Bull Radar

Style Outperformer:

Small-cap Growth (+.71%)

Sector Outperformers:

Homebuilders (+4.07%), Computer Services (+1.11%) and I-Banks (+1.11%)

Stocks Rising on Unusual Volume:

FSS, LFC, IVN, FCX, STO, BARE, CPL, LAD, HLF, RDEN, ERES, MXWL, SYNO, MASI, LKQX, CLHB, BARE, ATHN, DLTR, HWAY, CEDC, WRNC, NFLX, CRDN, CCOI, COIN, GTXI, PZZA, SSRI, ASTE, FNM, OME, DOX, CDI, SHS and HLF

Links of Interest

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Wednesday Watch

Late-Night Headlines
Bloomberg:
- Goldman Sachs(GS) advised investors to exit its trade recommendation to purchase five-year Treasury Inflation Protected Securities. The difference in yield between five-year TIPS and nominal Treasuries, known as the breakeven rate, has widened to about 2.34 percentage points from 1.95 percentage points since the recommendation was made on Feb. 6. “Since then, the market has become increasingly more concerned about inflation,” said Goldman strategists Michael Vakin, Francesco Garzarelli and Sergiy Verstyuk in a research note. Breakevens are now at “a level at which we are comfortable in taking profits.”
- Asian stocks rose for a third day, led by commodity producers and department-store operators, after raw-material prices advanced and US retailers reported an increase in earnings.
- US House Financial Services Committee Chairman Barney Frank wants to provide $35 billion in federal funds to buy homes in foreclosure and offer refinancing for “distressed” homeowners under a plan unveiled today.
- Blackstone Group LP(BX), manager of the world’s biggest private-equity fund, plans to bypass Wall Street firms and directly find lenders for leveraged buyouts, President Hamilton James said.
- Coal power investments are increasingly risky when the price of greenhouse-gas emissions is factored into fuel costs, according to a report by a consulting firm whose clients include the US Energy Dept. Proposed coal-fired generators across the US are being canceled or delayed as pending regulation of heat-trapping gases threatens investment returns, Synapse Energy Economics Inc. said.
- A new Bloomberg/LA Times survey shows Obama is preferred by Democratic primary voters 48% to 42%, the first time he has overtaken Clinton in a Bloomberg/Times poll. In a general-election match-up among registered voters, McCain is 2 points ahead of Obama and 6 points ahead of Clinton.
- McDonald’s Corp.(MCD) and Honeywell(HON) led a rush of borrowers selling $9.5 billion in US corporate bonds today, the most since January.

Wall Street Journal:
- Hillary Rodham Clinton and Barack Obama blamed each other for spreading false information about their respective health care plans Tuesday night in a high stakes debate one week before a quartet of primaries.

MarketWatch.com:
- JPMorgan(JPM) gets nod to underwrite China government bonds.
- Despite price, Visa may be a bargain.

CNBC.com:
- Private equity firms and unexposed banks have joined a group to rescue bond insurer Ambac Financial(ABK). The appearance of the private equity firms and unexposed banks indicates the bailout group thinks there is still a market for bond insurance and that Ambac “can survive in the future,” said CNBC anchor Charlie Gaspparino.
- MBIA CEO: Bond Insurer Is Done Raising Capital.
- Charting Asia: Shanghai Alert.
- Fund Manager: Buy Fast – and Buy These Names.

BusinessWeek.com:
- Earnings: A Clearer Picture Emerges.

SmartMoney.com:
- CEO Interview: Morningstar’s(MORN) Joe Mansueto.

Boston Globe:
- Hedge funds embrace Obama, donate less to Clinton.

Reuters:
- Google(GOOG) winner as Microsoft(MSFT) and Yahoo(YHOO) face off.
- Delta(DAL) says no merger yet, deal must meet conditions.

Financial Times:
- Don Kohn, Federal Reserve vice-chairman, on Tuesday indicated that he remained open to cutting US interest rates further.
- Ovation in Pyongyang is music to US ears.
- Tentative signs of an improvement in global liquidity are starting to emerge, says David Shairp, global strategist at JPMorgan Asset Management.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (FWLT), target $104.

UBS:
- Raised (XLNX) to Buy, target raised to $27.

Night Trading
Asian Indices are +1.0% to +2.25% on average.
S&P 500 futures -.02%.
NASDAQ 100 futures +.14%.

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Earnings of Note
Company/EPS Estimate
- (RRD)/.73
- (MYL)/-.04
- (TOL)/-.50
- (DLTR)/1.01
- (CKP)/.52
- (DYN)/.05
- (LAMR)/.07
- (BYD)/.38
- (CRM)/.04
- (FLS)/1.22
- (LTD)/.92
- (MDR)/.67
- (TIE)/.30
- (LIZ)/.20
- (SPW)/1.68
- (PSA)/.27
- (FNM)/-1.20
- (NBL)/1.62
- (HET)/.74

Upcoming Splits
- (RBN) 2-for-1

Economic Releases
8:30 am EST
- Durable Goods Orders for January are estimated to fall 4.0% versus a 5.0% gain in December.
- Durables Ex Transports for January are estimated to fall 1.4% versus a 2.3% gain in December.

10:00 am EST
- New Home Sales for January are estimated to fall to 600K versus 604K in December.

Other Potential Market Movers
- The Fed’s Bernanke speaking, Fed’s Mishkin speaking, weekly MBA Applications report, weekly EIA energy inventory data, (JPM) investor day, (SNWL) analyst meeting, (UTX) analyst meeting, BMO Capital Markets Global Metals/Mining Conference, Goldman Sachs Technology Symposium, CSFB Global Services Conference, Robert Baird Business Solutions Conference, Keefe Bruyette Regional Bank Conference, Jefferies Internet Conference, Merrill Communications Conference and Wachovia Homebuilding Conference could also impact trading today.

BOTTOM LINE: Asian indices are sharply higher, boosted by retailer 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 Higher, Boosted by Homebuilding, Retail, Semi and Oil Service Shares

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In Play

Stocks Higher into Final Hour on Short-Covering, Bargain-Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Software longs, Alternative Energy longs, Gaming longs and Biotech longs. I added to my (GOOG) long and took some profits in another long today, thus leaving the Portfolio 100% net long. The overall tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Investor anxiety is slightly above average, despite gains in the major averages. Today’s overall market action is very bullish. The VIX is falling 4.7% today, but remains relatively high at 22.0. The ISE Sentiment Index is a low 95.0 and the total put/call is an above-average 1.03 today. Finally, the NYSE Arms has been running below-average and is currently .80. Today’s broad market action is even more impressive considering today’s economic data, the rise in oil and decline in tech leader (GOOG). While the major averages are getting extended short-term, the recent parabolic rise in short interest, high cash levels at most funds, historically bearish sentiment readings and technical breakout in the S&P 500 should keep pullbacks relatively mild and short-lived. Hitwise said today that it is actually seeing an increase in traffic from Google to retail sites, which indicates GOOG’s paid search deceleration is not due to the economy. Pacific Crest said that its channel checks contradict the data from comScore and CSFB said that the January decline in paid clicks was intentional in an attempt to eliminate the zero value click. I still believe recent significant improvements to GOOG’s algorithms will result in further substantial market share gains over the intermediate-term. I suspect the shares are in the process of bottoming for the year right now and will finish the year substantially higher than current levels. Nikkei futures indicate an +206 open in Japan and DAX futures indicate an +45 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short covering, diminishing bond insurer angst and bargain hunting.

Today's Headlines

Bloomberg:
- IBM Corp.(IBM), the world’s biggest computer-services company, announced plans to buy back $15 billion of stock. The stock surged to a four-month high.
- International Game Technology(IGT), the world’s largest slot machine maker, might boost earnings more than 10% by purchasing a competitor without weakening the equity of shareholders. Shuffle Master(SHFL) is the most likely target. Other candidates may include Bally Technologies(BYI) and WMS Industries(WMS).
- MBIA Inc.(MBI) had its Aaa bond insurer rating affirmed by Moody’s Investors Service, removing the threat of an immediate downgrade that would have sparked losses across the credit markets.
- The Fed’s Poole said financial markets are not healed, but he sees progress. He also said the TIPS spread is well within its two-year range, he sees no change in direction of Fed policy yet and that the US economy will likely avoid recession.
- Federal Reserve Vice Chairman Donald Kohn said turmoil in credit markets and the possibility of even slower growth pose a “greater threat” than inflation.
- Crude oil is rising above $100/bbl. in NY after the US dollar dropping to a three-week low prompted investment funds to boost speculation in the commodity.

Wall Street Journal:
- US Pushes Sovereign Funds To Open to Outside Scrutiny.

CNBC:
- Sam Zell, chairman of Equity Group Investments LLC, told CNBC that the US economy isn’t going into a recession and that the housing market will begin its “recovery phase” in the next few months. “Obviously, what we have going on is an attempt to creat a self-fulfilling prophecy,” he said. “We have two Democratic candidates who are vying with each other to describe the economic situation worse.”
- Former US Treasury Secretary Lawrence Summers said in an interview on CNBC today that while inflation numbers need to be monitored closely, the US is far from the “stagflation” of the 1970s.

Forbes:
- The world’s largest hedge fund, US-based Renaissance Technologies, has received approval from the Securities and Exchange Board of India to operate in the nation’s stock markets as a foreign institutional investor.

USA Today:
- Shortage of surgeons pinches US hospitals. Cuts in medical school enrollments in ‘80s and ‘90s now felt nationwide.

LA Times:
- California to Pump Up Access to Biofuels.

AP:
- Internet advertising revenue surpassed $21 billion for the first time in 2007, citing the Interactive Ad Bureau. Ad revenue rose 25% from almost $17 billion in 2006.

AFP:
- Iran’s supreme leader, Ayatollah Ali Khamenei, praised President Mahmoud Ahmadinejad for the “great success” of the country’s nuclear program, citing a speech aired on state tv.

Jerusalem Post:
- “I think there is a strain within the pro-Israel community that says unless you adopt an unwavering pro-Likud approach to Israel, then you’re anti-Israel, and that can’t be the measure of our friendship with Israel,” leading Democratic presidential contender Illinois Senator Barack Obama said.

al-Hayat:
- Saudi Arabia has no plans to end pricing crude oil in dollars and change to euros, citing Mohamed Al-Jasser, vice governor of the kingdom’s central bank.

Tehran Times:
- Iranian companies will soon start work on public infrastructure projects in Iraq as part of cooperation efforts between the two neighbors, citing Tehran Mayor Mohammad-Baqer Qalifaf.