BETWEEN THE HEDGES

Monday, April 10, 2006

Tuesday Watch

Posted by Gary .....at 11:33 PM

Late-Night Headlines
Bloomberg:
- Bausch & Lomb(BOL) said it is temporarily halting shipments of its ReNu solution with MoistureLoc after reports of fungal infections in the US.
- French unions and students, emboldened by their victory over the government on a disputed youth-labor law, are now taking aim at a 2005 measure that makes it easier for small companies to fire workers.

Economic Times:
- India’s crude oil import bill rose to a record of $43.8 billion during 2005, an increase of 46.8%. The bill was larger because of higher oil prices, not an increase in demand, the newspaper said.

Commercial Times:
- Microsoft Corp.(MSFT) is expected to double its orders from Taiwanese suppliers in the second quarter as it accelerates shipments for its Xbox 360 video-game console.

China Daily:
- Applied Materials(AMAT) will build a $225 million support center in the northwestern Chinese city of Xi’an.

Beijing Youth Daily:
- Beijing has registered 14 days of “heavy” air pollution this year, the most in almost six years, citing the city’s environmental bureau.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -1.0% to unch. on average.
S&P 500 indicated -.06%.
NASDAQ 100 indicated -.10%.

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
- (BRY)/1.55
- (CRK)/.63
- (DSW)/.24
- (DNA)/.41
- (SWN)/.29

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Trade Deficit for February is estimated to shrink to -$67.5 billion versus -$68.5 billion in January.

2:00 pm EST
- The Monthly Budget Deficit for March is estimated to widen to -$82.1 billion versus -$71.2 billion in February.

BOTTOM LINE: Asian indices are mostly lower, weighed down by technology 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.

Stocks Finish Mostly Lower on Average Volume

Posted by Gary .....at 4:51 PM

Indices
S&P 500 1,296.62 +.09%
DJIA 11,141.33 +.19%
NASDAQ 2,333.27 -.25%
Russell 2000 752.95 -.42%
Wilshire 5000 13,104.68 -.01%
S&P Barra Growth 608.83 +.12%
S&P Barra Value 684.82 +.05%
Morgan Stanley Consumer 603.24 -.02%
Morgan Stanley Cyclical 825.40 -.16%
Morgan Stanley Technology 551.36 -.60%
Transports 4,667.13 -.50%
Utilities 388.22 +.54%
Put/Call .83 -6.74%
NYSE Arms .87 -34.71%
Volatility(VIX) 12.19 -.57%
ISE Sentiment 149.00 -1.32%
US Dollar 89.67 -.02%
CRB 339.99 +.83%

Futures Spot Prices
Crude Oil 68.76 +.03%
Unleaded Gasoline 201.35 +.21%
Natural Gas 6.94 +.81%
Heating Oil 194.54 +3.34%
Gold 603.10 +.22%
Base Metals 190.67 +2.62%
Copper 271.85 +.35%
10-year US Treasury Yield 4.95% -.41%

Leading Sectors
Oil Service +2.15%
Energy +1.72%
Broadcasting +.83%

Lagging Sectors
HMOs -1.53%
Disk Drives -1.89%
Airlines -2.12%

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
Citigroup:
- Rated BAC, WFC and JPM Buy.

Afternoon/Evening Headlines
Bloomberg:
- Time Warner’s(TWX) AOL Internet unit may reverse a revenue slide as early as this year, buoyed by a pickup in online advertising and a slowing in customer defections, CEO Parsons said.
- Fidelity Investments almost doubled its holdings in AMR Corp.(AMR) since year-end to become the biggest shareholder in the parent of American Airlines.
- Alcoa Inc.(AA) said its first-quarter profit more than doubled to a record $608 million as metal prices surged.
- Oracle Corp.(ORCL) predicted $250 million to $300 million in annual costs to expense employee stock options.

BOTTOM LINE: The Portfolio finished lower today on losses in my Semi longs, Networking longs and Energy-related shorts. I did not trade in the final hour, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished lower, sector performance was mostly negative and volume was about average. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was mildly bearish. On the positive side, the bears were unable to capitalize meaningfully on Friday's reversal even as oil approached $70/bbl. The rolling corrections that have characterized trading in individual stocks are helping keep the major averages in bull mode. The networking sector is currently in the midst of one of these declines. I expect this will provide a very good entry point in these stocks over the next few weeks.

Stocks Mostly Lower into Final Hour on Profit-taking as Oil Rises

Posted by Gary .....at 3:18 PM

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Semi longs, Networking longs and Energy-related shorts. I added to my (QQQQ) and (IWM) shorts today, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are falling and volume is about average. The Saudi Tadawul Index is plunging over 8% today, its biggest one day drop ever. Saudi shares are still trading at around 40x estimated earnings. I continue to believe the mania for emerging market stocks, which is mainly the result of record commodity speculation, will end badly. I expect US stocks to trade mixed into the close from current levels as rising energy prices offsets short-covering.

Today's Headlines

Posted by Gary .....at 2:07 PM

Bloomberg:
- Saudi Arabia’s main stock index had its biggest drop ever, falling almost 9%, on concern that share prices have outpaced prospects for earnings growth.
- US Federal Reserve Bank of Dallas President Richard Fisher said in a NY Times column that more globalized nations tend to achieve faster economic growth, lower inflation and higher incomes than those which are less so.
- Boeing(BA) will get a $5 billion order from Hainan Airlines and seven Chinese carriers tomorrow for as many as 80 planes, airline executives said.
- President Bush said he wants a diplomatic solution to Iran’s nuclear power ambitions and called published reports that the US many be contemplating military strikes “wild speculation.”
- The first exchange-traded fund that tracks US oil prices debuted today on the American Stock Exchange, providing another way to invest in a market that has drawn increasing interest from speculators.
- Crude oil is rising on speculation of potential supply disruptions and debut of the oil ETF.

Wall Street Journal:
- Novartis AG, Switzerland’s largest drugmaker, said it asked for regulatory approval to sell its Gleevec treatment for four types of cancer.
- Webaroo Inc., a closely held US Internet company, plans to release a service that allows customers to search and browse Web sites while not connected to the Internet.
- Alcoa Inc.(AA) will say today it plans to expand into China with a $95 million joint venture near Shanghai.
- Sprint Nextel(S) will ally with Time Warner(TWX), Comcast(CMCSA) and other US cable operators for a test program of a new wireless service for television and Internet.
- Walt Disney(DIS) plans to make much of its programming on ABC and other channels available for free on the Internet.
- The US Citizenship and Immigration Services received a record 6.6 million hits on its Web site in March as legal immigrants seek citizenship amid the debate over new residency laws.
- Wal-Mart Stores(WMT) plans to match employees’ work shifts with customer traffic patterns and boost part-time workers’ schedules as the CEO of the company’s US stores tries to improve shoppers’ experience.

Lloyd’s List:
- Shell Gas & Power International expects global supplies of liquefied natural gas to rise almost 282% through 2020.

NY Times:
- Orkut, Google’s(GOOG) on-line friends network, is more popular in Brazil than any other country.

Financial Times:
- DirectTV Group, EchoStar Communications(DISH) and other satellite-tv providers are being squeezed between cable operators and telecom companies, both seeking to offer telephone, broadband Internet and video services.
- US forests are becoming an increasingly popular investment, yet most of the price gains may already be history.

Les Echos:
- French Prime Minister Dominique de Villepin will propose scrapping the much-disputed new labor young worker contract which has brought violent demonstrations to the streets of France.

Nihon Keizai:
- Samsung Electronics of South Korea and Japan’s Sony Corp.(SNE) have agreed to build a second liquid-crystal display factory.

Oman Daily:
- The Oman government will invest $10 billion over the next five years to boost domestic oil production, citing Oil Ministeer Mohammed al-Rumhy.

Economic Releases

Posted by Gary .....at 11:14 AM

- None of note