BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Networking longs, Medical longs and Computer longs. I covered some of my (IWM) and (QQQQ) shorts, thus leaving the Portfolio 75% net long. The tone of the market is slightly negative as the advance/decline line is modestly lower, sector performance is mixed are higher and volume is above average. I suspect Apple Computer (AAPL), along with Google (GOOG) and Intuitive Surgical (ISRG) have seen their lows for the year. All present attractive entry points for longer-term investors, in my opinion. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain hunting.
Friday, February 10, 2006
Stocks Reverse Higher as Oil Price Drops Again and Short Cover
Today's Headlines
Bloomberg:
- Copper fell the most in 13 months in London on speculation mining companies will boost production to take advantage of prices that reached a record high earlier this week. Aluminum and zinc also tumbled, and the 6.9% drop in lead was the biggest fluctuation of any commodity today.
- The US government reported the first back-to-back monthly budget surpluses in three years as a robust economy boosted tax receipts. The US budget deficit is set to come in at 2.5% of GDP this year, right at the long-term average.
- Crude oil fell again, finishing down another 2% near session lows as speculation increases that US supplies are ample to meet an shock related to Iran.
Wall Street Journal:
- Time Warner(TWX) is starting an Internet magazine for young men to be called “Office Pirates,” but it won’t say much about it, relying on word-of-mouth appeal.
- Philip Morris’s(MO) license to produce Marlboro cigarettes in China is not affected by China’s plan to halt construction of more cigarette factories.
- Some futures traders, concerned by several energy manipulation cases brought by the US Commodities Futures Trading Commission, are trying to weaken the commission’s authority.
- Lenovo Group Ltd., the world’s third-biggest personal-computer seller, plans to use Olympic-related marketing events to gain brand recognition and distinguish itself from IBM(IBM).
- American International Group(AIG) agreed to pay US regulators $1.64 billion to resolve allegations of wrongdoing, but investors who bought the shares yesterday probably got it right.
CNBC:
- Richard Breeden, a former chairman of the SEC, has raised $1 billion since late last year for a planned hedge fund.
Boston Globe:
- Harvard President Lawrence Summers will face his second vote of no confidence when the Faculty of Arts and Sciences meets of Feb. 28.
NY Times:
- Wachovia Corp.(WB) has attracted sales and trading executives from investment banks after setting up an equities group and building on its relationships with real estate and midsized companies to expand capital market activities.
Washington Post:
- US Vice President Richard Cheney told Republicans that the wiretapping of suspected terrorists overseas should be an election issue.
Boston Herald:
- Google(GOOG), EarthLink(ELNK) and other technology companies want to set up a free or inexpensive wireless Internet network in Boston.
- Copper fell the most in 13 months in London on speculation mining companies will boost production to take advantage of prices that reached a record high earlier this week. Aluminum and zinc also tumbled, and the 6.9% drop in lead was the biggest fluctuation of any commodity today.
- The US government reported the first back-to-back monthly budget surpluses in three years as a robust economy boosted tax receipts. The US budget deficit is set to come in at 2.5% of GDP this year, right at the long-term average.
- Crude oil fell again, finishing down another 2% near session lows as speculation increases that US supplies are ample to meet an shock related to Iran.
Wall Street Journal:
- Time Warner(TWX) is starting an Internet magazine for young men to be called “Office Pirates,” but it won’t say much about it, relying on word-of-mouth appeal.
- Philip Morris’s(MO) license to produce Marlboro cigarettes in China is not affected by China’s plan to halt construction of more cigarette factories.
- Some futures traders, concerned by several energy manipulation cases brought by the US Commodities Futures Trading Commission, are trying to weaken the commission’s authority.
- Lenovo Group Ltd., the world’s third-biggest personal-computer seller, plans to use Olympic-related marketing events to gain brand recognition and distinguish itself from IBM(IBM).
- American International Group(AIG) agreed to pay US regulators $1.64 billion to resolve allegations of wrongdoing, but investors who bought the shares yesterday probably got it right.
CNBC:
- Richard Breeden, a former chairman of the SEC, has raised $1 billion since late last year for a planned hedge fund.
Boston Globe:
- Harvard President Lawrence Summers will face his second vote of no confidence when the Faculty of Arts and Sciences meets of Feb. 28.
NY Times:
- Wachovia Corp.(WB) has attracted sales and trading executives from investment banks after setting up an equities group and building on its relationships with real estate and midsized companies to expand capital market activities.
Washington Post:
- US Vice President Richard Cheney told Republicans that the wiretapping of suspected terrorists overseas should be an election issue.
Boston Herald:
- Google(GOOG), EarthLink(ELNK) and other technology companies want to set up a free or inexpensive wireless Internet network in Boston.
Trade Deficit Widens Slightly, US Exports Hit Another Record
- The Trade Balance for December widened to -$65.7 billion versus estimates of -$65.0 billion and -$64.7 billion in November.
BOTTOM LINE: The US trade deficit widened last year as US economic growth remained robust and energy prices jumped, Bloomberg reported. Imports rose to a record on US demand for business equipment, industrial equipment, autos and consumer electronics. US exports also rose to an all-time record to $111.5 billion. I continue to believe the trade deficit will only improve modestly over the intermediate-term as falling commodity prices more than offset the fact that the US economy will remain relatively strong compared to economies of other industrialized nations.
Friday Watch
Late-Night Headlines
Bloomberg:
- Mattel Inc.(MAT) is giving Ken the surfer look to woo back Barbie and help revive sales of its biggest line.
- Japan is preparing for a possible eruption of Mount Fuji 60 miles from Tokyo, the world’s biggest city, after increased seismic activity.
- Oil prices may fall again next week amid speculation that US inventories are sufficient to meet demand in the months ahead, a Bloomberg News survey shows.
- A three-year rally in Australia’s S&P/ASX 200 Index may slow as strategists trim expectations for resources stocks’ earnings growth this reporting season.
Financial Times:
- Apple Computer(AAPL) started a new free service that will let colleges publish lectures on the Internet.
Mercury News of San Jose:
- Craigslist, a provider of free Internet ad listings, is being sued by a Chicago civil rights group that says the closely held company violates fair housing laws.
Xinhua News Agency:
- China will complete construction of all major Olympic venues for the 2008 games by the end of this year, one year ahead of its revised schedule, citing the organizing committee.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (RDEN), (TAP), (ENH), (CL), (NRG) and (MAR).
- Reiterated Underperform on (MHX).
Business Week:
- The shares of Medallion Financial(TAXI), which provides loans to taxicab owners for license medallions, may rise as prices for such medallions increase.
- STMicroelectronics NV(STM), the French-Italian semiconductor maker that lost 6.8% in 2005, will see its stock rise under new management and after cost cuts.
- Illumina Inc.(ILMN), which develops tools for use in genetic analysis, may rise as drug companies attempt to improve treatments by using genetic data.
Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated -.09%.
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
(ACI)/.29
(CVH)/.80
(ODP)/.32
(PIXR)/.18
(RBK)/.58
Upcoming Splits
(EME) 2-for-1
Economic Releases
8:30 am EST
- The Trade Deficit for December is estimated to widen to -$65.0 billion versus -$64.2 billion in November.
2:00 pm EST
- The Monthly Budget surplus for November is estimated at $8.0 billion versus $8.6 billion in December.
Bloomberg:
- Mattel Inc.(MAT) is giving Ken the surfer look to woo back Barbie and help revive sales of its biggest line.
- Japan is preparing for a possible eruption of Mount Fuji 60 miles from Tokyo, the world’s biggest city, after increased seismic activity.
- Oil prices may fall again next week amid speculation that US inventories are sufficient to meet demand in the months ahead, a Bloomberg News survey shows.
- A three-year rally in Australia’s S&P/ASX 200 Index may slow as strategists trim expectations for resources stocks’ earnings growth this reporting season.
Financial Times:
- Apple Computer(AAPL) started a new free service that will let colleges publish lectures on the Internet.
Mercury News of San Jose:
- Craigslist, a provider of free Internet ad listings, is being sued by a Chicago civil rights group that says the closely held company violates fair housing laws.
Xinhua News Agency:
- China will complete construction of all major Olympic venues for the 2008 games by the end of this year, one year ahead of its revised schedule, citing the organizing committee.
Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (RDEN), (TAP), (ENH), (CL), (NRG) and (MAR).
- Reiterated Underperform on (MHX).
Business Week:
- The shares of Medallion Financial(TAXI), which provides loans to taxicab owners for license medallions, may rise as prices for such medallions increase.
- STMicroelectronics NV(STM), the French-Italian semiconductor maker that lost 6.8% in 2005, will see its stock rise under new management and after cost cuts.
- Illumina Inc.(ILMN), which develops tools for use in genetic analysis, may rise as drug companies attempt to improve treatments by using genetic data.
Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated -.09%.
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
(ACI)/.29
(CVH)/.80
(ODP)/.32
(PIXR)/.18
(RBK)/.58
Upcoming Splits
(EME) 2-for-1
Economic Releases
8:30 am EST
- The Trade Deficit for December is estimated to widen to -$65.0 billion versus -$64.2 billion in November.
2:00 pm EST
- The Monthly Budget surplus for November is estimated at $8.0 billion versus $8.6 billion in December.
BOTTOM LINE: Asian indices are lower, pressured by technology and exporting stocks in the region. I expect US equities to open mixed and to trade modestly lower into the afternoon. The Portfolio is 50% net long heading into the day.
Thursday, February 09, 2006
***Alert***
Due to a scheduling conflict I am unable to post the Thursday Close. I will post the Friday Watch later this evening. I finished the day 50% net long.
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