BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Computer longs, Internet longs and Retail longs. I added to my (BRCM) long and covered my remaining (QQQQ)/(IWM) hedges this morning, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is higher and volume is above average. The ISE Sentiment Index plunged to a depressed 90.0 today. The CBOE total put/call is an above-average 96.0. Moreover, options traders, especially retail, remain very skeptical of the current rally in stocks as evidenced by longer-term readings. With short interest at an all-time record and many bulls underinvested, I suspect severe performance anxiety will set in much sooner than would otherwise be the case. I believe the many bears need a substantial pullback very soon to keep the wide-held belief of an imminent recession alive. The average stock continues to outpace the major averages. The Value Line Geometric index, the best gauge of the broad market, is 4.5% higher year to date. Moreover, mid-cap stocks are up about 6.0% for the year. As I have said several times of late, this is one of the better stock-picking enviornments I have seen. Many stocks are already soaring this year, despite modest gains in the major averages. I expect US stocks to trade mixed-to-higher into the close on short-covering, buyout speculation, lower energy prices, more economic optimism and bargain-hunting.
Tuesday, April 03, 2007
Stocks Sharply Higher into Final Hour on Falling Energy Prices, More Economic Optimism
Today's Headlines
Bloomberg:
- Colorado State is predicting 9 hurricanes for the upcoming season, 3 more than the long-term average.
- Hedge funds, private-equity and venture-capital companies almost tripled investments in North American oil and natural gas in 2006.
- The shares of Humana Inc.(HUM) and other managed-care providers rose after the US issued higher reimbursement rates for Medicare Advantage plans for the elderly than some analysts expected.
- President Bush said it’s “irresponsible” for the Democratic-controlled Congress to delay money for the Iraq war and failure to fund US troops would force extended tours and cuts in training.
- Job growth in NYC, propelled by private businesses, will help bring down the financial capital’s unemployment rate this year, according to a forecast by the Federal Reserve Bank of NY.
- Winton Capital Management LLC, a hedge fund manager with $8 billion in assets, abandoned plans to sell shares in a $200 million fund to the public on concerns about potential conflicts between investors.
- Shares of Accredited Home Lenders Holding(LEND) jumped as much as 26% after the subprime mortgage company got financing commitments totaling $1.1 billion from two lenders.
- Gasoline futures fell for a third straight day, following crude oil(-$1.30/bbl.), on signs that the UK may be able to resolve the dispute over Iran’s detention of 15 British military personnel and expectations inventories will rise.
- Wind, solar and green-fuel companies received 58% more funding globally in the first three months of 2007 than a year earlier, led by “large” venture capital and private-equity deals.
- Sony Computer Entertainment America said Tuesday it has reduced the price for the PlayStation Portable game console by around 15% from $199.99 to $169.99, effective immediately.
- Corn, the worst-performing commodity during the past month, is in a bear market that may persist as US farmers prepare to plant their biggest crop since WWII, according to Barclays Capital.
- Global Crossing Ltd(GLBC) may be attractive to private equity firms as it wins more customers for its fiber-optic network, CEO Legere said.
- Copper is rising to a five-month high on speculation demand from China is accelerating.
- Wheat prices fell in Chicago and Kansas City for the third straight session as favorable weather in the US, India and other grain-growing countries benefits crops.
Wall Street Journal:
- Auction house Sotheby’s(BID) has seen its shares rise 48%, to almost $46, so far this year, as investors bet that prosperous art-buyers will be spending lavishly.
- News Corp.(NWS/A) plans to insert short portions of programs into television ads to retain the attention of viewers who would otherwise be distracted by the commercials.
NY Times:
- Illinois Senator Barack Obama raised over $20 million in the first three months of the presidential campaign.
- US charitable foundations gave a record $40 billion in 2006, beating the previous best of $36.4 billion in 2005, citing estimates by the Foundation Center.
Financial Times:
- Kohlberg Kravis Roberts’ offer for First Data Corp.(FDC) may show that the leveraged-buyout boom is entering a new phase where firms buy companies with support from investment bankers rather than private-equity firms.
AFP:
- Nigeria plans to sell rights to 45 oil exploration blocs on May 3, citing Energy Minister Edmund Daukoru. Production-sharing agreements will be signed two weeks later.
RIA Novosti:
- OAO Gazprom, Russia’s natural-gas monopoly, plans to become the world’s largest energy company through diversification, citing Deputy CEO Medvedev. Gazprom will only be able to achieve the goal by expanding into oil, refining and electricity, he said.
International Oil Daily:
- BP Plc(BP) restarted its 50,000 barrels a day Mad Dog oil field in the Gulf of Mexico last weekend. The oil field had been shut since Feb. 28 because of an “equipment failure.”
Valor Economico:
- Brazilian engineering company Sucral and venture-capital fund Greentech will lead $221 million of investments in two new ethanol mills to meet rising demand for crop-based fuels.
- Colorado State is predicting 9 hurricanes for the upcoming season, 3 more than the long-term average.
- Hedge funds, private-equity and venture-capital companies almost tripled investments in North American oil and natural gas in 2006.
- The shares of Humana Inc.(HUM) and other managed-care providers rose after the US issued higher reimbursement rates for Medicare Advantage plans for the elderly than some analysts expected.
- President Bush said it’s “irresponsible” for the Democratic-controlled Congress to delay money for the Iraq war and failure to fund US troops would force extended tours and cuts in training.
- Job growth in NYC, propelled by private businesses, will help bring down the financial capital’s unemployment rate this year, according to a forecast by the Federal Reserve Bank of NY.
- Winton Capital Management LLC, a hedge fund manager with $8 billion in assets, abandoned plans to sell shares in a $200 million fund to the public on concerns about potential conflicts between investors.
- Shares of Accredited Home Lenders Holding(LEND) jumped as much as 26% after the subprime mortgage company got financing commitments totaling $1.1 billion from two lenders.
- Gasoline futures fell for a third straight day, following crude oil(-$1.30/bbl.), on signs that the UK may be able to resolve the dispute over Iran’s detention of 15 British military personnel and expectations inventories will rise.
- Wind, solar and green-fuel companies received 58% more funding globally in the first three months of 2007 than a year earlier, led by “large” venture capital and private-equity deals.
- Sony Computer Entertainment America said Tuesday it has reduced the price for the PlayStation Portable game console by around 15% from $199.99 to $169.99, effective immediately.
- Corn, the worst-performing commodity during the past month, is in a bear market that may persist as US farmers prepare to plant their biggest crop since WWII, according to Barclays Capital.
- Global Crossing Ltd(GLBC) may be attractive to private equity firms as it wins more customers for its fiber-optic network, CEO Legere said.
- Copper is rising to a five-month high on speculation demand from China is accelerating.
- Wheat prices fell in Chicago and Kansas City for the third straight session as favorable weather in the US, India and other grain-growing countries benefits crops.
Wall Street Journal:
- Auction house Sotheby’s(BID) has seen its shares rise 48%, to almost $46, so far this year, as investors bet that prosperous art-buyers will be spending lavishly.
- News Corp.(NWS/A) plans to insert short portions of programs into television ads to retain the attention of viewers who would otherwise be distracted by the commercials.
NY Times:
- Illinois Senator Barack Obama raised over $20 million in the first three months of the presidential campaign.
- US charitable foundations gave a record $40 billion in 2006, beating the previous best of $36.4 billion in 2005, citing estimates by the Foundation Center.
Financial Times:
- Kohlberg Kravis Roberts’ offer for First Data Corp.(FDC) may show that the leveraged-buyout boom is entering a new phase where firms buy companies with support from investment bankers rather than private-equity firms.
AFP:
- Nigeria plans to sell rights to 45 oil exploration blocs on May 3, citing Energy Minister Edmund Daukoru. Production-sharing agreements will be signed two weeks later.
RIA Novosti:
- OAO Gazprom, Russia’s natural-gas monopoly, plans to become the world’s largest energy company through diversification, citing Deputy CEO Medvedev. Gazprom will only be able to achieve the goal by expanding into oil, refining and electricity, he said.
International Oil Daily:
- BP Plc(BP) restarted its 50,000 barrels a day Mad Dog oil field in the Gulf of Mexico last weekend. The oil field had been shut since Feb. 28 because of an “equipment failure.”
Valor Economico:
- Brazilian engineering company Sucral and venture-capital fund Greentech will lead $221 million of investments in two new ethanol mills to meet rising demand for crop-based fuels.
Pending Home Sales Unexpectedly Rise
- Pending Home Sales for February rose .7% versus estimates of a -.5% decline and a -4.2% fall in January.
BOTTOM LINE: More Americans signed contracts to buy previously owned homes in February, easing concern the real-estate market will worsen, Bloomberg said. Strong wage growth and lower prices are making homes more affordable. This index is considered a leading indicator because it tracks contract signings. Sales rose despite one of the coldest Februarys in US history. Sales rose 4.5% in the South and 2.9% in the Midwest. They fell 6% in the west and 1.3% in the Northeast. I continue to believe home sales are stabilizing at relatively high levels.
Monday, April 02, 2007
Tuesday Watch
Late-Night Headlines
Bloomberg:
- Crude oil is falling .40/bbl. in NY on signs Iran may step back from a confrontation with the UK over its detention of British naval personnel.
- Research published in the Journal of Clinical Oncology found that deaths caused by estrogen-fueled breast cancer, the most common and treatable form, fell 38% among women younger than 70 since 1990. For older women, the decrease was 14% over that period.
- Fremont General(FMT) said Grant Thornton LLP is resigning as its auditor.
- China is planning to order $12.5 billion of US-made goods before a visit by Chinese trade officials to Washington next month. China may buy $10 billion of machinery and electronics, $2 billion of soy beans and $500 million of cotton from US companies.
- Devon Energy Corp.(DVN) plans to drill seven new well at the Panyu field in the western South China Sea this year.
- The University of Florida beat Ohio State 84-75 to become the first school in 15 years to repeat as college basketball’s national champion.
Wall Street Journal:
- Marshall & Ilsley Corp.(MI), a Milwaukee bank, and private-equity firm Warburg Pincus LLC are considering a $4 billion spin-off of the bank’s Metavante payment processing
London-based Times:
- Google Inc.(GOOG) will say it has signed an advertising agreement with EchoStar Communications(DISH). Television advertisers will be allowed to bid for ad slots online and track the campaign’s performance in real time.
Economic Times:
- India is asking hedge funds seeking to invest in the country to lock in their investments fro two years to avoid a sudden outflow of capital under adverse conditions.
Yomiuri:
- China plans to develop the ability to destroy US, Indian and Japanese satellites orbiting above its territory by 2020.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (AIZ), target $62.
Morgan Stanley:
- Reiterated Underweight on (PTEN), target $23.
Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.06%.
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/EPS Estimate
- (ISCA)/.74
- (OXM)/.66
- (SHFL)/.07
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Pending Home Sales for February are estimated to fall -.5% versus a -4.1% decline in January.
Afternoon:
- Total Vehicle Sales for March are estimated at 16.5M versus 16.6M in February.
- Domestic Vehicle Sales for March are estimated at 12.7M versus 12.8M in February.
Bloomberg:
- Crude oil is falling .40/bbl. in NY on signs Iran may step back from a confrontation with the UK over its detention of British naval personnel.
- Research published in the Journal of Clinical Oncology found that deaths caused by estrogen-fueled breast cancer, the most common and treatable form, fell 38% among women younger than 70 since 1990. For older women, the decrease was 14% over that period.
- Fremont General(FMT) said Grant Thornton LLP is resigning as its auditor.
- China is planning to order $12.5 billion of US-made goods before a visit by Chinese trade officials to Washington next month. China may buy $10 billion of machinery and electronics, $2 billion of soy beans and $500 million of cotton from US companies.
- Devon Energy Corp.(DVN) plans to drill seven new well at the Panyu field in the western South China Sea this year.
- The University of Florida beat Ohio State 84-75 to become the first school in 15 years to repeat as college basketball’s national champion.
Wall Street Journal:
- Marshall & Ilsley Corp.(MI), a Milwaukee bank, and private-equity firm Warburg Pincus LLC are considering a $4 billion spin-off of the bank’s Metavante payment processing
London-based Times:
- Google Inc.(GOOG) will say it has signed an advertising agreement with EchoStar Communications(DISH). Television advertisers will be allowed to bid for ad slots online and track the campaign’s performance in real time.
Economic Times:
- India is asking hedge funds seeking to invest in the country to lock in their investments fro two years to avoid a sudden outflow of capital under adverse conditions.
Yomiuri:
- China plans to develop the ability to destroy US, Indian and Japanese satellites orbiting above its territory by 2020.
Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (AIZ), target $62.
Morgan Stanley:
- Reiterated Underweight on (PTEN), target $23.
Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.06%.
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/EPS Estimate
- (ISCA)/.74
- (OXM)/.66
- (SHFL)/.07
Upcoming Splits
- None of note
Economic Releases
10:00 am EST
- Pending Home Sales for February are estimated to fall -.5% versus a -4.1% decline in January.
Afternoon:
- Total Vehicle Sales for March are estimated at 16.5M versus 16.6M in February.
- Domestic Vehicle Sales for March are estimated at 12.7M versus 12.8M in February.
BOTTOM LINE: Asian indices are higher, boosted by financial and technology shares in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.
Stocks Finish Mostly Higher as Iran Tensions Ease
Indices
S&P 500 1,424.55 +.26%
DJIA 12,382.30 +.23%
NASDAQ 2,422.26 +.03%
Russell 2000 803.22 +.31%
Wilshire 5000 14,394.26 +.28%
Russell 1000 Growth 560.49 +.34%
Russell 1000 Value 824.57 +.19%
Morgan Stanley Consumer 704.62 +.35%
Morgan Stanley Cyclical 956.86 +.14%
Morgan Stanley Technology 561.64 +.94%
Transports 4,816.83 +.13%
Utilities 510.20 +2.0%
MSCI Emerging Markets 117.04 -1.08%
Sentiment/Internals
Total Put/Call .83 -30.25%
NYSE Arms .95 -34.69%
Volatility(VIX) 14.59 -.34%
ISE Sentiment 129.0 +37.23%
Futures Spot Prices
Crude Oil 66.00 +.20%
Reformulated Gasoline 204.71 -.53%
Natural Gas 7.66 -.88%
Heating Oil 186.57 -.60%
Gold 669.90 +.13%
Base Metals 249.63 +.03%
Copper 318.35 +1.19%
Economy
10-year US Treasury Yield 4.64% unch.
US Dollar 82.87 -.07%
CRB Index 315.07 -.57%
Leading Sectors
Computer Services +2.61%
Utilities +2.0%
Gold +1.80%
Lagging Sectors
Homebuilders -.65%
Disk Drives -1.34%
Banks -1.50%
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:
- Solengo Capital Advisors, a new commodity investment fund founded by Canadian trader Brian Hunter, sued the DealBreaker Web site for copyright infringement for posting Solengo’s confidential prospectus. Hunter caused the biggest hedge fund collapse ever as an Amaranth Advisors LLC energy trader when his bet on natural gas prices last year led to $6.6 billion in losses.
- Corn prices in Chicago fell the most in seven months today and are now down 21% from their highs after US farmers indicated they plan to sow the most acres in 63 years.
- Brazil’s ethanol exports surged 21% in March from a year ago and corn exports soared 100%.
S&P 500 1,424.55 +.26%
DJIA 12,382.30 +.23%
NASDAQ 2,422.26 +.03%
Russell 2000 803.22 +.31%
Wilshire 5000 14,394.26 +.28%
Russell 1000 Growth 560.49 +.34%
Russell 1000 Value 824.57 +.19%
Morgan Stanley Consumer 704.62 +.35%
Morgan Stanley Cyclical 956.86 +.14%
Morgan Stanley Technology 561.64 +.94%
Transports 4,816.83 +.13%
Utilities 510.20 +2.0%
MSCI Emerging Markets 117.04 -1.08%
Sentiment/Internals
Total Put/Call .83 -30.25%
NYSE Arms .95 -34.69%
Volatility(VIX) 14.59 -.34%
ISE Sentiment 129.0 +37.23%
Futures Spot Prices
Crude Oil 66.00 +.20%
Reformulated Gasoline 204.71 -.53%
Natural Gas 7.66 -.88%
Heating Oil 186.57 -.60%
Gold 669.90 +.13%
Base Metals 249.63 +.03%
Copper 318.35 +1.19%
Economy
10-year US Treasury Yield 4.64% unch.
US Dollar 82.87 -.07%
CRB Index 315.07 -.57%
Leading Sectors
Computer Services +2.61%
Utilities +2.0%
Gold +1.80%
Lagging Sectors
Homebuilders -.65%
Disk Drives -1.34%
Banks -1.50%
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:
- Solengo Capital Advisors, a new commodity investment fund founded by Canadian trader Brian Hunter, sued the DealBreaker Web site for copyright infringement for posting Solengo’s confidential prospectus. Hunter caused the biggest hedge fund collapse ever as an Amaranth Advisors LLC energy trader when his bet on natural gas prices last year led to $6.6 billion in losses.
- Corn prices in Chicago fell the most in seven months today and are now down 21% from their highs after US farmers indicated they plan to sow the most acres in 63 years.
- Brazil’s ethanol exports surged 21% in March from a year ago and corn exports soared 100%.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Retail longs and Biotech longs. 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 about average. Measures of investor anxiety were about average into the close. Today's overall market action was neutral. Banks remained under pressure throughout the day. I-banks trimmed morning losses and finished just slightly lower. I sat on my hands most of the day. I still expect stocks to finish the week modestly higher. The Nikkei is indicated 160 points higher on the open in Japan tonight.
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