Bear Radar

Style Underperformer:

Large-cap Growth (+.41%)

Sector Underperformers:

Utilities (-.96%), Drugs (-.22%) and Retail (-.11%)

Stocks Falling on Unusual Volume:

FMD, PAY, FDO, UTIW, ISSC, TRAK, CHNR, CMTL, ZUMZ, SYNO, RYAAY, EVVV, SVVS, TGT and SRP

Jobless Claims Fall, Unemployment Still Low

- Initial Jobless Claims fell to 338K versus estimates of 335K and 353K the prior week.

- Continuing Claims fell to 2599K versus estimates of 2620K and 2658K prior.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits fell last week, Bloomberg reported. The four-week moving-average of claims rose to 340,250 versus 335,500 the prior week. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, remained at a historically low 2%. The ADP Employer Services report yesterday showed private companies added 189,000 jobs in November, more than three times the number economists had projected, versus 106,000 the prior month. I expect non-farm payrolls for November, which are released tomorrow, to come in around estimates of 80,000. The unemployment rate should also come in around estimates of 4.8%. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Bull Radar

Style Outperformer:

Small-cap Value (+1.06%)

Sector Outperformers:

Homebuilders (+3.57%), Airlines (+1.92%) and Semis (+1.23%)

Stocks Rising on Unusual Volume:

FDG, FLS, TRB, GEF, GME, GTI, KFY, CAG, DSG, HOKU, PTIE, THRX, CLNE, RICK, ALOG, BEAV, ZEUS, CEPH, CRMT, CASY, CETV, FCSX, FSNM, HOFT, PWRD, CPRT, RSTI, SNPS, CFC, LFG, MBI, ENG, HES, PDLI, MEI and GMO

Links of Interest

Market Snapshot Commentary
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Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
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In Play
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Dow Jones Hedge Fund Indexes

Thursday Watch

Late-Night Headlines
Bloomberg:
- The US dollar traded near an almost two-month high versus the pound as traders increased bets the Bank of England will cut its benchmark interest rate today.
- BP Plc(BP), the world’s third-largest oil refiner, and Calgary-based Husky Energy agreed to form partnerships for production and processing of crude from Alberta’s oil sands.
- Prudential Financial(PRU) may have its credit rating upgraded by Moody’s Investors Service.
- Crude oil fell for a third day in NY, touching a six-week low, on worries over slowing global demand and a rally in the US dollar.
- Jeffrey Davis, chief investment officer at Lee Munder Capital Group, is ‘bearish’ on oil prices.
- The risk of companies and governments in the Asia-Pacific region defaulting on their debt declined the most this week after US regulators and banks agreed to freeze interest rates on subprime mortgages for five years.
- The yen declined for a second day against the dollar after US employment and factory reports signaled the world’s biggest economy may avoid recession.
- Elpida Memory, Japan’s largest maker of computer memory chips, rose the most in almost two years in Tokyo trading, leading Asian semiconductor shares higher, on optimism prices are recovering.
- General Motors(GM), the world’s largest automaker, plans to invest as much as $5 billion in China over the next five years to expand its share of the world’s fastest-growing major car market.

Wall Street Journal:
- Bush to Unveil Aid to Homeowners. ‘Starter’ Mortgage Rates Will Be Frozen for 5 Years.

NY Times:
- Ethanol Advocates Push for More in Regular Cars.

MarketWatch.com:
- In 2004, short sellers made money betting against the stock of Cal-Maine Foods, the largest US egg producer. Short sellers – those who bet a stock will fall, not rise – are looking for another pay off.

BusinessWeek.com:
- Ticketmaster’s Hail Mary Pass. Amid IAC’s breakup drama, the ticketing giant wants to be the NFL’s official reseller.
- Open Networks Could Spark a Gadget Boom. As wireless providers increasingly let outside devices run on their networks, a slew of new Web-enabled electronics could hit the market.

CNNMoney.com:
- Saudis may supply more oil on sly.

IBD:
- Unknown Alt Energy Field Heats Up.

USA Today.com:
- Thinking of switching to a Mac? Here’s why you might.
- Adobe’s(ADBE) new CEO zeroes in on Web.
- AT&T(T) flings cellphone network wide open. Starting immediately, AT&T customers can ditch their AT&T phones and use any wireless phone, device and software application from any maker – think smartphones, e-mail and music downloading. And they don’t have to sign a contract.
- A performance shift is underway in the stock market, where growth stocks that have what it takes to post steady streams of profits in tough times are posting better gains than value stocks for the first time in years. Many Wall Street strategists say the trend is likely to persist into the new year and beyond. Historically, when major shifts like this in the market occur, they tend to last three to seven years, says Jeffrey Kleintop, chief market strategist at LPL Financial Services.

Reuters:
- “Opportunistic” BlackRock thrives in credit turmoil.
- The SEC, which recently stepped up probes of hedge funds, is looking at whether banks and others are investing in hedge funds to share inside information, an SEC official and securities lawyers said on Wednesday.

Financial Times:
- The number of computer attacks from China – some of which use Chinese government websites to download malicious code – has risen sharply in recent months, say private cyber-security specialists.
- US pressure on Beijing to impose financial sanctions of Tehran over its nuclear program is showing signs of yielding results, with Iranians who import goods from China complaining about restrictions on trade.

South China Morning Post:
- Casino revenue in Macau increased 56% to a monthly record of $1.1 billion in October, helped by a surge in visitors from China, citing Macau Statistics.

Late Buy/Sell Recommendations
Citigroup:
- Maintain Buy on (WDC), target $33.
- Reiterated (GILD) Top Pick in large-cap biotech arena.
- Reiterated Buy on (EBAY) and raised estimates, target $49

Night Trading
Asian Indices are +.25% to +1.25% on average.
S&P 500 futures +.34%.
NASDAQ 100 futures +.44%.

Morning Preview
US AM Market Call
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Earnings of Note
Company/EPS Estimate
- (UTIW)/.34
- (KFI)/.33
- (MOV)/.66
- (TOL)/-.70
- (TTC)/.14
- (NSM)/.31
- (SNPS)/.36
- (ESL)/.78
- (PAY)/.39

Upcoming Splits
- (CAM) 2-for-1

Economic Releases
8:30 am EST
- Initial Jobless Claims for this week are estimated to fall to 335K versus 352K the prior week.
- Continuing Claims are estimated to fall to 2620K versus 2665K prior.

10:00 am EST
- ICSC Chain Store Sales for November are estimated to rise 2.4% versus a 1.6% increase in October.

Other Potential Market Movers
- The BOE Policy Meeting, ECB Policy Meeting, 3Q Mortgage Delinquencies, weekly EIA natural gas inventory report, (PHG) analysts’ day, (FE) analyst meeting, (PRS) analyst meeting, (PH) investor day, (KNXA) analyst meeting, (SCUR) investor day, (SVVS) analyst meeting, (SFI) investor day, Deutsche Bank Healthcare Tech Day, Stifel Nicolaus Financial Institutions Conference, CIBC Communications Software Conference, Citigroup ePayments Day, ThinkEquity Alternative Energy Forum and Lehman Brothers Global Tech 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 modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Surge, Finishing at Session Highs, on Falling Energy Prices and Less Economic Pessimism

Indices
S&P 500 1,485.01 +1.52%
DJIA 13,444.96 +1.48%
NASDAQ 2,666.36 +1.78%
Russell 2000 765.64 +1.81%
Wilshire 5000 14,904.91 +1.48%
Russell 1000 Growth 617.43 +1.47%
Russell 1000 Value 806.26 +1.44%
Morgan Stanley Consumer 752.17 +.60%
Morgan Stanley Cyclical 992.30 +1.54%
Morgan Stanley Technology 626.04 +2.27%
Transports 4,684.37 +1.41%
Utilities 550.13 +1.44%
MSCI Emerging Markets 157.56 +2.42%

Sentiment/Internals
Total Put/Call .87 -17.14%
NYSE Arms .72 -42.20%
Volatility(VIX) 22.53 -5.30%
ISE Sentiment 127.0 +16.51%

Futures Spot Prices
Crude Oil $87.35 -1.10%
Reformulated Gasoline 221.60 -1.59%
Natural Gas 7.19 +.55%
Heating Oil 248.64 -1.01%
Gold 801.30%
Base Metals 214.11 +.48%
Copper 304.0 +.66%

Economy
10-year US Treasury Yield 3.93% +4 basis points
US Dollar 76.48 +1.04%
CRB Index 339.51 -.17%

Leading Sectors
Disk Drives +3.77%
Software +3.43%
Homebuilders +3.33%

Lagging Sectors
Gold -.15%
Restaurants -.34%
Airlines -1.30%

Evening Review
Market Performance Summary
WSJ Data Center
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Style Performance
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Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Stock Quote
In Play

Afternoon Recommendations
Deutsche Bank:

- Rated (PMTC) Buy, target $24.
- Rated (ADSK) Buy, target $55.

Goldman Sachs:
- Buy (DNA) on weakness.

Afternoon/Evening Headlines
Bloomberg:
- US stocks rose the most in a week after signs of increased productivity and a closely watched private report on employment suggested the economy will avoid a recession.
- The US dollar may extend its gains against the euro, yen and pound as signs of resilience in the US labor market and manufacturing allayed concern the US economy will head into a recession.
- Duncan of MBA Calls Mortgage Applications ‘Positive’: Video.
- Crude oil fell $1.00/bbl., closing at a six-week low in NY, after an EIA report showed that US fuel stockpiles rose significantly and the US dollar surged.
- Gold fell $6.80/oz. as the dollar rose against the euro, reducing the appeal of the precious metal as an alternative investment.
- Gamestop(GME) will replace Dow Jones in the S&P 500, S&P said. BE Aerospace(BEAV) will replace Gamestop in the S&P Midcap 400.
- DSW Inc.(DSW), the Columbus, Ohio-based footwear retailer, rose 4.2% after posting third-quarter net income that beat analysts’ estimates and refined full-year sales and profit forecasts.
- Oracle(ORCL) rose the most in more than a year on the Nasdaq after a Lehman Brothers analyst predicted that demand for the company’s products would remain “solid.”

Washingtonpost.com:
- Video recording on cellphones is set to reach high definition(HD) quality in a few years’ time, an executive at the world’s top cellphone maker Nokia(NOK) said.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Computer longs, Biotech longs, Medical longs and Semi 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, almost every sector rose and volume was above average. Measures of investor anxiety were slightly above average into the close. Today's overall market action was very bullish. Despite negative news on (MBI) and (DNA), the broad market was able to close at session highs, led by a late surge in financial shares. Market leading growth stocks were especially strong today. The DJIA is now 10.3% higher and the Nasdaq 11.2% higher year-to-date, notwithstanding all the recession and bear market talk that is a constant in the current “US negativity bubble.” Large-cap growth remains this year’s best-performing style, rising 12.7% for the year. While we will likely see some more near-term turbulence related to Friday's jobs report and next week's Fed meeting, I still think stocks have meaningful upside potential from current levels through year-end and over the intermediate-term. Tech stocks outperformed today, rising 2.3%, and I continue to expect these shares to remain market leaders going forward.