Thursday, December 13, 2007

Bull Radar

Style Outperformer:

Large-cap Growth (-.65%)

Sector Outperformers:

Software (+.92%), HMOs (+.18%) and Road & Rail (+.16%)

Stocks Rising on Unusual Volume:

MGI, KNM, MMA, IOSP, RIGL, SVNT, MATK, EMKR, ADCT, JOSB, IOSP, MRTN, XRAY, CYNO, UMBF, FCSX, FSLR, FSIN, LTRE, XMSR, CRDC, PRAI, ACAP, DOW, HON, FALC, PAS, CCE, NKE and HES

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

NYSE Unusual Volume

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Dow Jones Hedge Fund Indexes

Wednesday, December 12, 2007

Thursday Watch

Late-Night Headlines
Bloomberg:
- Bill Gross, manager of the world’s biggest bond fund, said a plan by the Federal Reserve and European central banks to alleviate a global credit crunch will help break the reluctance among banks to lend.
- China’s industrial production grew at the slowest pace this year, suggesting weaker export growth and government curbs on lending are starting to cool the world’s fastest-growing major economy.

- The risk of Asia-Pacific companies, including National Australia Bank Ltd., defaulting on their debt fell after the Federal Reserve announced a joint effort with four other central banks to alleviate a credit squeeze.

Wall Street Journal:
- In the biggest coordinated show of international financial force since Sept. 11, 2001, the Federal Reserve yesterday joined four other central banks in a plan aimed at coaxing banks to lend more readily at a time when fear has seized up world credit markts.

BusinessWeek.com:
- Holiday Shoppers Plan to Flock Online.

CNNMoney.com:
- Despite the day-to-day turmoil, the stock market damage has been limited, with the Dow and S&P 500 clinging to levels not far from record highs.
- GM dominates ‘Car of the Year’ nominee list. General Motors products capture four of six nominations in two categories for prestigious auto journalists’ award.

IBD:
- Host Of Comparison-Shopping Web Sites Emerge.

USA Today.com:
- China talks introduce world of import controls.

Globeandmail.com:
- Even as many investors fret that US consumers could slow spending sharply, possibly tipping the US into recession, Tobias Levkovich, chief US equity strategist at Citigroup Global Markets, recommends a look at US retailing stocks, along with media issues, given what he considers are those groups’ attractive valuations.

Late Buy/Sell Recommendations
Citigroup:

- Reiterated Buy on (CCE), target $31.

CSFB:
- Reiterated Outperform on (T), raised target to $50.

Night Trading
Asian Indices are -1.50% to unch. on average.
S&P 500 futures -.15%.
NASDAQ 100 futures -.21%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
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Earnings of Note
Company/EPS Estimate
- (COST)/.59
- (LEH)/1.44
- (JOSB)/.33
- (CIEN)/.41
- (NOVL)/.04
- (LEAP)/-.04
- (ZQK)/.53

Upcoming Splits
- (DNR) 2-for-1

Economic Releases
8:30 am EST

- The Producer Price Index for November is estimated to rise 1.5% versus a .1% gain in October.
- The PPI Ex Food & Energy for November is estimated to rise .2% versus unch. in October.
- Advance Retail Sales for November are estimated to rise .6% versus a .2% gain in October.
- Retail Sales Less Autos for November are estimated to rise .6% versus a .2% gain in October.
- Initial Jobless Claims for this week are estimated to fall to 335K versus 338K the prior week.
- Continuing Claims are estimated at 2599K versus 2599K prior.

10:00 am EST
- Business Inventories for October are estimated to rise .3% versus a .4% gain in September.

Other Potential Market Movers
- The weekly EIA natural gas inventory data, (PBG) investor day, (AMD) analyst day, (SMG) analyst day, (ZGEN) analyst meeting, (JAV) analyst meeting, (UTX) analyst meeting, Thomas Weisel Telecom Technologies of Tomorrow Conference, Merrill Lynch Growth Industrial Conference and RBC Healthcare Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial 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 Higher After Rebound into the Close

Indices
S&P 500 1,486.60 +.61%
DJIA 13,473.90 +.31%
NASDAQ 2,671.14 +.71%
Russell 2000 771.71 +.71%
Wilshire 5000 14,929.50 +.50%
Russell 1000 Growth 618.61 +.65%
Russell 1000 Value 806.82 +.40%
Morgan Stanley Consumer 751.98 +.19%
Morgan Stanley Cyclical 1,003.47 +.71%
Morgan Stanley Technology 633.65 +1.0%
Transports 4,738.15 +.07%
Utilities 540.93 +.20%
MSCI Emerging Markets 157.79 +.45%

Sentiment/Internals
Total Put/Call .98 -10.91%
NYSE Arms .90 -66.80%
Volatility(VIX) 22.47 -4.75%
ISE Sentiment 127.0 -13.01%

Futures Spot Prices
Crude Oil $93.71 +4.09%
Reformulated Gasoline 239.60 +4.56%
Natural Gas 7.39 +4.25%
Heating Oil 262.90 +4.20%
Gold 818.30 +.15%
Base Metals 212.64 -.42%
Copper 303.0 -1.94%

Economy
10-year US Treasury Yield 4.09% +12 basis points
US Dollar 76.19 -.04%
CRB Index 354.08 +2.09%

Leading Sectors
Telecom +3.10%
Alternative Energy +2.76%
Energy +2.57%

Lagging Sectors
Restaurants -1.31%
Banks -1.78%
Airlines -4.48%

Evening Review
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
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
Bank of America:

- Rated (PMCS) Sell, target $6.
- Rated (OMTR) Buy, target $40.
- Rated (FIS) Buy, target $54.

Citigroup:
- Rated (MDP) Buy, target $64.
- Rated (OMC) Buy, target $59.
- Rated (SCHL) Sell, target $30.50.
- Rated (MHP) Buy, target $60.

Afternoon/Evening Headlines
Bloomberg:
- Treasuries fell the most in three years after the Fed announced a joint effort with foreign central banks to break a logjam in credit markets.
- The perceived risk of companies defaulting on their debt fell after central banks in the US and Europe announced plans to alleviate a credit squeeze that’s threatening global growth.
- Duke Energy(DUK) agreed to buy 100 turbines from General Electric(GE) in its first purchase of generators for the wind power business it acquired this year.
- Biogen Idec(BIIB) said it will remain an independent company instead of pursuing a sale, after it didn’t receive any definitive offers. The shares fell 28% in after-hours trading.
- Gap Inc.(GPS) is defying the skeptics. By refusing to join competitors making early-holiday markdowns, the biggest US clothing retailer may post a fourth-quarter profit gain for the first time since 2005.

Reuters:
- The manager of the world’s biggest bond fund, Bill Gross, said on Wednesday there is less doubt about the Fed’s understanding of the global liquidity crunch after it and other central banks unveiled a plan to bolster credit availability.

BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Biotech longs, Computer longs and Networking longs. I covered some of my (EEM) short and some of my (IWM/QQQQ) hedges 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 slightly higher, most sectors rose and volume was above average. Measures of investor anxiety were above average into the close. Today's overall market action was neutral. As I said earlier, the fact that the financials were unable to rally on today’s news was a large negative. However, the many bears were unable to gain downside traction into the close. Growth stocks outperformed value again today. The US dollar recouped losses into the afternoon and is near session highs against the yen, which is a positive. I want to see the market’s reaction to tomorrow’s PPI report and Lehman’s(LEH) earnings report before further shifting market exposure.

Stocks Lower into Final Hour on Higher Energy Prices, Weakness in Financials

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Biotech longs and Networking longs. I added to my (EEM) short and added to my (IWM)/(QQQQ) hedges today, thus leaving the Portfolio 50% net long. The overall tone of the market is slightly positive today as the advance/decline line is about even, most sectors are rising and volume is about average. Investor anxiety is above average. Today’s overall market action is bearish. The US dollar-based 3-month LIBOR rate is falling another 5 basis points to 5.06% today and is down 67 basis points from September highs. The average 30-year jumbo mortgage rate is falling 11 basis points today to 6.72% and is down 61 basis points from September highs. As well, the 30-day asset backed commercial paper yield is falling 15 basis points today to 6.01%, down 32 basis points from September highs. The substantial rise in oil today is a big negative. Despite a firmer dollar, decelerating global demand and rising supply oil continues to rise. According to the Energy Intelligence Group, global oil production is now 86.9 million barrels per day and global demand is 85.2 million barrels per day. Oil bulls have said for several years that global production was capped at 85 million barrels per day. The decline in financial shares is also a big negative today, given the news. I suspect today’s reversal in stocks will lead to losses in Asia tonight. I expect US stocks to trade mixed-to-lower into the close from current levels on rising energy prices and profit-taking.

Today's Headlines

Bloomberg:
- Mortgage applications in the US rose for the second consecutive week to the highest level since July 2005, boosted by gains in refinancing and purchases.
- Treasury’s Steel Says Bush’s Housing Relief Plan May ‘Evolve.’
- Oil is rising above $93/bbl. on speculation a decision by central banks to provide cash to financial institutions will spur economic growth.
- Copper is falling the most in a week on worries over rising global stockpiles.
- Microchip Tech(MCHP), the maker of semiconductors for toasters and garage-door openers, rose the most in almost eight months in Nasdaq Stock Market trading after announcing plans to buy back up to 14.3 million shares.
- 3M Co.(MMM), the maker of 50,000 products from Post-it Notes to electronic road signs, forecast 2008 profit of $5.44 to $5.47 a share, above analysts’ estimates.

Wall Street Journal:
- In the latest sign of growing appetite for environment-related investment tools, New York Mercantile Exchange parent Nymex Holdings and a group of Wall Street trading houses plan to launch an exchange for trading carbon emissions and other environmental products.
- Several House Judiciary Committee members have agreed on a piece of housing legislation that would give bankruptcy-court judges more flexibility to alter the terms of certain mortgages.

- Fed Sifts Options As Rate Cut Fails to Cheer Market.

NY Times:
- The SEC plans to delay for another year the requirement that small companies report on the state of their internal financial controls, the agency’s chairman, Christopher Cox, is expected to tell lawmakers on Wednesday.

- Ten months ago, Senator Hillary Rodham Clinton went to East High School here on her first trip to Iowa as a presidential candidate and laid out a case for her candidacy to a cheering crowd in a packed gym. Mrs. Clinton returned to East High late last week. But the crowd was much smaller and more sedate.

USA Today:
- Teachers’ qualifications improve in the past decade.

Financial Times:
- The Fed is set to announce as early as on today a fundamental overhaul of the way it provides liquidity in financial markets in a bid to tackle head-on severe strains in the interbank money market.

Finanz und Wirtschaft:
- UBS AG Chairman Marcel Ospel said “the worst is behind” for the Swiss bank.