Stocks Close Near Session Highs after Energy Prices Fell and Long-term Rates Stabilized

Indices
S&P 500 1,278.47 +.20%
DJIA 11,005.74 +.23%
NASDAQ 2,267.46 -.04%
Russell 2000 721.84 +.11%
Wilshire 5000 12,855.02 +.15%
S&P Barra Growth 605.43 +.33%
S&P Barra Value 669.44 +.07%
Morgan Stanley Consumer 604.62 +.42%
Morgan Stanley Cyclical 776.30 -34%
Morgan Stanley Technology 530.74 -.20%
Transports 4,420.21 -.33%
Utilities 400.26 +.24%
Put/Call .96 -5.88%
NYSE Arms .92 -.30%
Volatility(VIX) 12.32 -2.69%
ISE Sentiment 149.00 +7.19%
US Dollar 90.56 -.23%
CRB 317.87 -1.11%

Futures Spot Prices
Crude Oil 59.89 -.20%
Unleaded Gasoline 163.75 -.77%
Natural Gas 6.62 -.36%
Heating Oil 169.18 -.14%
Gold 544.70 +.04%
Base Metals 161.68 -.64%
Copper 217.60 -.05%
10-year US Treasury Yield 4.72% +.09%

Leading Sectors
Airlines +1.44%
Drugs +1.14%
Hospitals +1.13%

Lagging Sectors
Semis -1.39%
Gold & Silver -2.20%
Alternative Energy -2.64%

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 (MYOG) and (COF).
- Reiterated Underperform on .

Afternoon/Evening Headlines
Bloomberg:
- North Korea launched two-short range missiles, a US official confirmed today, saying the test was a reminder of the threat posed by that country.
- President Bush promised residents of New Orleans that the levees protecting the Gulf Coast city will be rebuilt better than they were before Hurricane Katrina hit.
- Intel(INTC) became too relaxed about competition from Advanced Micro Devices(AMD), causing the company to scramble to introduce a fresh product design to reclaim market share, a top executive said.
- Merrill Lynch(MER) is sticking with its forecast that the Fed will stop raising rates when its target reaches 4.75%.
- New York City private sector jobs grew by a revised 1.8% over the 12 months ending in January, double the long-term average rate, as financial services companies added workers.
- Apple Computer(AAPL) created a monthly subscription service on iTunes for “The Daily Show with Jon Stewart” and “The Colbert Report” from the Comedy Central cable television network.
- Dell Inc.(DELL) will continue to undercut competitors on computer prices, limiting profit margins to revive revenue growth after its forecast trailed analysts’ projections, CEO Rollins said.
- JetBlue Airways(JBLU) may sell items on its flights to boost revenue after its first quarterly loss since the low-cost carrier went public in 2002.
- Shares of the NYSE(NYX) climbed as much as 22% in their trading debut, reflecting investor confidence in the transformation of the world’s largest equity market into a public company.
- A US House committee approved a measure to block a state-owned Dubai firm’s takeover of terminal operations at six US ports, defying a threat from President Bush to veto the legislation.
- Crude oil in NY traded near a three-week low after the US reported the largest stockpiles of crude since 1999 and OPEC left output near a 20-year high.
- Google(GOOG) said today it settled a “click-fraud” lawsuit filed in Arkansas for $90 million.

Wall Street Journal:
- The US Justice Dept. said it plans to seek civil-fraud charges against fund manager Mario Gabelli.

al-Sabah:
- Iraqi Prime Minister Ibrahim al-Jaafari said he’s confident the process of forming a new government will speed up.

BOTTOM LINE: The Portfolio finished higher today on gains in my Biotech longs, Retail longs, Networking longs and Commodity shorts. I did not trade in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was slightly positive today as the advance/decline line finished about even, sector performance was mostly positive and volume was above average. Measures of investor anxiety were lower into the close. Overall, today's market performance was bullish. The only thing missing today was a good dose of fear. If commodity prices fall as hard as I expect, we will likely get elevated anxiety readings over the coming weeks. I continue to believe falling commodity prices will prove to be a huge positive for the broad stock market over the longer-term.

Stocks Modestly Higher into Final Hour as Commodity Prices Fall and Interest Rates Stabilize

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Networking longs, Retail longs and Biotech longs. I covered some of my (IWM)/(QQQQ) shorts and added (CYMI) long, thus leaving the Portfolio 75% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, sector performance is mostly positive and volume is heavy. The CRB Index is breaking down convincingly through its 200-day moving average today for the fist time since June 2003. The Index has fallen almost 10% since late January. A weekly close below 310 on the CRB would put the entire uptrend in jeopardy that has been in place since Nov. 2001. I expect this to happen over the coming weeks. This will lead to decelerating inflation readings throughout most of the year. I expect US stocks to trade modestly higher into the close from current levels on short-covering, lower energy prices and stabilizing long-term rates.

Today's Headlines

Bloomberg:
- The UNs’ nuclear agency cleared the way for the Security Council to weigh possible political or economic sanctions against Iran after 3 years of inspections failed to declare the Islamic Republic’s atomic work peaceful.
- Exxon Mobil(XOM) said it will raise capital spending 13% this year to about $20 billion to boost reserves and expand refineries.
- OPEC will maintain oil production near 20-year highs as violence in Nigeria and a dispute with Iran over nuclear research keep prices above $60/bbl.
- Shares of the NYSE(NYX) climbed as much as 12% in their trading debut, underlining investor confidence in the future of the world’s largest equity market as a public company.
- Micro Tech(MU) agreed to buy Lexar Media(LEXR) for about $680 million in stock to expand a push into the fastest-growing part of the flash-memory market.
- Biogen(BIIB) and Elan(ELN) won the backing of a US regulatory panel to resume sales of Tysabri, the MS drug withdrawn a year ago because it was linked to a rare, fatal brain infection.
- Copper, zinc, and nickel dropped in NY and London on speculation rising interest rates will slow economic growth, curbing demand for industrial metals.
- Oil is falling for a third day after a report showed a larger-than-expected gain in US stockpiles left inventories at 7-year high levels.
- Brazil’s currency, bonds and stocks tumbled, leading declines throughout Latin America, as rising interest rates in the US, Europe and Japan lured money from riskier developing country assets that are heavily dependent on commodities.

Wall Street Journal:
- A US federal grand jury is looking into possible price-fixing and collusion in the air-freight business, indicating that the Justice Department might seek criminal charges against some airlines.
- XM Satellite Radio Holdings(XMSR) will soon have to carry advertising on four of its stations, citing the company’s chairman.
- GM(GM) failed to follow US consumer trends and regional preferences, running ads in Miami showing cars driving in snow and starting Spanish-language advertising later than rivals.
- Verizon Communications(VZ) CEO Seidenberg is betting that high-speed lines will help the company win against rivals in the race to supply televisions, Internet and voice services.
- Prime brokers, which offer preferred-customer services for hedge funds that include financing trading, helping with paperwork and introducing potential clients, may have too free a rein.
- David Tepper, who heads Appaloosa Management LP, a hedge-fund firm, has acquired 14.8% of Dana Corp.(DCNAQ), a vehicle parts maker that went into Chapter 11 last week, but individual investors would be wise not to emulate him.


Market News Intl.:
- Fed Bank of Minneapolis President Gary Stern said he doesn’t see any “material” acceleration of inflation.

USA Today:
- The US government plans to test almost eight times as many wild birds this year as in the past decade in efforts to stave off the spread of the deadly H5N1 bird flu virus.

NY Times:
- Chinese Web sites are home to scam artists selling products from date rape drugs to stolen cars.
- New York State regularly sends patients from mental hospitals to nursing homes, where it illegally houses hundreds of patients without the required care and in conditions comparable to imprisonment.

Washington Post:
- Harold Ickes, an adviser to Senator Hillary Rodham Clinton, is leading a group of Democrats in raising millions of dollars to start a private firm named Data Warehouse that plans to gather data on Americans in an attempt to find Democratic voters.

Reuters:
- Boston Scientific(BSX) plans to appoint new management and may adopt another name for Guidant’s(GDT) heart-rhythm unit after closing its $27 billion acquisition of Guidant next month.

AP:
- Arizona Governor Janet Napolitano said she signed an executive order to put more of the state’s National Guard troops on the border with Mexico to assist federal efforts to curb illegal immigration.

BBC’s Brazilian News:
- Brazil may build as many as seven nuclear power plants in 15 years as part of a plan to diversify energy sources, citing Science and Technology Minister Rezende.

Economic Releases

- None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
Today in IBD
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

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Merck Inc.(MRK) has cut the price for its Stocrin AIDS drug by 20% in developing countries.
- Pearson Plc’s Penguin Group purchased the rights to former Federal Reserve Chairman Alan Greenspan’s book on the world economy and its future for an undisclosed amount.
- Google Inc.(GOOG) said it mistakenly posted a revenue forecast in notes prepared ahead of a meeting last week. The estimate would trail some projections.
- Prudential Financial(PRU) may buy Allstate’s(ALL) variable annuities unit for as much as $750 million.
- Japan’s bank lending rose for the first time in more than nine years, adding to evidence that deflation is ending in the world’s second-biggest economy.
- The US House, by a vote of 280-138, passed a new version of the USA Patriot Act, removing the last barrier to renewal of the law that gave the FBI expanded powers to investigate terrorism after the Sept. 11 attacks.
- Namco Bandai Holdings, Japan’s second-biggest toys and game software maker, said Sony(SNE) won’t be able to release its PlayStation 3 console as scheduled this spring.

Financial Times:
- Gillette’s new Fusion razor, which went on sale four weeks ago, has accounted for 55% of new razor purchases.

Automotive News:
- Mississippi is offering $240 million in federal tax breaks for Kia Motors to build an assembly plant as the US state tries to lure investment after the ravage left by Hurricane Katrina.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (STX), (SYMC) and (MRVL).

Night Trading
Asian Indices are -1.0% to -.50% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.18%.

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
- (ASVI)/.24
- (CWTR)/.17
- (CMTL)/.33
- (DYN)/-.12
- (GMST)/-.05
- (HUG)/.46
- (L)/.04
- (MIK)/.85
- (REM)/.36
- (TECD)/.67
- (WIND)/.12

Upcoming Splits
- None of note

Economic Releases
- None of note

BOTTOM LINE: Asian indices are lower, led down by technology and energy shares in the region. I expect US equities to open lower and to rally into the afternoon, finishing slightly lower. The Portfolio is 50% net long heading into the day.