Bear Radar

Style Underperformer:

Small-cap Value (-1.12%)

Sector Underperformers:

Airlines (-4.26%), I-Banks (-2.53%) and Banks (-2.10%)

Stocks Falling on Unusual Volume:

GBX, SVU, AKNS, PANL, VSAT, FEIC, MEAS, CITP, ORLY, UNFI, MASI, UAUA, RYAAY, MATK and MTG

Nov. Pending Home Sales Decline, Oct. Revised Higher

- Pending Home Sales for November fell 2.6% versus estimates of a .7% decline and an upwardly revised 3.7% gain in October.

BOTTOM LINE: The number of Americans signing contracts to buy previously owned homes fell more than forecast in November, Bloomberg reported. Pending home sales fell 13% in the Northeast, 4.1% in the Midwest and 2.1% in the West. Sales rose 2.3% in the South. The larger rise in October than previously estimated suggests the market may be stabilizing, said Lawrence Yun, the group’s chief economist. “Although there could be some minor slippage in the first quarter, existing home sales should hold in a narrow range before trending up,” Yun said. I suspect home sales are finally stabilizing and will bounce back a bit this quarter on pent-up demand and diminishing credit market angst.

Bull Radar

Style Outperformer:

Small-cap Growth(+.95%)

Sector Outperformers:

Biotech (+2.55%), Drugs (+2.31%) and Steel (+2.06%)

Stocks Rising on Unusual Volume:

APL, HNT, PZE, RPM, GRR, NSH, SEH, KG, VRUS, ISIS, ITMN, QMAR, HWAY, SBUX, AMSG, WBSN, HELE, HRBN, INCY, SHPGY, AVCT, LEAP, ALXN, PERY, TISI, PPDI, SIGM, PGNX, KGC, SSRI, TNE, BRP, PBR, WYE, SGP, DIVX, ICE, SWS, UBS and ACGL

Links of Interest

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Tuesday Watch

Late-Night Headlines
Bloomberg:
- Australia’s home-building approvals unexpectedly surged in November by the most in nine months as higher employment, wages and immigration spurred investment.
- Wheat output in Australia, the world’s fifth-largest exporter, may rebound to a record next harvest as higher prices and expectations of improved weather spur farmers to lift plantings, Emerald Group Australia Pty said.
- President Bush and Treasury Secretary Paulson said that US economic indicators are sending “mixed” signals and that they are considering whether a stimulus is needed.
- Democratic presidential candidate Hillary Rodham Clinton, her voice cracking, told voters in New Hampshire “it’s not easy” to keep going in a long political campaign “against some pretty difficult odds.”
- You’re more likely to survive cancer if you live in a sunny place and make the most of the weather, scientists say.
- Starbucks Corp.(SBUX) ousted CEO Jim Donald and replaced him with former CEO and Chairman Howard Schultz after posting its worst-ever annual performance in US trading. The shares surged 9% in after-hours trading.
- Genzyme Corp.(GENZ) will license Isis Pharmaceuticals’(ISIS) cholesterol-lowering drug for $175 million to start and will buy 5 million of its partner’s shares for $150 million. The shares soared 51% in extended trading.
- Matsushita Electric Industrial, the world’s biggest consumer electronics maker, will sell televisions in the US that can access Internet video clips on Google’s(GOOG) YouTube.

CNBC.com:
- CNBC has confirmed that James Cayne, the chairman and CEO of Bear Stearns(BSC), is stepping down.
- Top Manager Names Wireless, Web Stocks.

IBD:
- Q4 Profits Seen Off Nearly 10%, But Up 12% Ex Financials.

USA Today.com:
- After an unprecedented year of toy recalls, the Consumer Product Safety Commission is adding staff at the nation’s busiest ports and pledging to work more closely with US Customs to stop suspect imports and identify potential hazards before toys hit the market.

Reuters:
- Short interest on the NYSE rose .7% in late December, the exchange said on Monday, indicating an increase in bearish sentiment in the stock market.

Financial Times:
- TV screen makers vie for slimness.
- Paramount Pictures plans to abandon Toshiba Corp.’s HD-DVD format after Warner Bros. Entertainment dropped its support of the technology.

globeandmail.com:
- TD Bank repeats it has no US subprime exposure.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 futures +.19%.
NASDAQ 100 futures +.27%.

Morning Preview
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Earnings of Note
Company/EPS Estimate
- (FDO)/.37
- (STZ)/.55
- (KBH)/-1.34
- (AYI)/.82
- (APOL)/.73
- (PPDI)/.34
- (SWY)/.69
- (SVU)/.63

Upcoming Splits
- None of note

Economic Releases
10:00 am EST
- Pending Home Sales for November are estimated to fall .7% versus a .6% increase in October.

3:00 pm EST
- Consumer Credit for November is estimated to rise to $8.0 billion from $4.7 billion in October.

Other Potential Market Movers
- The Fed’s Plosser speaking, weekly retail sales reports, IBD/TIPP Economic Optimism Index, Needham Growth Conference, JPMorgan Healthcare Conference, Citigroup Entertainment Conference, Consumer Electronics Show, JPMorgan Global Energy Day and Raymond James Govt. Services & Tech. Summit could also impact trading today.

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

Stocks Finish Well Off Session Lows After Late Rebound

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