Stocks Modestly Lower Mid-day on Weakness in Homebuilders

Indices
S&P 500 1,219.34 -.28%
DJIA 10,550.29 -.34%
NASDAQ 2,173.78 -.21%
Russell 2000 656.35 -.74%
DJ Wilshire 5000 12,180.61 -.36%
S&P Barra Growth 584.16 -.24%
S&P Barra Value 630.52 -.39%
Morgan Stanley Consumer 585.76 -.26%
Morgan Stanley Cyclical 733.26 -.70%
Morgan Stanley Technology 510.86 -.19%
Transports 3,960.28 -.48%
Utilities 393.65 -.24%
Put/Call .84 unch.
NYSE Arms 1.11 +17.48%
Volatility(VIX) 13.18 +.61%
ISE Sentiment 176.00 -6.88%
US Dollar 91.38 +.10%
CRB 317.61 +.05%

Futures Spot Prices
Crude Oil 59.40 -.12%
Unleaded Gasoline 154.75 -.55%
Natural Gas 11.73 -1.20%
Heating Oil 176.30 -1.29%
Gold 462.30 +.41%
Base Metals 136.24 -.01%
Copper 183.80 -.51%
10-year US Treasury Yield 4.57% -1.06%

Leading Sectors %
Oil Service +.79%
Energy +.74%
Disk Drives +.73%

Lagging Sectors
Papers -1.46%
Gaming -2.30%
Homebuilders -4.72%

BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet longs, Homebuilding longs and Retail longs. I added to my NTES long this morning and to existing shorts, thus leaving the Portfolio 100% net long. I am using a close below $60 as a stop on this position. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is about average. Measures of investor anxiety are mostly higher. The Johnson Redbook same-store sales index rose 4.2% year-over-year last week even with unseasonably warm weather vs. a 3.8% rise the prior week. This week's gain is up from a 1.5% increase in late April and the 27th week in a row the index has risen 3% or more. I continue to believe while consumer sentiment remains depressed, spending remains healthy. There remains little evidence of any widespread consumer slowdown. I expect US stocks to trade modestly higher from current levels into the close on short-covering.

Today's Headlines

Bloomberg:
- The euro dropped to a two-year low against the dollar after a 12th night of rioting in France. Concern that the social disorder will damp growth and deter investment in euro-denominated assets pushed the currency lower.
- President Chiraq declared a state of emergency to quell spiraling urban violence, applying for the first time in France a 50-year law that authorizes curfews and warrant-less searches.
- The UN Security Council voted 15 to 0 to authorize US-led forces to remain in Iraq until Dec. 31, 2006, to give Iraqi troops time to prepare for assuming responsibility for the nation’s security.
- US Treasuries are rising for a second day, the first back-to-back gain in more than two weeks, as yield near the highest since March attracted investors.
- Linens ‘n Things agreed to a $1.3 billion buyout by a group led by Apollo Management LP after struggling to compete with Bed Bath & Beyond.
- Comcast plans to sell $2 billion of five-, 10-, and 30-year bonds today, according to Market News.
- Yum! Brands is developing contingency plans to educate consumers that it’s safe to eat at its Kentucky Fried Chicken restaurants amid rising concerns about a possible avian flu outbreak.
- Guidant said the SEC started a formal investigation into the company’s disclosures about unspecified products and trading in Guidant stock.

Wall Street Journal:
- Worldwide demand for business jets is expected to reach a record of about 850 aircraft deliveries in 2006, citing estimates by Honeywell.
- Advanced Micro Devices in October beat Intel in supplying chips for personal computers to US retail stores.
- US House of Representatives and Senate negotiators reached agreement on a $30.5 billion water and energy bill.
- Genetically modified plants are increasingly distorting the makeup of traditional crops as they account for a growing share of the world’s farmland.
- GM’s Chevrolet brand may pass Ford’s Ford nameplate as the No. 1 vehicle marque this year in the US for the first time in 18 years.

NY Times:
- Some US retailers such as Gap Inc., Walgreen Co. and Wal-Mart Stores are developing national crime databases to combat shoplifting gangs.
- The FASB will decide this week whether to alter its 20-year-old rule on how US companies account for pensions.

DigiTimes:
- Global demand for indium-tin oxide, which is used to make liquid-crystal displays, may rise as much as 40% net year because of increasing demand from panel makers.

NY Post:
- Sales of Apple Computer’s Macintosh personal computers have benefited from the success of the iPod personal music player.

Le Parisien:
- French courts are imposing increasingly heavy punishment on youths involved in riots which have rocked the country in the past 12 days.

Ath-Thawra:
- Syria wants foreign companies to carry out more seismic surveys in its waters to search for oil and gas fields.

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

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%.

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
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.