Weekly Scoreboard*

Indices
S&P 500 1,433.06 -1.78%
DJIA 13,181.91 -.63%
NASDAQ 2,511.25 -1.99%
Russell 2000 755.42 -2.88%
Wilshire 5000 14,389.19 -1.87%
Russell 1000 Growth 579.44 -1.25%
Russell 1000 Value 800.71 -2.27%
Morgan Stanley Consumer 700.95 -.21%
Morgan Stanley Cyclical 1,016.40 -.92%
Morgan Stanley Technology 617.81 -2.49%
Transports 4,873.81 -3.28%
Utilities 476.75 +.41%
MSCI Emerging Markets 130.82 -1.65%

Sentiment/Internals
NYSE Cumulative A/D Line 65,800 -2.09%
Bloomberg New Highs-Lows Index -735 -11.03%
Bloomberg Crude Oil % Bulls 16.0 -65.1%
CFTC Oil Large Speculative Longs 264,395 +4.53%
Total Put/Call 1.43 +10.0%
NYSE Arms 3.52 +156.93%
Volatility(VIX) 25.16 +4.1%
ISE Sentiment 103.0 -21.97%
AAII % Bulls 45.88 +3.78%
AAII % Bears 40.0 +8.58%

Futures Spot Prices
Crude Oil 75.48 -2.04%
Reformulated Gasoline 202.90 -2.65%
Natural Gas 6.09 -2.09%
Heating Oil 203.40 -2.87%
Gold 684.40 +1.86%
Base Metals 255.51 +.73%
Copper 347.90 -1.90%

Economy
10-year US Treasury Yield 4.69% -7 basis points
4-Wk MA of Jobless Claims 305,500 -1.1%
Average 30-year Mortgage Rate 6.68% - 1 basis points
Weekly Mortgage Applications 607.10 -.31%
Weekly Retail Sales +2.8%
Nationwide Gas $3.86/gallon -.06/gallon
US Cooling Demand Next 7 Days 27.0% above normal
ECRI Weekly Leading Economic Index 142.50 -.77%
US Dollar Index 80.18 -.95%
CRB Index 318.17 -.45%

Best Performing Style
Large-Cap Growth -1.25%

Worst Performing Style
Small-Cap Value -3.66%

Leading Sectors
Defense +2.16%
Engineering & Construction +1.81%
Gaming +1.29%
Medical Equipment +1.19%
HMOs +.77%

Lagging Sectors
Insurance -4.28%
Coal -5.41%
Biotech -5.42%
Oil Service -6.4%
I-Banks -7.6%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Falling into Final Hour on Bear Stearns Comments

BOTTOM LINE: The Portfolio is lower into the final hour as losses in my Computer longs and Biotech longs are more than offsetting gains in my commodity shorts and emerging market shorts. I added to my (EEM) short and to my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 50% net long. The overall tone of the market is very negative today as the advance/decline line is substantially lower, every sector is lower and volume is above average. My intraday gauge of investor angst is at a very elevated level. The major averages and breadth are pushing lower on comments from Bear Stearns (BSC) on a conference call. I didn't think they said anything we didn't already know, but the market's reaction to them was severe. Bank of America is defending BSC, saying its valuation is at a 12-year low and that the decline in the shares is overdone. Trading in the broad market has a sloppy, panicky feel to it again. The CBOE total put/call ratio soared to a very elevated 1.76. It has been higher only nine other times in the last decade. The last time it was this high was March 15, a day after the market had already bottomed. Moreover, the 10-day moving average of the CBOE total put/call is a very elevated 1.25. It has only exceeded this level once in history, which was during the March decline. Only time will tell, but I sense that the market has once again priced in the worst-case scenario rather than the most realistic one with regards to the U.S. economy and stocks. I expect US stocks to trade mixed-to-lower into the close from current levels on credit fears and worries regarding overseas shares Sunday night/Monday morning.

Today's Headlines

Bloomberg:
- Crude oil is falling another $.70/bbl. after OPEC said it pumped the most oil in July since September 2004, excluding Angola’s entry in January.
- Colorado State University forecasters trimmed the number of major hurricanes they expect to form in the Atlantic Ocean this year to four from five forecast in May.
- Bear Stearns(BSC), the manager of two hedge funds that collapsed last month, had its credit-rating outlook cut to negative by S&P on concern declining prices for mortgage-backed securities will reduce earnings.
- President Bush signed legislation today that stiffens requirements for screening air and sea cargo and increases anti-terrorism grants to high-risk states and cities.

Wall Street Journal:
- US recalls of toys contaminated by lead paint may point to a Chinese health problem, because lead is still a typical addition to paint in the country.
- Hayman Capital Partners LP and Balestra Capital Partners are among US hedge funds that profited in July by betting on problems in the subprime mortgage market.
- Cardiologists at the Minneapolis Heart Institute have started airlifting heart-attack patients from as far as 210 miles away to provide them with faster treatment than they would get otherwise.
- Bulgari Spa, Cartier, LVMH Moet Hennessy Louis Vuitton SA and other European jewelry and luxury goods companies are boosting sales of diamond engagement rings as demand for them increases in Europe and China.

NY Times:
- Young working women in major US cities are earning more than their male counterpart, citing an analysis of census data.

Dow Jones:
- Kohlberg Kravis Roberts is looking to buy Beyonics Technology’s hard-disk drive business.

Links of Interest

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Dow Jones Hedge Fund Indexes

Friday Watch

Late-Night Headlines
Bloomberg:
- Countrywide Financial(CFC), the biggest US mortgage lender, said it has “significant” sources of short-term funding after the slump in demand for loans pushed some rivals toward bankruptcy.
- Bond insurers, including Radian Asset Assurance and ACA Capital Holdings, have enough capital to protect their credit ratings against a “highly stressed” scenario for subprime mortgages originated in 2006, Standard & Poor’s credit analysts said in a research report.
- One measure of the US money supply rose by $8.1 billion in the week that ended July 23, according to Federal Reserve statistics released in Washington. That left M2 growing at an annual rate of 6.1% for the past 52 weeks.
- China, which may surpass the US to become the second-largest gold producer this year, mined 15% more of the precious metal in the first half as higher prices prompted companies to boost output.
- The yen headed for a weekly decline versus the US dollar as investors resumed purchase of riskier assets funded by loans in the currency.
- Japanese exporter shares advanced after better-than-forecast earnings in the US lifted indexes there and eased investor concern that the subprime loan problem will derail growth in Japan’s largest export market.
- Toyota Motor’s(TM) plug-in electric car may have less than half the range of a competing vehicle planned by General Motors(GM), people with knowledge of both companies’ development programs said.

Wall Street Journal:
- MRU Holdings(UNCL), also known as MyRichUncle, is using the student-loan industry’s conflict of interest scandal to set itself apart and increase business.

NY Times:
- Ford Motor(F) wants to sell its Jaguar and Land Rover brands by Sept. 30 and its Volvo unit by year’s end.
- Is the Dance Over? Citigroup Is Upbeat.

Reuters:
- Fed’s Kroszner: Broader economy unhurt by subprime.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (EXPE), target raised to $32.
- Downgraded (TLB) to Sell, target $16.
- Reiterated Buy on (CVS), target $43.
- Reiterated Buy on (GME), target $46.
- Reiterated Buy on (ADBL), target $13.

Morgan Stanley:
- UAL Corp.(UAUA), the owner of United Airlines, is a potential takeover target for rival carriers or a private equity firm. The company can earn about $4 billion in free cash flow over the next four years, making it attractive to private equity, citing Credit Suisse analyst Daniel McKenzie. .

Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 futures -.16%.
NASDAQ 100 futures -.14%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
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Earnings of Note
Company/EPS Estimate
- (PG)/.66
- (WY)/.39

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Change in Non-farm Payrolls for July is estimated at 127K versus 312K in June.
- The Unemployment Rate for July is estimated at 4.5% versus 4.5% in June.
- Average Hourly Earnings for July are estimated to rise by .3% versus a .3% gain in June.

10:00 am EST
- The ISM Non-Manufacturing for July is estimated at 59.0 versus 60.7 in June.

Other Potential Market Movers
- None of note

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

Stocks Finish Near Session Highs on Strong Volume

Market Performance Summary
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