Wednesday Watch

Late-Night Headlines
Bloomberg:
- North Korea fired at least six missiles over the Sea of Japan today, defying demands by the US, China, Japan, South Korea and Russia to refrain from such tests.
- The space shuttle Discovery blasted off with a roar to rival any fireworks show as NASA carried out its first-ever Independence Day launch.
- The yen fell to a record low versus the euro and dropped against the dollar after Japan said North Korea fired missiles over the Sea of Japan.
- Oracle Corp.(ORCL) plans to acquire companies in Asia to grab market share from SAP AG(SAP).

Financial Times:
- EBay Inc.(EBAY) is attempting to build software tools that help Internet bloggers insert product listing into their own Web sites.

Australian:
- Burma’s military junta has attempted to buy nuclear weapons technology from North Korea in an alliance that presents a new threat to regional security.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -.50% to +.50% on average.
S&P 500 indicated -.21%.
NASDAQ 100 indicated -.28%.

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
- None of note

Upcoming Splits
- (INTU) 2-for-1
- (WOS) 2-for-1

Economic Releases
10:00 am EST
- Factory Orders for May are estimated to rise .1% versus a 1.8% decline in April.

BOTTOM LINE: Asian indices are mostly lower, weighed down by exporting stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish Higher on Bargain Hunting

Indices
S&P 500 1,280.19 +.79%
DJIA 11,228.02 +.70%
NASDAQ 2,190.43 +.84%
Russell 2000 730.80 +.85%
Wilshire 5000 12,906.50 +.76%
S&P Barra Growth 590.89 +.72%
S&P Barra Value 687.75 +.85%
Morgan Stanley Consumer 613.66 +.37%
Morgan Stanley Cyclical 831.85 +.34%
Morgan Stanley Technology 498.47 +.95%
Transports 4,974.91 +.93%
Utilities 418.46 +1.09%
Put/Call .89 -3.26%
NYSE Arms .97 -36.90%
Volatility(VIX) 13.05 -.23%
ISE Sentiment 66.00 -38.32%
US Dollar 85.14%
CRB 348.13 +.50%

Futures Spot Prices
Crude Oil 73.93 unch.
Unleaded Gasoline 221.88 unch.
Natural Gas 6.10 unch.
Heating Oil 202.86 unch.
Gold 616.00 unch.
Base Metals 216.69 -.44%
Copper 335.50 unch.
10-year US Treasury Yield 5.14% +.24%

Leading Sectors
Gold & Silver +4.07%
I-Banks +1.83%
REITs +1.30%

Lagging Sectors
Homebuilders -.03%
Gaming -.06%
Retail -.08%

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:
- The US dollar climbed the most in a week against the yen.
- NASA workers spotted a small cavity in the foam insulation in the giant fuel tank of the space shuttle Discovery, but officials plan to go ahead with liftoff tomorrow.
- Renault SA and affiliate Nissan Motor authorized their chief executive officer, Carlos Ghosn, to begin “exploratory” talks with GM(GM) on a possible alliance.

BBC:
- Al-Qaeda sympathizers have attempted to infiltrate MI5, the UK’s internal security service, citing unidentified government sources.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Medical longs and Computer longs. I did not trade, thus leaving the Portfolio 100% net long. The tone of the market was positive as the advance/decline line finished higher, almost every sector rose and volume was light. Measures of investor anxiety were mostly lower into the close. Overall, today's market performance was bullish. The S&P 500 closed back above its 50-day moving average, which many had pointed to as a substantial point of resistance after last week's sharp gains. Moreover, the ISE Sentiment Index made another all-time low of 36.0 this morning, a very depressed level, which is a big positive. The 10-year also maintained last week's gains, which was also a positive. The main negative for today was the fact that commodity stocks paced the advance. However, a number of market-leading growth stocks finished with nice gains, as well. Have a great July 4th holiday! Thanks for reading.

Today's Headlines

Bloomberg:
- Ford Motor(F) and DaimlerChrysler(DCX) said their US sales of cars and trucks declined in June.
- The US dollar climbed the most in a week against the yen as an industry report showed prices paid by US manufacturers were higher in June than analysts predicted.
- Mexican election authorities will conduct a recount to determine who won yesterday’s presidential vote, with nearly complete returns showing former Energy Minister Calderon in front by the slimmest of margins.

Wall Street Journal:
- MasterCard Intl.(MA) may have to quit its role as middleman in establishing bank fees charged to complete credit card transactions in the European Union, citing antitrust officials.
- The US Congress is considering fixed-price contracts for defense companies as it seeks to hold down weapons spending.
- Fees charged by US mutual funds are declining, but more fund managers need to invest money in their own funds, so their interests are in consonance with those of shareholders, according to Morningstar.

AP:
- New Jersey regulators told the state’s 12 casinos to prepare to close July 5 as part of a government shutdown ordered by Governor Corzine after a government shutdown
- Toys “R” Us(TOY) CEO Storch said he wants cleaner, less cluttered stores and will continue to focus on younger children as the second-largest US toy seller competes with Wal-Mart Stores(WMT).
- Iran needs to stop enriching uranium by July 12 or face possible sanctions before the UN Security Council.

NY Times:
- Vonage(VG), SunRocket and other companies that offer low-cost telephone services over the Internet are putting pressure on traditional phone companies to cut their rates.
- Google Inc.(GOOG) continues to design most of its software and servers as part of a strategy to gain a lead over rivals Microsoft(MSFT) and Yahoo!(YHOO), which mainly buy machines from other manufacturers.

Financial Times:
- The NYMEX may announce plans next week to start electronically traded aluminum and zinc contracts.

Construction Spending Falls Again, Manufacturing Slows, Prices Paid Stable

- Construction Spending for May fell .4% versus estimates of a .2% increase and a .2% decline in April.
- ISM Manufacturing for June fell to 53.8 versus estimates of 55.0 and a reading of 54.4 in May.
- ISM Prices Paid for June rose to 76.5 versus estimates of 75.0 and a reading of 77.0 in May.

BOTTOM LINE: Construction spending in the US unexpectedly fell in May by the most since September 2004, as higher interest rates put the squeeze on homebuilders and commercial spending plans, Bloomberg reported. Increases in corporate construction are expected to help offset some of the drop in housing construction. I expect construction spending to continue to decelerate over the intermediate-term.

Growth in US manufacturing unexpectedly slowed for a second month in June as companies curbed expansion plans in the face of higher energy costs, Bloomberg said. The employment component of the index declined to 48.7 from 52.9 the prior month. The prices paid component fell to 76.5 versus a reading of 77 in May. I continue to believe manufacturing is in the process of slowing to around average levels as economic growth slows.

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 Watch

Weekend Headlines
Bloomberg:
- Wal-Mart Stores(WMT) said June same-store sales in the US rose 1.2%, the slowest monthly rate since April 2005.
- Credit Suisse Group and Morgan Stanley say the storm has passed for stock investors. They recommend that investors increase their stockholdings while reducing cash. The firms point to bullish signs such as corporate stock buybacks and even cite bearish indicators that are so pessimistic they’re cause for optimism.
- Japan’s largest companies plan to increase investment at the fastest pace in almost 16 years, strengthening the central bank’s base for raising interest rates from close to zero percent.
- Saddam Hussein’s oldest daughter, named by Iraq’s government on a list of the 41 most wanted Iraqis, is living in Jordan as a guest of King Abdullah II, Jordan’s official news agency Petra said.
- Texas Instruments(TXN) and Broadcom(BRCM) filed a complaint to South Korea’s antitrust regulator, claiming that Qualcomm(QCOM) unfairly hindered competition.

Barron’s:
- Ned Davis, president of Ned Davis Research, said the economy may grow more than 3.5% in the next year on low inflation rates.

Wall Street Journal:
- General Motors’(GM) board will meet on a conference call next week after the US July 4 holiday to discuss Kirk Kerkorian’s proposal about allying with Nissan Motor and Renault SA.

NY Times:
- The US government showed undercover videotapes of some of the seven men alleged to have been plotting to blow up the Sears Tower in Chicago and other buildings in Miami.

Washington Post:
- Chinese President Hu Jintao said in a speech that widespread corruption might diminish the Chinese Communist Party’s popular legitimacy and weaken its grip on power.
- The US government has paid at least $1.3 billion in agriculture subsidies since 2000 to people who don’t farm, citing an analysis of government records.
- US and Canadian police agencies are increasingly working together through cross-border investigations, shared intelligence and joint patrols along the Great Lakes.

San Francisco Chronicle:
- San Francisco may become the first US city to offer universal healthcare by offering its health plan for low-income people to all uninsured residents. Mayor Gavin Newsom wants the system opened to residents of any income, immigration status or medical condition.

CRN:
- Apple Computer’s(AAPL) Next Big Thing: Home Entertainment

AP:
- Osama bin Laden told insurgents in Iraq to keep fighting against the US-led coalition in a new message posted on the Internet.

London Daily Telegraph:
- Prostate cancer patients may benefit from drinking eight ounces of pomegranate juice daily, citing a Univ. of Cal. study.

Xinhua News Agency:
- Beijing has banned businesses from setting up offices in residential buildings to cool property prices.
- Chinese companies in more than 30 industries had losses or “marginal profits” in the first five months of the year because of rising costs of raw materials and fuel, citing the director of the National Bureau of Statistics.

Etemadd:
- Venezuela’s President Hugo Chavez will visit Iran, North Korea and Vietnam in late July, citing the Venezuelan Foreign Ministry.

WirtschaftsWoche:
- Hewlett-Packard(HPQ) plans to make “targeted” acquisitions to complement its businesses, citing CEO Hurd.

Sunday Times:
- The European Union may ban alcohol advertising, including sponsorship for sports events, before 9 pm.

Weekend Recommendations
Barron's:
- Had positive comments on (C) and (NEM).

Night Trading
Asian indices are -.25% to +.25% on average.
S&P 500 indicated +.26%
NASDAQ 100 indicated +.27%.

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/Estimate
- None of note

Upcoming Splits
- (UIL) 5-for-3

Economic Releases
10:00 am EST
- Construction Spending for May is estimated to rise .2% versus a .1% decline in April.
- ISM Manufacturing for June is estimated to rise to 55.0 versus a reading of 54.4 in May.
- ISM Prices Paid for June is estimated to fall to 75.0 versus a reading of 77.0 in May.

Afternoon:
- Total Vehicle Sales for June are estimated to rise to 16.4M versus 16.1M in May.
- Domestic Vehicle Sales for June rose to 12.6M versus 12.4M in May.

BOTTOM LINE: Asian Indices are mostly higher, boosted by financial shares in the region. I expect US stocks to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the week.