Bull Radar

Style Outperformer:

Large-cap Value (+1.91%)

Sector Outperformers:

Steel (+3.16%), Insurance (+2.87%) and Banks (+2.94%)

Stocks Rising on Unusual Volume:

VRX, WWE, CMP, TNS, SDA, HGR, AIG, CW, CNA, SBP, FWRD, ASEI, VECO, ELOS, NUAN, TWTC, IPGP, BMRN, CBEY, MELI, MDTH, OZRK, WOOF, CRZO, JRCC, LCAPA, CRVL, BRLI, CHNR, TKC, ITU, RTP, HBC, GL, HOFT and UTIW

Economic Releases

- None of note

Links of Interest

Market Snapshot Commentary
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Top 20 Biz Stories
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NYSE Unusual Volume
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Dow Jones Hedge Fund Indexes

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Federal Reserve Bank of St. Louis President William Poole said that the US will probably avoid a recession and that the Fed’s interest-rate policy is appropriate for the slowing economy.

Wall Street Journal:
- Indian automobile maker Mahindra & Mahindra Ltd.’s light pickup trucks will be assembled in Ohio starting in 2009, and its hybrid vehicles will be sold in the US by 2010.

CNBC.com:
- Venezuela Moves Bank Accounts After Exxon(XOM) Freeze.
- S&P 500 Earnings Leaderboard: Biggest Surprises Season to Date.
- Blackberry Outage Strikes Across North America.

NY Times:
- Hedge Funds Raise Stake in Times Co. To Near 10%.
- AT&T(T) Joins Starbucks(SBUX) to Provide Store Wi-fi.

BusinessWeek.com:
- GTx(GTXI): A Compelling Biotech. S&P says the company’s lead drug candidate, Acapodene, represents a “significant opportunity” in the treatment of prostate cancer.

CNNMoney.com:
- Earnings: Nowhere to go but up. Banks dragged down profit growth for the S&P 500 in the fourth quarter and will likely do so again in the first quarter. But earnings may improve by year’s end.
- Deferred earnings: Apple’s(AAPL) hidden revenue bonus.

IBD:
- IBD Reinvents Market Section To Help You Focus On Winners.

Morningstar.com:
- A private sector committee created under the President’s Working Group on Financial Markets expects to have its recommendations for sound hedge-fund practices available for public comment sometime this quarter.

USA Today.com:
- Support grows for Sony’s(SNE) Blu-ray high-def DVDs.
- Lawyer gets two years in prison for class-action schemes.

Reuters:
- Six mortgage lenders will announce a plan tomorrow to help delinquent homeowners avoid foreclosure.
- Cisco CEO: Don’t freak out about weak market.
- Short interest in shares of Intel Corp.(INTC) rose 48% from mid-January to late January, the largest increase of any Nasdaq stock.
- Non-Hispanic whites will become a minority in the US by 2050, with immigrants and their children driving 82% of US population growth in coming years, a new study said.

Financial Times:
- Fed is right to intervene to ward off recession. As the US economy and markets weaken, perennial pessimists have moved to center stage, arguing for the inevitability of a serious recession.

TimesOnline:
- Microsoft(MSFT) Vows it will Continue Yahoo!(YHOO) Fight.

Late Buy/Sell Recommendations
Citigroup:
- Maintained Buy on (PBI), target $51.
- Reiterated Buy on (A), target $44.

Night Trading
Asian Indices are +.25% to +1.50% on average.
S&P 500 futures +.03%.
NASDAQ 100 futures unch.

Morning Preview
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Earnings of Note
Company/EPS Estimate
- (IMB)/-1.57
- (MAS)/.28
- (SGP)/.25
- (WYN)/.45
- (MMC)/.31
- (OMC)/.95
- (GM)/-.64
- (Q)/.14
- (CCE)/.27
- (TAP)/.65
- (WYNN)/.68
- (CEPH)/.80
- (PNRA)/.55
- (NILE)/.44
- (XTO)/.92
- (SNDA)/.45
- (XMSR)/-.63
- (AMAT)/.20
- (BWLD)/.32

Upcoming Splits
- (WGOV) 2-for-1

Economic Releases
10:00 am EST
- The Monthly Budget Surplus for January is estimated at $19.0 billion versus $38.2 billion in December.

Other Potential Market Movers
- The IBD/TIPP Economic Optimism Index, (LVS) investor conference, (DRI) analyst meeting, (ERTS) analyst meeting, UBS Global Healthcare Services Conference, Lehman Brothers Industrial Select Conference, BIO CEO & Investor Conference, Goldman Sachs Ag Conference, Citigroup Retail Conference and Merrill Insurance Investors Conference could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and commodity stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish Near Session Highs, Led by Technology, Energy, Retail and Homebuilding Shares

Evening Review
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PM Market Call
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In Play

Stocks at Session Highs into Final Hour on Bargain-Hunting, Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Gaming longs, Computer longs, Semi longs, Medical longs and Retail longs. I covered all of my (IWM)/(QQQQ) hedges, some of my (EEM) short and added to my (AMSC) long this morning, thus leaving the Portfolio 100% net long. The overall tone of the market is mildly positive as the advance/decline line is slightly higher, most sectors are rising and volume is about average. Investor anxiety is above average. Today’s overall market action is bullish. The VIX is falling .6% today, but remains high at 28.0. The ISE Sentiment Index is a below average 115.0 and the total put/call is an above-average .96. Growth stocks are substantially outperforming value stocks for the second day in a row, with many positing meaningful gains. As I said last week, after underperforming in January, I suspect a significant rotation back into “growth” stocks and away from “value” stocks is underway again. I still expect growth to outperform value for several more years. Today’s upside market reversal came despite more weakness in the (XLF) and Asian indices, which is a big positive. Moreover, despite financial sector weakness, the TED spread fell to .78 basis points today, the lowest since August of last year. While I am not currently long (MSFT), I suspect that the stock is near an important low, which could help boost the Nasdaq as its substantial drag on the index subsides. Nikkei futures indicate a flat open in Japan and DAX futures indicate a +77 open in Germany. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting and short-covering.