Weekly Scoreboard*

Indices
S&P 500 1,325.19 -5.41%
DJIA 12,099.30 -4.02%
NASDAQ 2,340.02 -4.09%
Russell 2000 673.18 -4.47%
Wilshire 5000 13,258 -5.3%
Russell 1000 Growth 551.22 -4.81%
Russell 1000 Value 715.23 -6.06%
Morgan Stanley Consumer 680.48 -4.63%
Morgan Stanley Cyclical 878.66 -3.93%
Morgan Stanley Technology 547.39 -2.14%
Transports 4,179.70 -.19%
Utilities 503.92 -7.27%
MSCI Emerging Markets 136.61 -7.46%

Sentiment/Internals
NYSE Cumulative A/D Line 55,625 -6.2%
Bloomberg New Highs-Lows Index -1,235
Bloomberg Crude Oil % Bulls 9.8 -57.6%
CFTC Oil Large Speculative Longs 227,907 -5.9%
Total Put/Call 1.31 +43.96%
NYSE Arms .84 -44.29%
Volatility(VIX) 27.2 +14.78%
ISE Sentiment 79.0 -11.2%
AAII % Bulls 24.26 +23.6%
AAII % Bears 54.4 -7.5%

Futures Spot Prices
Crude Oil 90.58 -2.47%
Reformulated Gasoline 230.55 -.99%
Natural Gas 7.95 -2.94%
Heating Oil 251.0 -1.48%
Gold 883.50 -1.43%
Base Metals 220.32 -1.19%
Copper 323.10 -2.03%

Economy
10-year US Treasury Yield 3.63% -15 basis points
4-Wk MA of Jobless Claims 328,500 -3.5%
Average 30-year Mortgage Rate 5.69% -18 basis points
Weekly Mortgage Applications 906,400 +28.39%
Weekly Retail Sales +.9%
Nationwide Gas $3.03/gallon -.06/gallon
US Heating Demand Next 7 Days 13.0% above normal
ECRI Weekly Leading Economic Index 137.40 +.88%
US Dollar Index 76.43 +.53%
CRB Index 360.87 -1.17%

Best Performing Style
Small-cap Value -4.05%

Worst Performing Style
Large-cap Value -6.06%

Leading Sectors
Airlines +4.5%
Computer Services +2.98%
Semis +2.79%
Retail +1.14%
Foods -1.1%

Lagging Sectors
Banks -7.67%
Insurance -8.24%
Energy -8.57%
Gold -9.05%
Oil Service -9.9%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Lower into Final Hour on Weakness in Telecom, Insurance and Financial Shares

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Software longs and Semi longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is negative today as the advance/decline line is substantially lower, most sectors are declining and volume is heavy. Investor anxiety is high again. Today’s overall market action is bearish. The total put/call hit a high 1.33 and the ISE Sentiment Index hit a very low 66.0 today. For the second day in a row, the Morgan Stanley Tech sector index is substantially outperforming. Large and mid-cap “growth” stocks are also substantially outperforming “value” stocks. Steel, Computer Hardware, Semi, Computer Service, Construction, Homebuilding, Retail, Restaurant, Airline, Railroad, Software and Energy stocks are all higher or just slightly lower on the day. Cyclical stocks are slightly higher on the day, as well. A number of market leading stocks continue to trade as though they are “washed out” and are under accumulation even as the major averages tick lower. The ECRI Weekly Leading Index has bounced strongly the last two weeks from 134.60 to 137.40. I expect US stocks to trade modestly higher into the close from current levels on short-covering and bargain hunting.

Leading Indicators Fall Slightly, Consumer Confidence Jumps

- Leading Indicators for December fell .2% versus estimates of a .1% decline and a .4% decline in November.

- Preliminary Univ. of Mich. Consumer confidence

BOTTOM LINE: The Index of US leading economic indicators fell more than forecast in December, Bloomberg reported. However, the Conference Board’s index of coincident indicators, a gauge of current economic activity, rose .1% in December for a second month. The index tracks payrolls, incomes, sales and production. Over the last six months, the leading indicators index has dropped at an annual pace of 1.6%, below the 4-4.5% drop that signals recession. I continue to believe US GDP growth will average about 2% for the year. Growth should pick up in the second half of the year on inventory rebuilding as exports remain at record levels and as the deflator subtracts less on a meaningful deceleration in inflation. This would provide a very positive macro backdrop for true "growth" stocks.

Confidence among US consumers unexpectedly jumped in January despite a rise in gas prices, Bloomberg reported. The Expectations component rose to 69.1 from 65.6 in December. The Present Situation component jumped to 98.1 from 91.0 the prior month. The average 30-year mortgage rate has plunged 48 basis points so far this month to 5.69%. This is also down 105 basis points from June 07 highs. As a result, mortgage refinancings are soaring, which may behind the surge in consumer confidence. A decline in the average 30-year mortgage rate below 5.5%, which I expect over the coming weeks, should greatly help with the mortgage reset situation and prevent many foreclosures that the market currently expects. This would be a large positive surprise for the economy and stock market, in my opinion.

Bear Radar

Style Underperformer:

Large-cap Value (-1.47%)

Sector Underperformers:

Telecom (-4.57%), Insurance (-3.61%) and Oil Service (-2.57%)

Stocks Falling on Unusual Volume:

SLB, ACO, AZZ, IEZ, ZGEN, HSII, ATPG, TTGT, WCBO, LULU, LBAI, HNSN, AMSF, ATNI, NCTY, AGO, DFG, CCOI and MXIM

Bull Radar

Style Outperformer:

Mid-cap Growth (+1.32%)

Sector Outperformers:

Retail (+3.1%), Computer Services (+2.64%) and Semis (+2.37%)

Stocks Rising on Unusual Volume:

PXQ, CXW, XSD, CH, RZV, JKJ, WL, DPZ, FMR, PFGC, LCRD, GFIG, CEDC, FAST, RRGB, LMIA, XLNX, SRCL, XNPT, MELI, QMAR, MICC, ROST, SCSC, PCLN, IRBT, WGOV, GLNG, OMTR, RTP, CHA, BPHX, CLF, TKC, GE, STO, EMR, SU, LFC, AZN, SGP, WHQ, WG, HBC, FNF and MFC

Links of Interest

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