Tuesday, May 23, 2006

Stocks Slightly Higher Into Final Hour on Bargain Hunting

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Networking longs and Retail longs. I covered some of my (IWM) and (QQQQ) shorts and then added them back today, 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 mixed and volume is above average. Bloomberg just reported that China raised jet fuel, diesel and gasoline prices more than 10%. This will result in a further deceleration in demand for oil. I expect US stocks to trade mixed into the close from current levels as higher energy prices and economic worries offset short-covering and bargain hunting.

Today's Headlines

Bloomberg:
- Toll Brothers(TOL), the largest builder of luxury homes, said fiscal second-quarter earnings rose 2.8%, the least in three years, and trimmed its 2006 forecast as higher mortgage rates discouraged potential buyers.
- Google(GOOG) is branching out into video to attract larger clients.
- Crude oil rose above $72/bbl. in NY on speculation that hurricane season will disrupt production again this year.

Wall Street Journal:
- European governments are looking at ways of curbing hedge funds’ power, encouraged by corporate executives who dislike the way the funds can use small stakes in companies to push for changes.
- India’s Sonia Gandhi and her rising political influence have prompted concern among investors over the future direction of the country’s economic expansion.
- Mobile Top Level Domain, a company founded by several companies including Microsoft(MSFT), Google(GOOG), Vodafone Group(VOD) and Nokia(NOK) has created an Internet domain name to make wireless Web access easier.

NY Times:
- More than 5,000 nongovernmental organizations have registered in Iraq since 2003, including human rights, medical and literary groups.
- US Senator Hillary Clinton and former President Bill Clinton appear rarely in public together, a move affected by her possible presidential ambitions.

Daily Telegraph:
- UK soldiers may remain in Iraq for a further four years after Prime Minister Tony Blair yesterday agreed with his Iraqi counterpart Nuri al-Maliki on a phased handover of control to civilian authorities.

El Economista:
- Telefonica SA and T-Mobile USA signed an agreement to share their networks of wireless Internet access points.

Handelsblatt:
- Walt Disney(DIS) is in talks with T-Online Intl. AG, Germany’s largest Internet-access provider, to start Internet TV channels in Germany.

Arab News:
- Saudi Arabia’s summer wedding season is expected to see 50% less ceremonies this year after the country’s stock market crash affected 25% of the kingdom’s citizens, citing wedding organizers and investors.

Financial Times Deutschland:
- More CEOs around the world resigned in 2005 than ever before, citing a report published by Booz Allen Hamilton.

National Post:
- Canada’s Conservative Party government would win a majority of seats in the House of Commons if an election were held today, according to a poll.

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

Monday, May 22, 2006

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Hedge fund manager David Tepper of Appaloosa Management LP, had almost 75% of his fund’s $1.3 billion in assets in Microsoft(MSFT), Oracle(ORCL) and Cisco Systems(CSCO) at the end of March.
- NYC won its highest-ever credit rating on $34.2 billion in bonds after S&P said a surge in Wall Street profits and runaway real estate prices boosted revenue in the most populous US city.
- Daniel Ellsberg, who leaked secret Vietnam War documents, said the NY Times’ decision to publish classified information on domestic surveillance was “necessary” for democracy.
- Bank of Japan Governor Toshihiko Fukui suggested the yen’s strength is likely to be temporary.
- The US dollar strengthened against the yen on speculation sliding share prices and raw materials will spur flows into less risky assets such as US Treasuries.
- Indian stocks may extend their three-day, 14% plunge as some overseas investors judge local shares expensive given the outlook for earnings.

Financial Times:
- News Corp.’s(NWS/A) MySpace.com social networking Web site is seeking to link up with a large Internet search engine.

China Daily:
- Dell’s(DELL) sales of personal computers in China rose 29% in the three months starting Feb. 1, 2006, citing Dell Asia Pacific President Steve Felice.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -1.0% to -.50% on average.
S&P 500 indicated +.21%.
NASDAQ 100 indicated +.24%.

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
- (BGP)/-.24
- (CBRL)/.50
- (CSC)/1.13
- (MDT)/.62
- (PVH)/.73
- (TECD)/.32
- (TOL)/1.03

Upcoming Splits
- (JCOM) 2-for-1
- (NHY) 5-for-1
- (UN) 3-for-1
- (UL)

Economic Releases
10:00 am EST
- Richmond Fed Index for May is estimated to fall to 14 versus a reading of 18 in April.

BOTTOM LINE: Asian indices are lower, weighed down by exporting stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing higher. The Portfolio is 75% net long heading into the day.

Stocks Finish Lower on Worries Over Future Growth

Indices
S&P 500 1,262.07 -.39%
DJIA 11,125.33 -.17%
NASDAQ 2,172.86 -.96%
Russell 2000 715.25 -1.01%
Wilshire 5000 12,709.79 -.52%
S&P Barra Growth 585.03 -.37%
S&P Barra Value 675.18 -.41%
Morgan Stanley Consumer 602.64 +.03%
Morgan Stanley Cyclical 823.87 -1.32%
Morgan Stanley Technology 501.44 -.77%
Transports 4,650.34 +.52%
Utilities 399.55 +.71%
Put/Call 1.21 -.82%
NYSE Arms 1.54 +72.87%
Volatility(VIX) 17.54 +3.03%
ISE Sentiment 191.00 +36.43%
US Dollar 84.33 -.65%
CRB 344.21 +1.64%

Futures Spot Prices
Crude Oil 69.23 +1.02%
Unleaded Gasoline 205.85 +.05%
Natural Gas 6.30 +.41%
Heating Oil 193.26 +.65%
Gold 656.50 -.18%
Base Metals 225.00 +1.12%
Copper 343.50 -.77%
10-year US Treasury Yield 5.03% -.44%

Leading Sectors
Broadcasting +.79%
Utilities +.71%
Tobacco +.50%

Lagging Sectors
Semis -4.19%
Alternative Energy -4.54%
Steel -4.94%

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
- None of note

Afternoon/Evening Headlines
Bloomberg:
- People over 65, who are at greatest risk of death from influenza, may need four times the standard level of flu vaccine for effective protection, researchers say.
- Investment strategists Thomas McManus of Banc of America Securities and Ed Keon of Prudential Equity Group defended US stocks amid their biggest correction in three years.
- The average US pump price for regular gasoline fell 6.4 cents to $2.88 a gallon in the week ended today, the US Energy Dept. said.

AP:
- Stephens Inc., the brokerage firm based in Little Rock, Arkansas, said it will divide its business into two segments with each controlled by different family members.

Memphis Commercial Appeal:
- FedEx Corp.(FDX) will buy trucking company Watkins Motor Lines to extend freight services into Mexico and Canada.
BOTTOM LINE: The Portfolio finished lower today as losses in my Semi longs and Medical longs more than offset gains in my Base Metal shorts and Energy-related shorts. I covered some of my (IWM) and (QQQQ) shorts in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished lower, almost every sector fell and volume was above average. Measures of investor anxiety were mixed into the close. Overall, today's market performance was mildly bearish. The problem with today's slight comeback from morning lows is that it was led mainly by energy stocks as oil reversed higher. I don't think a broad market rally is sustainable that is led by commodities. Having said that, I am still hopeful a double bottom in the major averages occurred this morning as anxiety measures spiked higher. I will closely monitor signs of emerging leadership before becoming further convinced of a bottom in equities.