Bloomberg:
- Crude oil in NY plunged the most in 20 months as mild US weather curbed demand and record speculation by investment funds continues to subside.
- Copper prices in NY plunged 7.7% to a seven-month low as rising global inventories cut record speculation by investment funds. Copper is now down 35% from May 06 highs.
- The US Dollar is rising the most since July against the euro and reached a two-month high versus the yen after a report showed manufacturing in the US expanded in December.
- Fed Reserve officials concluded that the risk inflation would fail to slow was “the predominant concern” last month while acknowledging that chances for slower economic growth increased.
- Home Depot(HD) ousted CEO Nardelli after investors criticized him for earning $225 million while the company’s stock fell during his six-year tenure.
- The northeastern US may start to see winter-like temperatures by the middle of January, countering a warmer-than-average December, forecasters said.
NY Times:
- Makers of air fresheners are focusing on teenagers as younger consumers are becoming big users of the product.
- Education is the single social factor researchers agree is consistently linked to a longer life.
AP:
- US military helicopters and the National Guard are delivering food to people stranded by blizzards in Colorado, Kansas, Nebraska, and Oklahoma.
Multichannel News:
- News Corp.(NWS) has reached a distribution commitment agreement for its planned business-news network with Time Warner(TWX) as part of a broader accord. Time Warner’s large subscriber base and strong presence in Manhattan is critical to the success of the proposed News Corp. channel against rivals including CNBC.
Washington Post:
- US shopping malls, which have become modern day town centers, starting this month will train their 20,000 security guards to fight terrorism.
Financial Times:
- Investments in clean and renewable energy rose 43% to $70 billion last year, citing research company New Energy Finanace.
Wednesday, January 03, 2007
Construction Falls Less Than Estimates, ISM Manufacturing Expands, ISM Prices Paid Declines Again
- Construction Spending for November fell -.2% versus estimates of a -.5% decline and an upwardly revised -.3% decline in October.
- ISM Manufacturing for December rose to 51.4 versus estimates of 50.0 and a reading of 49.5 in November.
- ISM Prices Paid for December fell to 47.5 versus estimates of 54.0 and a reading of 53.5 in November.
- ISM Manufacturing for December rose to 51.4 versus estimates of 50.0 and a reading of 49.5 in November.
- ISM Prices Paid for December fell to 47.5 versus estimates of 54.0 and a reading of 53.5 in November.
BOTTOM LINE: Construction spending in the US fell for a third straight month in November, but less than analysts had expected and the prior month was revised higher. Spending on private residential building fell 1.6%. Construction of offices, warehouses, hospitals and schools is cushioning the slowdown in homebuilding. Total non-residential construction rose 14.7% from year-ago levels. While the worst of the housing slowdown is very likely over, homebuilders will continue to pare down inventories which will mute overall construction spending through at least the first half of this year.
Manufacturing in the US unexpectedly expanded in December, Bloomberg reported. A reading above 50.0 signifies expansion. Resilient consumer spending and continued growth in exports has resulted in lower inventories, helping stabilize factory production. The Employment Component of the index rose to 49.7 versus 49.2 the prior month. The New Orders Component of the index rose to 52.1 versus 48.7 the prior month. The Inventory Component fell to 48.4 versus 49.7 the prior month. Manufacturing will likely improve slowly during the first half of the year as auto production cutbacks and housing inventories continue to subside.
Tuesday, January 02, 2007
Wednesday Watch
Weekend Headlines
Bloomberg:
- US stocks rose last week, extending their biggest annual gain since 2003 after reports on home sales and consumer confidence suggested the economy has weathered the worst of the housing slump.
- The Dow Jones Industrial Average finished 2006 with a 19.0% total return and near an all-time high.
- Former Iraqi dictator Saddam Hussein, who was accused of killing more than 100,000 civilians during his 23-year rule over oil-rich Iraq, was hanged in Baghdad for crimes against humanity.
- The death of Iraq’s former dictator Saddam Hussein was “divine justice,” Kuwait’s Minister of Social Affairs and Labor Sheikh Sabah Al-Khalid Al-Hamad Al-Sabah said.
- Wal-Mart Stores(WMT) said December sales at US stores open at least a year rose about 1.6%, the most since August.
- US Treasuries had their best half-year since 2002 as the Federal Reserve ended two years of interest-rate increases and investors began to anticipate rate cuts next year.
- China’s central bank, under pressure from the US and other Group of Seven nations to make the yuan more flexible, will in 2007 pursue a “stable currency policy” to promote economic growth.
- Cattle can be genetically altered to lack the protein that causes mad-cow disease without adverse health effects, a study suggests.
- South Korea isn’t likely to face a “drastic” economic slowdown as oil prices decline further and concerns about North Korea’s nuclear weapons diminish, Finance Minister Kwon Okyu said.
- Hundreds of mourners filed through the US Capitol to pay final respects to President Gerald Ford.
- An EIA report that showed US crude-oil supplies fell 8.13 million barrels last week was partly a correction of the previous week’s report.
- Hedge-fund managers and other large speculators increased their net-long position in NY crude oil futures last week, according to the CFTC. Oil drillers, refiners, marketers and other commercials users were net short 3,755 contracts, an increase of 2,093 contracts or 126% from the prior week.
- The price of US steel sheet fell to the lowest in 13 months as demand fell, companies delayed new orders and imports surged, Purchasing Magazine said. Prices fell for the fourth month in a row after US imports in the nine months ended September soared 45%.
- Lennar Corp.(LEN) said it will post a loss in the fiscal fourth quarter due to a one-time charge of as much as $500 million.
- European manufacturing growth unexpectedly slowed in December after interest rates rose and the stronger euro clouded the outlook for exports.
- Bear, Stearns’(BSC) Francois Trahan, one of Wall Street’s biggest bears during a four-year rally in US stocks, raised his year-end forecast for the S&P 500 Index to 1600 from 1550.
- US gasoline at the pump declined 7 cents to $2.33/gallon last week, an EIA report showed.
- Copper fell the most in seven weeks in London, extending a slump to an eight-month low.
- The cost of transporting crude oil to Asia and the US from the Middle East may fall, extending a two-week decline, as reduced import demand leaves a surplus of vessels.
- Pfizer(PFE), Amgen(AMGN) and the rest of the pharmaceutical industry awake to a new reality this week: a Congress controlled by Democrats determined to impose costly restrictions on their business. Five committees are planning investigations into how to lower prices paid by Medicare and make generic medications available faster. Further probes and policy salvos may follow.
- Ensco Intl.(ESV) will join the S&P 500 Index, replacing BellSouth Corp.
- Starbucks Corp.(SBUX) removed trans fatty acids from pastries and drinks at more than 2,700 company-owned restaurants in the US and is aiming cutting the unhealthy fats entirely.
Wall Street Journal:
- Economists think that US economic growth will accelerate in the second half of this year as service businesses boom and housing and manufacturing slumps lessen, citing its own survey of 60 economists. On average, the economists forecast that real gross domestic product will increase at an annualized rate of 2.3% in the first half and 2.8% in the second half.
- The biggest US airlines will report for 2006 their first overall full-year profit since 2000, as the US economy remained strong and the companies filled their planes, citing data from the Air Transport Association trade group.
- AT&T(T) plans to focus on selling wireless services to consumers and corporations.
CBS Marketwatch.com:
- If the supply of equities continues to dwindle and retail investors also rediscover their former penchant for US stock mutual funds, it could mean the market in 2007 would get a significant push higher, some strategists say.
NY Times:
- Pitney Bowes(PBI), the world’s biggest maker of postal meters, is looking to China and direct marketers to counter a decline in single-letter mailings since the introduction of e-mail, citing CEO Critelli.
- Walt Disney(DIS) will introduce Jan. 8 the yearlong makeover of its Disney.com Web site, which has been called amateurish and difficult to navigate.
- Wal-Mart Stores(WMT) wants consumers to embrace compact fluorescent lamps, which burn less electricity than traditional light bulbs, as part of a plan to lower energy use.
- Investment banks, such as UBS AG and Bear Stearns(BSC), lease space in their offices to hedge fund firms, a relationship that may lead to a potential conflict of interests.
- The US and its European allies are working to increase pressure on Iran to end its nuclear ambitions by developing a financial and psychological strategy.
Washington Post:
- The Department of Homeland Security is helping fund intelligence centers run by local and state law enforcement agencies.
- Senators Hillary Clinton and Barack Obama, likely frontrunners for the 2008 Democratic presidential nomination, have opposed earch other on at least 40 roll-call votes taken during the overlap in their Senate terms.
AP:
- The Spokane Tribe of Indians has reached a tentative agreement with Washington state and the federal government to operate as many as five casinos in the state.
- The American College of Obstetricians and Gynecologists recommended that every pregnant woman, regardless of age, be given the option of having a test for Down syndrome.
LA Times:
- Enterprise Rent-A-Car Co., which last year had $9 billion in sales, expects increasing rentals of luxury cars to California drivers who want to make an impression.
- Boeing’s(BA) orders for its latest version of the 747 passenger jetliner, the 747-8, have prompted the company’s suppliers to increase hiring, citing executives at suppliers.
Financial Times:
- Warren Buffett’s $31 billion donation to Microsoft Corp.(MSFT) Chairman Bill Gates’ Bill & Melinda Gates Foundation last year helped make 2006 a record year for US charitable donations, citing Chronicle of Philanthropy data.
- Many commodities investors lost money in 2006, and individual commodities varied in price rather than went up or down in unison. The Goldman Sachs Commodities Index dropped 15% last year, as many investors lost money on oil futures.
National Post:
- A Few Kind Words About Growth Stocks by Noah Blackstein.
The Observer:
- Online Christmas shopping in the UK increased by 50% this year compared to 2005, citing Interactive Media in Retail Group.
The Mail on Sunday:
- Nasdaq Stock Market(NDAQ) said it will set up a rival market to the London Stock Exchange if its bid for the LSE fails.
Times of London:
- A venture of Verizon Communications(VZ) and Vodafone Group Plc(VOD) may bid for Alltel Corp.(AT), the fifth biggest cell-phone operator in the US, to become the nation’s largest.
- Some 10% of television will soon be watched via the internet rather than traditional broadcasts, according to the BBC.
PAP newswire:
- PKN Orlen SA, Poland’s largest oil company, may spend more than $140 million on investments in oil extraction this year.
Fars News Agency:
- Iran will loan Iraq $1 billion for infrastructure projects.
Bild-Zeitung:
- McDonald’s(MCD) is Germany’s favorite restaurant, followed by LSG Lufthansa, the airline caterer, and Burger King(BKC).
Xinhua News Agency:
- Chinese corn processors are expanding ethanol production, with a yearly output of 10 million tons planned compared with 1.02 million tons today.
Weekend Recommendations
Barron's:
- Made positive comments on (GXP).
- Made negative comments on (T) and (SWY).
Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated +.60%.
NASDAQ 100 indicated +.68%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/Estimate
- (BLUD)/.18
- (SONC)/.19
- (WITS)/.18
Upcoming Splits
- None of note
Economic Releases
8:15 am EST
- ADP Employment Change for December is estimated at 123K versus 158K in November.
10:00 am EST
- Construction spending for November is estimated to decline -.5% versus a -1.0% decline in October.
- ISM Manufacturing for December is estimated to rise to 50.0 versus 49.5 in November.
- ISM Prices Paid for December is estimated to rise to 54.0 versus 53.5 in November.
2:00 pm EST
- Minutes of Dec. 12 FOMC Meeting
Afternoon:
- Total Vehicle Sales for December are estimated to rise to 16.5M versus 16.1M in November.
Bloomberg:
- US stocks rose last week, extending their biggest annual gain since 2003 after reports on home sales and consumer confidence suggested the economy has weathered the worst of the housing slump.
- The Dow Jones Industrial Average finished 2006 with a 19.0% total return and near an all-time high.
- Former Iraqi dictator Saddam Hussein, who was accused of killing more than 100,000 civilians during his 23-year rule over oil-rich Iraq, was hanged in Baghdad for crimes against humanity.
- The death of Iraq’s former dictator Saddam Hussein was “divine justice,” Kuwait’s Minister of Social Affairs and Labor Sheikh Sabah Al-Khalid Al-Hamad Al-Sabah said.
- Wal-Mart Stores(WMT) said December sales at US stores open at least a year rose about 1.6%, the most since August.
- US Treasuries had their best half-year since 2002 as the Federal Reserve ended two years of interest-rate increases and investors began to anticipate rate cuts next year.
- China’s central bank, under pressure from the US and other Group of Seven nations to make the yuan more flexible, will in 2007 pursue a “stable currency policy” to promote economic growth.
- Cattle can be genetically altered to lack the protein that causes mad-cow disease without adverse health effects, a study suggests.
- South Korea isn’t likely to face a “drastic” economic slowdown as oil prices decline further and concerns about North Korea’s nuclear weapons diminish, Finance Minister Kwon Okyu said.
- Hundreds of mourners filed through the US Capitol to pay final respects to President Gerald Ford.
- An EIA report that showed US crude-oil supplies fell 8.13 million barrels last week was partly a correction of the previous week’s report.
- Hedge-fund managers and other large speculators increased their net-long position in NY crude oil futures last week, according to the CFTC. Oil drillers, refiners, marketers and other commercials users were net short 3,755 contracts, an increase of 2,093 contracts or 126% from the prior week.
- The price of US steel sheet fell to the lowest in 13 months as demand fell, companies delayed new orders and imports surged, Purchasing Magazine said. Prices fell for the fourth month in a row after US imports in the nine months ended September soared 45%.
- Lennar Corp.(LEN) said it will post a loss in the fiscal fourth quarter due to a one-time charge of as much as $500 million.
- European manufacturing growth unexpectedly slowed in December after interest rates rose and the stronger euro clouded the outlook for exports.
- Bear, Stearns’(BSC) Francois Trahan, one of Wall Street’s biggest bears during a four-year rally in US stocks, raised his year-end forecast for the S&P 500 Index to 1600 from 1550.
- US gasoline at the pump declined 7 cents to $2.33/gallon last week, an EIA report showed.
- Copper fell the most in seven weeks in London, extending a slump to an eight-month low.
- The cost of transporting crude oil to Asia and the US from the Middle East may fall, extending a two-week decline, as reduced import demand leaves a surplus of vessels.
- Pfizer(PFE), Amgen(AMGN) and the rest of the pharmaceutical industry awake to a new reality this week: a Congress controlled by Democrats determined to impose costly restrictions on their business. Five committees are planning investigations into how to lower prices paid by Medicare and make generic medications available faster. Further probes and policy salvos may follow.
- Ensco Intl.(ESV) will join the S&P 500 Index, replacing BellSouth Corp.
- Starbucks Corp.(SBUX) removed trans fatty acids from pastries and drinks at more than 2,700 company-owned restaurants in the US and is aiming cutting the unhealthy fats entirely.
Wall Street Journal:
- Economists think that US economic growth will accelerate in the second half of this year as service businesses boom and housing and manufacturing slumps lessen, citing its own survey of 60 economists. On average, the economists forecast that real gross domestic product will increase at an annualized rate of 2.3% in the first half and 2.8% in the second half.
- The biggest US airlines will report for 2006 their first overall full-year profit since 2000, as the US economy remained strong and the companies filled their planes, citing data from the Air Transport Association trade group.
- AT&T(T) plans to focus on selling wireless services to consumers and corporations.
CBS Marketwatch.com:
- If the supply of equities continues to dwindle and retail investors also rediscover their former penchant for US stock mutual funds, it could mean the market in 2007 would get a significant push higher, some strategists say.
NY Times:
- Pitney Bowes(PBI), the world’s biggest maker of postal meters, is looking to China and direct marketers to counter a decline in single-letter mailings since the introduction of e-mail, citing CEO Critelli.
- Walt Disney(DIS) will introduce Jan. 8 the yearlong makeover of its Disney.com Web site, which has been called amateurish and difficult to navigate.
- Wal-Mart Stores(WMT) wants consumers to embrace compact fluorescent lamps, which burn less electricity than traditional light bulbs, as part of a plan to lower energy use.
- Investment banks, such as UBS AG and Bear Stearns(BSC), lease space in their offices to hedge fund firms, a relationship that may lead to a potential conflict of interests.
- The US and its European allies are working to increase pressure on Iran to end its nuclear ambitions by developing a financial and psychological strategy.
Washington Post:
- The Department of Homeland Security is helping fund intelligence centers run by local and state law enforcement agencies.
- Senators Hillary Clinton and Barack Obama, likely frontrunners for the 2008 Democratic presidential nomination, have opposed earch other on at least 40 roll-call votes taken during the overlap in their Senate terms.
AP:
- The Spokane Tribe of Indians has reached a tentative agreement with Washington state and the federal government to operate as many as five casinos in the state.
- The American College of Obstetricians and Gynecologists recommended that every pregnant woman, regardless of age, be given the option of having a test for Down syndrome.
LA Times:
- Enterprise Rent-A-Car Co., which last year had $9 billion in sales, expects increasing rentals of luxury cars to California drivers who want to make an impression.
- Boeing’s(BA) orders for its latest version of the 747 passenger jetliner, the 747-8, have prompted the company’s suppliers to increase hiring, citing executives at suppliers.
Financial Times:
- Warren Buffett’s $31 billion donation to Microsoft Corp.(MSFT) Chairman Bill Gates’ Bill & Melinda Gates Foundation last year helped make 2006 a record year for US charitable donations, citing Chronicle of Philanthropy data.
- Many commodities investors lost money in 2006, and individual commodities varied in price rather than went up or down in unison. The Goldman Sachs Commodities Index dropped 15% last year, as many investors lost money on oil futures.
National Post:
- A Few Kind Words About Growth Stocks by Noah Blackstein.
The Observer:
- Online Christmas shopping in the UK increased by 50% this year compared to 2005, citing Interactive Media in Retail Group.
The Mail on Sunday:
- Nasdaq Stock Market(NDAQ) said it will set up a rival market to the London Stock Exchange if its bid for the LSE fails.
Times of London:
- A venture of Verizon Communications(VZ) and Vodafone Group Plc(VOD) may bid for Alltel Corp.(AT), the fifth biggest cell-phone operator in the US, to become the nation’s largest.
- Some 10% of television will soon be watched via the internet rather than traditional broadcasts, according to the BBC.
PAP newswire:
- PKN Orlen SA, Poland’s largest oil company, may spend more than $140 million on investments in oil extraction this year.
Fars News Agency:
- Iran will loan Iraq $1 billion for infrastructure projects.
Bild-Zeitung:
- McDonald’s(MCD) is Germany’s favorite restaurant, followed by LSG Lufthansa, the airline caterer, and Burger King(BKC).
Xinhua News Agency:
- Chinese corn processors are expanding ethanol production, with a yearly output of 10 million tons planned compared with 1.02 million tons today.
Weekend Recommendations
Barron's:
- Made positive comments on (GXP).
- Made negative comments on (T) and (SWY).
Night Trading
Asian indices are -.25% to +.50% on average.
S&P 500 indicated +.60%.
NASDAQ 100 indicated +.68%.
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
Conference Calendar
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule
Earnings of Note
Company/Estimate
- (BLUD)/.18
- (SONC)/.19
- (WITS)/.18
Upcoming Splits
- None of note
Economic Releases
8:15 am EST
- ADP Employment Change for December is estimated at 123K versus 158K in November.
10:00 am EST
- Construction spending for November is estimated to decline -.5% versus a -1.0% decline in October.
- ISM Manufacturing for December is estimated to rise to 50.0 versus 49.5 in November.
- ISM Prices Paid for December is estimated to rise to 54.0 versus 53.5 in November.
2:00 pm EST
- Minutes of Dec. 12 FOMC Meeting
Afternoon:
- Total Vehicle Sales for December are estimated to rise to 16.5M versus 16.1M in November.
BOTTOM LINE: Asian Indices are mostly higher, boosted by financial and technology 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.
Saturday, December 30, 2006
Year-end Scoreboard*
Indices
S&P 500 1,418.30 +15.8%
DJIA 12,463.15 +19.0%
NASDAQ 2,415.29 +10.4%
Russell 2000 787.66 +18.4%
Wilshire 5000 14,215.82 +13.75%
S&P Barra Growth 652.55 +11.0%
S&P Barra Value 764.25 +20.9%
Morgan Stanley Consumer 695.50 +20.1%
Morgan Stanley Cyclical 893.44 +16.1%
Morgan Stanley Technology 568.20 +9.4%
Transports 4,560.20 +9.8%
Utilities 456.77 +16.6%
MSCI Emerging Markets 114.17 +31.2%
S&P 500 Cum A/D Line 10,927 +16.6%
Bloomberg Crude Oil % Bulls 46.0 +110.0%
CFTC Oil Large Speculative Longs 160,309 +33.0%
Put/Call .88 +15.8%
NYSE Arms 1.56 -5.55%
Volatility(VIX) 11.56 -4.22%
ISE Sentiment 165.0 -13.6%
AAII % Bulls 46.0 -10.0%
AAII % Bears 36.0 +47.3%
US Dollar 83.65 -8.3%
CRB 307.26 -7.4%
ECRI Weekly Leading Index 138.50 +14.0%
Futures Spot Prices
Crude Oil 61.05 unch.
Reformulated Gasoline 161.63 n/a
Natural Gas 6.3 -44.0%
Heating Oil 164.82 -6.2%
Gold 638.80 +22.9%
Base Metals 236.91 +55.4%
Copper 286.60 +32.3%
10-year US Treasury Yield 4.7% +7.1%
Average 30-year Mortgage Rate 6.18% -13.44%
Leading Sectors
Telecom +33.6%
REITs +30.0%
Gaming +25.2%
Defense +25.1%
I-Banks +23.1%
Lagging Sectors
Hospitals +1.52%
Internet +.64%
Semis -2.4%
Homebuilding -9.1%
Coal -9.3%
This Year’s Winners
This Year’s Losers
*1-Year % Total Return
S&P 500 1,418.30 +15.8%
DJIA 12,463.15 +19.0%
NASDAQ 2,415.29 +10.4%
Russell 2000 787.66 +18.4%
Wilshire 5000 14,215.82 +13.75%
S&P Barra Growth 652.55 +11.0%
S&P Barra Value 764.25 +20.9%
Morgan Stanley Consumer 695.50 +20.1%
Morgan Stanley Cyclical 893.44 +16.1%
Morgan Stanley Technology 568.20 +9.4%
Transports 4,560.20 +9.8%
Utilities 456.77 +16.6%
MSCI Emerging Markets 114.17 +31.2%
S&P 500 Cum A/D Line 10,927 +16.6%
Bloomberg Crude Oil % Bulls 46.0 +110.0%
CFTC Oil Large Speculative Longs 160,309 +33.0%
Put/Call .88 +15.8%
NYSE Arms 1.56 -5.55%
Volatility(VIX) 11.56 -4.22%
ISE Sentiment 165.0 -13.6%
AAII % Bulls 46.0 -10.0%
AAII % Bears 36.0 +47.3%
US Dollar 83.65 -8.3%
CRB 307.26 -7.4%
ECRI Weekly Leading Index 138.50 +14.0%
Futures Spot Prices
Crude Oil 61.05 unch.
Reformulated Gasoline 161.63 n/a
Natural Gas 6.3 -44.0%
Heating Oil 164.82 -6.2%
Gold 638.80 +22.9%
Base Metals 236.91 +55.4%
Copper 286.60 +32.3%
10-year US Treasury Yield 4.7% +7.1%
Average 30-year Mortgage Rate 6.18% -13.44%
Leading Sectors
Telecom +33.6%
REITs +30.0%
Gaming +25.2%
Defense +25.1%
I-Banks +23.1%
Lagging Sectors
Hospitals +1.52%
Internet +.64%
Semis -2.4%
Homebuilding -9.1%
Coal -9.3%
This Year’s Winners
This Year’s Losers
*1-Year % Total Return
Friday, December 29, 2006
Stocks Slightly Lower into Final Hour on Year-end Profit-taking
BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs and Commodity shorts. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is modestly negative as the advance/decline line is lower, most sectors are declining and volume is very light. US stock short interest is just off all-time highs, US stock mutual funds have seen outflows for months and the sentiment of the herd is very pessimistic. In fact, herd sentiment has never been worse in US history with the DJIA making record highs almost weekly. With all the many bears and even many bulls calling for a pullback in January, I wouldn’t be surprised to see stocks start the new year off with a very strong upwards bang after a couple more consolidation days as the anticipated decline fails to materialize and investors jump back on before getting left too far behind again. The S&P 500 is finishing the year with about a 15.5% total return, slightly above my early year prediction of a 15% total return. I expect US stocks to trade modestly higher into the close from current levels on more economic optimism and short-covering.
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