Tuesday Watch

Late-Night Headlines
Bloomberg:
- ConocoPhillips(COP), agreed to buy Burlington Resources(BR) for $35.6 billion in cash and stock.
- California Governor Schwarzenegger refused to stop tomorrow’s execution of Stanley Williams, co-founder of the Crips gang in LA and convicted murderer who won the support of celebrities. Schwarzenegger said William’s refusal to apologize for the murders, his unwillingness to help police dissect the structures of street gangs, as well as a plan he had to blow up a jail transportation bus and escape during his trial, raised doubt about his redemption.
- Microsoft sod 39% of its new Xbox game console in the first two days its was available in Japan, according to market researcher Enterbrain Inc.

Financial Times:
- Kuwait may allow international oil companies access to its oilfields by the end of 2006 to meet its oil production targets.

AP:
- Osama bin Laden may no longer be directing operations of his al-Qaeda terrorist organization, citing remarks made by Ryan Crocker, the US ambassador to Pakistan.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on AMP, CRL, DNA and EBAY.

Night Trading
Asian Indices are -.50% to unch. on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.03%.

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
ADCT/.17
BBY/.30
EASI/.56
LEH/2.64

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Advance Retail Sales for November are estimated to rise .4% versus a .1% decline in October.
- Retail Sales Less Autos for November are estimated to fall .1% versus a .9% increase in October.

10:00 am EST
- Business Inventories for October are estimated to rise .5% versus a .5% increase in September.

2:15 pm EST
- The FOMC is expected to raise the benchmark interest rate 25 basis points to 4.25%.

BOTTOM LINE: Asian indices are mostly lower on rising apprehension ahead of the US Fed announcement. I expect US equities to open mixed and to rally modestly into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish Mixed Ahead of Fed Announcement

Indices
S&P 500 1,260.43 +.08%
DJIA 10,767.77 -.10%
NASDAQ 2,260.95 +.19%
Russell 2000 689.54 +.11%
DJ Wilshire 5000 12,628.53 +.10%
S&P Barra Growth 603.15 +.17%
S&P Barra Value 652.92 unch.
Morgan Stanley Consumer 591.52 +.13%
Morgan Stanley Cyclical 780.46 -.03%
Morgan Stanley Technology 535.68 +.59%
Transports 4,090.70 -.28%
Utilities 407.78 -.50%
Put/Call .69 -13.75%
NYSE Arms .81 -20.38%
Volatility(VIX) 11.47 -1.88%
ISE Sentiment 207.00 +5.61%
US Dollar 90.31 -1.03%
CRB 333.70 +1.80%

Futures Spot Prices
Crude Oil 61.41 +.18%
Unleaded Gasoline 165.25 +.35%
Natural Gas 15.04 +1.37%
Heating Oil 177.65 +.23%
Gold 531.00 -.09%
Base Metals 151.76 -1.53%
Copper 199.00 +.20%
10-year US Treasury Yield 4.54% +.57%

Leading Sectors
Energy +1.22%
Oil Service +1.12%
Broadcasting +1.10%

Lagging Sectors
Utilities -.50%
Restaurants -.58%
Insurance -.64%

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 CL and RDEN.
- Reiterated Underperform on MARSA.

Afternoon/Evening Headlines
Bloomberg:
- GM’s debt rating, already non-investment grade, was cut two levels by S&P because of concern that losses at the automaker’s North American operations will be difficult to end.
- Diebold said CEO Walden O’Dell resigned and will be replaced by President Thomas Swidarski.
- Crude oil rose to a five-week high as falling temperatures in the US spurred demand for heating oil.

CNBC:
- US Steel may sell its oil pipe business for $2.5 billion, Mergermarket consulting editor Josh Kosman said.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Medical longs and Semi longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was mixed today as the advance/decline line finished slightly lower, sector performance was mixed and volume was above average. Measures of investor anxiety were lower into the close. Intuitive Surgical (ISRG) broke out of a two-week trading range today, making another all-time high on above-average volume. This stock remains one of my largest long positions. I expect it to continue to outperform over the intermediate term.

Stocks Modestly Lower Mid-day on Rising Energy Prices and Apprehension Ahead of Fed Meeting

Indices
S&P 500 1,256.87 -.20%
DJIA 10,743.68 -.32%
NASDAQ 2,256.83 +.01%
Russell 2000 687.99 -.12%
DJ Wilshire 5000 12,593.73 -.18%
S&P Barra Growth 602.06 -.01%
S&P Barra Value 650.73 -.34%
Morgan Stanley Consumer 590.06 -.12%
Morgan Stanley Cyclical 778.47 -.28%
Morgan Stanley Technology 535.01 +.47%
Transports 4,062.55 -.97%
Utilities 407.35 -.60%
Put/Call .69 -13.75%
NYSE Arms .99 -3.59%
Volatility(VIX) 11.65 -.34%
ISE Sentiment 198.00 +1.02
US Dollar 90.27 -1.07%
CRB 331.92 +1.27%

Futures Spot Prices
Crude Oil 60.40 +1.70%
Unleaded Gasoline 162.70 +1.38%
Natural Gas 14.83 +3.62%
Heating Oil 175.50 +1.34%
Gold 531.50 +.25%
Base Metals 151.76 -1.53%
Copper 198.60 -2.17%
10-year US Treasury Yield 4.55% +.74%

Leading Sectors
Broadcasting +.97%
Energy +.73%
Gaming +.46%

Lagging Sectors
Telecom -.66%
Banks -.72%
HMOs -1.13%

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my Medical longs, Internet longs and Semi longs. I added RGLD short this morning and added to a few existing longs, thus leaving the Portfolio 100% net long. The tone of the market is negative as the advance/decline line is higher, most sectors are lower and volume is about average. Measures of investor anxiety are lower. Overall, today’s market action is slightly negative considering overnight gains in Asia and higher energy prices. The Energy sector saw the greatest insider selling in the S&P 500 for the week ending Dec. 9. Total insider sales for the group were $79,691,434 last week. Total insider purchases were $0. This is the largest amount of insider selling in Energy I have seen in quite some time. I expect US stocks to trade mixed-to-higher into the close on short-covering.

Today's Headlines

Bloomberg:
- OPEC may end an offer to tap 2 million barrels a day of spare output capacity because there isn’t sufficient demand, the group’s President Sheikh Ahmad Fahd al-Sabah said.
- Coca-Cola and PepsiCo are headed for their first annual decline in US soft-drink sales in at least four decades as health-conscious consumers switch to bottled water, sports drinks and juices.
- US strategists, who correctly called the stock market’s performance this year, are getting more bullish for 2006.
- Ford Motor may save more than $1 billion annually on US health care under an agreement reached with the UAW, analysts said.
- Merck suffered a setback when a judge declared a mistrial in the third case involving its Vioxx painkiller, after a jury said they’d deadlocked on whether the drug caused a Florida man’s death.
- Time Warner and Comcast are among six cable companies that plan to offer a separate tier of family-friendly programs, an industry group said.
- The dollar is falling the most in more than two months against the euro on speculation the Fed may say tomorrow that interest rates are no longer stimulating the US economy.

Wall Street Journal:
- Alteria Group’s Philip Morris USA will make its first drug-delivery product by partnering with Pennsylvania-based Discovery Labs Inc. to create new ways of delivering medicine to premature babies with breathing problems.
- Tommy Hilfiger has three possible offers.
- News Corp.’s HarperCollins Publishers said it will produce digital copies of its books and then make them available to search services offered by companies such as Google, Microsoft and Amazon.com.
- The avian flu virus in China is stable at present, not mutating toward a form readily transmissible among humans, according to Shu Yuelong, the head of China’s national influenza laboratory.

NY Post:
- Consumer Reports will begin offering product ratings, pricing information and store availability through wireless phones.

NY Times:
- Three private-equity firms and Dunkin Donuts are near an agreement for the sale of the donut chain for about $2 billion.
- Samsung Electronics and Toshiba are spending billions on new factories and more engineers as competition intensifies to develop more powerful NAND flash memory chips.
- The MSNBC cable news network will spend almost $1 million on its most concentrated Internet advertising blitz to date, promoting three of its prime-time shows on hundreds of Web sites and Web logs.

USA Today:
- Iraqi Vice President Adel Abdul Mahdi said he envisions the nation having three semi-independent regions that handle internal security and have more control over funding.

Boston Globe:
- Corporate spending on computer servers, networking and storage equipment, and software may rise 11% next year to $546.9 billion, citing Moody’s Economy.com research firm.

Chronicle of Higher Education:
- The Ford Foundation gave 26 schools including Yale University, Trinity University and Northwestern University grants of $100,000 for projects that promote academic freedom, religious tolerance and environments in which difficult subjects can be discussed openly.

AFP:
- Iraqis working in hospitals, the military and those in prisons started voting today before full elections for a parliament that will restore sovereignty to the country.

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