Links of Interest

Market Snapshot
Detailed Market Summary
Quick Summary
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
Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Morgan Stanley(MS), the biggest real estate investor among Wall Street banks, agreed to buy Crescent Real Estate Equities(CEI), an investment trust founded by Texas billionaire Richard Rainwater, for $2.78 billion.
- Wyeth(WYE) won US approval for its contraceptive Lybrel, the first birth control pill designed to completely eliminate monthly periods.
- Nintendo Co. expects to sell as many as 35 million Wii video-game consoles in the US, close to the record 38.2 million PlayStation 2 players sold by Sony Corp.
- The yen weakened to a three-month low against the US dollar on speculation Japanese investors will snap up new investment trusts that buy higher-yielding overseas assets.
- Fletcher Building Ltd., New Zealand’s largest construction company, agreed to buy US-based Formica Corp. for $700 million, creating the world’s biggest maker of laminated board.
- A farm-bill plan that calls for $400 million a year in loan guarantees for ethanol plants that use crops other than corn got the backing of the House subcommittee that oversees Agriculture Department energy programs.
- The Fed’s Lacker said after a speech to the Money Marketeers of NYU tonight that the Fed’s benchmark rate “has us on track to achieve what we want.”

Financial Times:
- Google’s(GOOG) desire to make best use of the personal information it retains about users is such that the company sees a time when it may be able to advise people on careers or leisure activities, citing Google CEO Schmidt.
- The Bancroft family, which controls Dow Jones(DJ), plans to hold a private meeting to discuss its options following a $5 billion bid for the company from Rupert Murdoch’s News Corp.(NWS/A).
- US regulators are poised on Wednesday to approve the first changes to the implementations of the Sarbanes-Oxley law since its passage five years ago, hoping to make compliance with its controversial provisions easier for top company executives.

Xinhua News Agency:
- US labor unions agreed to cooperate with the All-China Federation of Trade Unions, ending a decades-long boycott.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (KYPH).
- Reiterated Buy on (PLCE), target $78.

Morgan Stanley:
- Reiterated Overweight on (ADI), target $48. With ADI significantly outperforming YTD we would buy the stock aggressively if some investor’s aggressive near-term expectations were not met and the stock comes under near-term pressure.

Night Trading
Asian Indices are +.25% to +.50% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated -.03%.

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
- (ANF)/.65
- (CA)/.20
- (DKS)/.37
- (DDS)/.72
- (EV)/.16
- (FL)/.13
- (GME)/.16
- (GYMB)/.63
- (LTD)/.13
- (NTAP)/.29
- (ROST)/.47
- (SNPS)/.28
- (TLB)/.09
- (TGT)/.71
- (ZUMZ)/.06

Upcoming Splits
- (ATLS) 3-for-2
- (GIL) 2-for-1

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil build of 600,000 barrels versus a 1,061,000 barrel increase the prior week. Gasoline supplies are expected to rise by 1,200,000 barrels versus a 1,764,000 barrel build the prior week. Distillate inventories are expected to rise by 1,300,000 barrels versus a 992,000 barrel increase the prior week. Finally, Refinery Utilization is estimated to rise by .45% versus a .47% the prior week.

Other Potential Market Movers
- The Fed board meeting on Truth-in-Lending regulations, Fed’s Kroszner speaking, weekly EIA energy inventory report, weekly MBA Mortgage Applications report, Citigroup Healthcare Conference, Thomas Weisel RFID Conference, Robinson Humphrey Financial Services Conference, Goldman Sachs Internet Conference, JPMorgan Tech Conference and UBS Oil&Gas Conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and financial stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish Mostly Higher on Falling Energy Prices, More Economic Optimism

Indices
S&P 500 1,524.12 -.06%
DJIA 13,539.95 -.02%
NASDAQ 2,588.02 +.36%
Russell 2000 839.92 +.75%
Wilshire 5000 15,347.78 +.07%
Russell 1000 Growth 599.45 +.09%
Russell 1000 Value 879.65 -.08%
Morgan Stanley Consumer 744.64 +.06%
Morgan Stanley Cyclical 1,060.23 -.32%
Morgan Stanley Technology 616.32 +.42%
Transports 5,197.19 -.11%
Utilities 533.70 -.38%
MSCI Emerging Markets 127.05 +.28%

Sentiment/Internals
Total Put/Call 1.14 +22.58%
NYSE Arms 1.06 +17.96%
Volatility(VIX) 13.06 -1.80%
ISE Sentiment 148.0 -1.33%

Futures Spot Prices
Crude Oil 64.97 -1.96%
Reformulated Gasoline 230.77 -3.90%
Natural Gas 7.81 -1.28%
Heating Oil 190.98 -2.11%
Gold 659.20 -.69%
Base Metals 273.52 +1.29%
Copper 330.55 -2.79%

Economy
10-year US Treasury Yield 4.82% +4 basis points
US Dollar 82.41 +.06%
CRB Index 311.42 -1.60%

Leading Sectors
Gaming +4.83%
Airlines +2.59%
Homebuilders +2.04%

Lagging Sectors
Oil Service -1.51%
Steel -1.61%
Gold -1.72%

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
Needham:
- Upgraded (TECD) to Buy.

Afternoon/Evening Headlines
Bloomberg:
- Harbinger Capital Partners, owner of 13% of Openwave Systems(OPWV), offered $335 million in cash to gain control of the maker of mobile-phone software and replace its management and board.
- Copper futures fell 3% to the lowest in seven weeks in NY on speculation that demand may slow in China.
- Alcan Inc.(AL) rejected a $27.4 billion bid from Alcoa Inc.(AA) as “inadequate,” signaling a higher price may be needed to win acceptance for a takeover that would create the world’s largest aluminum company.
- Crude oil fell more than $1 barrel on signs that a government report tomorrow will show US gas supplies jumped.
- Corn in Chicago fell 3% after a government report showed that planting of the US crop had accelerated after a slow start and that plants were in better shape than last year.
- Valero Energy(VLO), the largest US gasoline refiner, projected a 57% increase this year in profit margins on oil processing at Gulf Coast plants.
- Gold fell $5/oz. on the decline in oil and rise in the US dollar.
- Wall Street’s largest bonus increases will probably go to bankers who specialize in the booming business of leveraged buyouts, where incentive pay may jump 20%, a survey by consultant Johnson Associates found.
- Medtronic(MDT) said fourth quarter profit rose 9.7% on higher sales of implantable defibrillators. The stock rose .80 to $51.61 in after-hours trading.
- Payless ShoeSource(PSS), the largest US shoe retailer by store count, agreed to buy Stride Rite(SRR) for $800 million in cash and will rename the combined company Collective Brands. SRR soared 31% on the news in after-hours trading.
- Analog Devices(ADI) said second-quarter earnings fell 14% on expenses to shut down a plant and a shift in orders to less-profitable products. The shares fell 4.9% in after-hours trading.
- Merrill Lynch’s Ben Watson, chief of its hedge-fund development and management group, resigned after two years at the firm.

AP:
- The manager of a Chinese toothpaste maker being probed in the deaths of at least 51 people in Panama said the product is safe.

Reuters:
- Barrick Gold Corp.(ABX) is in no rush to make new acquisitions, citing CEO Wilkins.

BOTTOM LINE: The Portfolio finished higher today on gains in my Computer longs, Biotech longs and Internet longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, sector performance was mostly positive and volume was above average. Measures of investor anxiety were above average into the close. Today's overall market action was bullish. The index everyone loves to hate, the Russell 2000, made another all-time high today and is up about 7% for the year. Many stocks I monitor posted 2%-4% gains. Today's action was more impressive considering the -1.5% losses in most commodity stocks. A gasoline build near or above tomorrow's 1.2 million barrel build estimate will likely result in further energy complex weakness. I have seen many negative articles written of late about the tech sector and how bad it is and how much it is underperforming. I'm not sure where this is coming from. The MS Tech Index is already 9% higher year-to-date vs. an 8.5% gain for the S&P 500. I expect tech shares' outperformance to accelerate in the second half of the year. The time to buy these shares is now, in my opinion, while perceptions are still negative. Three of my favorites are still Google (GOOG), Apple (AAPL) and Broadcom (BRCM). I remain long all three. As I said yesterday, I sense the Google train is leaving the station again right now. I still expect the stock to exceed $600 before year-end.

Stocks Higher into Final Hour on Falling Energy Prices and More Economic Optimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs, Internet longs, Semi longs and Biotech longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, most sectors are gaining and volume is about average. The NYSE reported after the close yesterday that short interest on the exchange, from mid-April through mid-May, rose from 10,989,500,000 shares to 11,761,000,000 shares, which is another all-time high. Moreover, this 7.03% increase leaves NYSE short interest up a whopping 22.6% since mid February, the largest three-month jump since at least 1991 when Bloomberg began tracking. This is even more remarkable considering the DJIA gained about 6.4% from mid April through mid May and was hitting one record after another. The largest overall short on the NYSE remains the iShares Russell 2000 (IWM) at 237,133,225 shares, up from 218,547,492 the prior month. The many bears remain stunningly complacent and continue to party like it's 2000-03, despite the S&P 500's 107% gain from that periods' lows. I continue to believe the current "U.S. negativity bubble" will eventually burst, thus spurring the "mother of all short-covering rallies."

Here are the 25 NYSE stocks with the largest percentage increase in their short interest relative to their float from mid April through mid May:

1) LUM +20.9%
2) MZ +16.4%
3) XJT +15.0%
4) PPS +12.1%
5) MNI +8.9%
6) MWA +8.7%
7) AXR +8.0%
8) BOW +7.7%
9) MEG +7.7%
10) EAT +7.4%
11) HZO +7.2%
12) SHS +6.9%
13) STZ +6.9%
14) VLO +6.7%
15) DVR +6.5%
16) GDP +6.5%
17) AOS +6.0%
18) HOS +5.8%
19) ORA +5.5%
20) ABD +5.3%
21) ARP +5.2%
22) AMD +5.1%
23) MNT +5.1%
24) BLG +4.9%
25) NCS +4.8%

I expect US stocks to trade modestly higher into the close from current levels on short-covering, lower energy prices, investment manager performance anxiety, buyout speculation and more economic optimism.

Today's Headlines

Bloomberg:
- Hedge funds are “extremely willing” to heed requests for better systems to prevent worldwide financial shocks, provided regulators are specific in their demands, an executive director at the Alternative Investment Management Association said.
- Copper futures are falling 3% in NY on speculation that demand is slowing in China, the world’s biggest consumer of the metal.
- Crude oil is falling $1.24/bbl. to $65.03 on speculation that US refineries will increase gasoline production from current unusually low levels.
- Gold and silver prices are falling in NY on speculation that the US dollar will continue rising.
- Bonds backed by subprime US mortgages are rallying as lenders tighten their underwriting standards and demand increases from managers needing the securities to fill collateralized debt obligations.
- Shares of US homebuilders, led by Standard Pacific(SPF) jumped on expectations that housing demand may rebound after US Treasury Secretary Henry Paulson said the slump in demand was largely over.
- Fremont General(FMT) will sell its commercial real-estate unit for $1.9 billion and bring in new managers led by billionaire banker Gerald J. Ford.
- OSI Restaurant Partners(OSI), owner of the Outback Steakhouse chain, agreed to a sweetened $3.1 billion takeover offer from a group led by Bain Capital Partners LLC and Catterton Partners.
- Robert Zoellick, a former US trade representative, is the favorite to succeed Paul Wolfowitz as president of the World Bank, says Irish bookmaker Paddy Power.
- US Treasury Secretary Henry Paulson, kicking off talks with China’s economic leaders, said the meeting must yield results to damp “anti-China” sentiment.
- Treasuries fell, pushing the benchmark 10-year yield to a three-month high, as traders speculated the US economy is gathering momentum.
- Intel Corp.(INTC) and STMicroelectronics NV plan to combine their unprofitable flash-memory businesses into a new company, creating the world’s largest maker of chips that store software in mobile phones.
- HSBC Holdings Plc, Europe’s biggest bank by market value, has “contained” a deterioration of its US mortgage loan portfolio, said CEO Geoghegan.

Wall Street Journal:
- AstraZeneca Plc, the UK’s second-largest drugmaker, Pfizer Inc., Novartis AG, Sanofi-Aventis SA and other drug companies are making a major push to develop biological drugs.
- CNN will probably announce an agreement by which it will be able to offer local news on its Web site, in a bid to gain a share of the rapidly expanding market for local online advertising.
- US food banks that distribute soup, cereals and other products to needy families are running short of donations as manufacturers and retailers cut down on damaged and mislabeled goods.
- Intel Corp.(INTC) is seeking to add new features to make personal computers better tools for calling and holding business conferences, citing the company’s director of business-client architecture, Steve Grobman.
- China has been urged to take steps to improve product safety, citing Nancy Nord, a US safety organization executive.

NY Times:
- Chinese government investigators are examining whether two Chinese companies exported contaminated toothpaste.
- Corporate directors last year fired or forced out failing executives at a higher rate than a decade ago, a study by consulting firm Booz Allen Hamilton found.
- Google Inc.(GOOG) urged the FCC to let companies resell radio spectrum in a real-time auction, the same way it sells advertisements.

AP:
- NYC mayor Republican Michael Bloomberg ordered all city cabs to be hybrid vehicles within five years.

Financial Times:
- China’s agreement to buy a $3 billion stake in Blackstone Group LP buyout fund is a “political masterstroke” that will simultaneously please both Wall Street and Washington, DC.

El Nacional:
- Nine of every ten Venezuelans are frightened of crime, suggesting that rising homicide and robbery rates are affecting people in all social classes, citing a survey by a non-government research group.

Toronto Globe and Mail:
- Royal Dutch Shell Plc may be the main customer for a nuclear power plant proposed for northeastern Alberta as the oil company tries to tap multibillion-barrel limestone-trapped reserves.

Dagens Industri:
- Oil prospectors and mining companies are flocking to the stock market to sell shares on the Nordic exchange.

Shanghai Securities News:
- China needs to raise deposit rates by a “relatively big margin” to help correct an “excessively loose” money supply that helped push up stock prices, a government researcher wrote.

Tehran Times:
- China and Iran completed talks to develop the North Pars gas field that may produce as much as 20 million metric tons of liquefied natural gas a year.

Economic Releases

- None of note