand cut forecast by the IEA.
- US Treasuries snapped a four-day slide on speculation falling energy prices will reduce future inflation readings.

Wall Street Journal:
- The US could draw steel imports from China and other countries because its prices for the metal are higher than elsewhere.
- Yahoo and Google plan to introduce wireless services that take advantage of advanced networks and cell phones to provide features similar to those available on computers.
- Share buybacks by technology companies are approaching an annual record.
- Energy production in the Gulf of Mexico is making a slow recovery after Hurricane Rita hit in late September, as important communications systems remain disabled.
- Japan’s Toyota Motor may build the Lexus RX400h sports utility vehicle as a hybrid in North America, along with it Toyota Prius.
- Starwood Hotels & Resorts Worldwide and casino-company Harrah’s Entertainment will develop a $2 billion Bahamas resort and casino.

NY Times:
- Microsoft has emerged as the top contender for buying a stake in Time Warner’s AOL unit.
- More people are leaving California after a decade of increasing home prices.
- Microsoft’s Xbox 360 video game console will offer users the option of purchasing small arcade-style games that can be downloaded from the Internet.
- The US Senate Intelligence Committee so far hasn’t found evidence of “political manipulation or pressure” in the use of prewar intelligence on Iraq.

AppleInsider:
- CBS, the television broadcasting unit of Viacom, has held talks with Apple Computer to offer TV shows over the new video Ipod, citing a CBS executive.

Economic Releases

- None of note

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