Bull Radar

Style Outperformer:

Small-cap Value (+1.72%)

Sector Outperformers:

Banks (+3.95%), Retail (+3.46%) and I-Banks (+3.44%)

Stocks Rising on Unusual Volume:

MKTX, NCC, GROW, PSMT, WAL, C, PSEC, WFC, GE, HNR, CHNR, CCC, SIL, CVX, BW, CMC, MGEE, IBOC, PLCE, NBTB, OTTR, PBNY, RNST, INDB, CWCO, NGPC, COHU, AMFI, MDCI, CHFC, PNFP, FFIN, LORL, AAON, MATW, FPFC, TNL, MOG/A, SMA, WMK, WOR, IHC, RUS, HNR and UBA

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Thursday Watch

Late-Night Headlines
Bloomberg:
- The Australian hedge funds industry body said it supports greater disclosure when investors sell borrowed shares, as regulators investigate whether market manipulation pushed some stocks to record lows in recent weeks. The Australian chapter of the Alternative Investment Management Assoc. rejected accusations hedge funds targeted troubled companies through short-selling and spreading rumors that company directors had received margin calls, AIMA’s Chairman Kim Ivey said.
- Wheat fell the maximum permitted by the Chicago Board of Trade as rains improved crop prospects in Australia and farmers worldwide prepared to sow more grain to take advantage of prices that reached a record high last month.
- Corn and soybeans fell the exchange limit in Chicago on speculation a rebound in the dollar will reduce the appeal of commodities as an inflation hedge.
- CIT Group Inc.(CIT), the largest independent commercial finance company in the US, may need to tap $7.3 billion in backup credit lines because its access to unsecured short-term debt has become “materially constrained,” Fitch Ratings said.
- Billionaire investor Joseph Lewis, the largest shareholder at Bear Stearns(BSC), said he may push the company to consider alternatives to the $339 million buyout offer from JPMorgan Chase(JPM).
- Nike Inc.(NKE), the world’s largest athletic-shoe maker, said third-quarter profit and revenue climbed more than analysts estimated on higher sales in China and Europe.
- Hillary Clinton’s daily schedules show that her formal policy role in the presidency of her husband, Bill Clinton, shrunk once Congress shelved the healthcare plan she helped craft in the administration’s first two years.

Wall Street Journal:
- The collapse of Bear Stearns(BSC) dealt a severe blow to investors, from big names like billionaire Joseph Lewis to thousands of employees of the brokerage firm. But there’s one group trying to contain their joy amid all the gloom on Wall Street: Investors who placed big bets against Bear Stearns. Large hedge funds – including Harbinger Capital Partners, Greenlight Capital, Tremblant Capital Group and Paulson & Co. – made millions of dollars as Bear Stearns’s shares tumbled and various bearish positions rose in value.

MarketWatch.com:
- It can’t be said that the rich are immune to stock market volatility, mightily as they might try with risk-averse strategies and hedge funds. And the wealthy have invested in hedge funds to the tune of more than $1 trillion over the past five years alone, according to Hennessee Group research. The most recent trend among the wealthy, however, is to pull out altogether. The number of wealthy people “not investing,” according to the Spectrem Affluent and Millionaire indices, is at an all-time low.
- Tuesday’s action was strong enough to trigger a bullish technical event know as a “Double Nine-To-One” signal.

CNBC.com:
-.Papa John’s Intl.(PZZA), the third-largest US pizza chain, is “surviving” higher commodities costs, CEO Nigel Travis said. While cheese and wheat are becoming more expensive, “some of the meat costs are going down,” Travis said.
- After 7 straight years of gains, is the $1,000-topping run in gold over? Central Florida dealers say they have been selling out of metal detectors as people hope to find gold treasure and the amount of small miner permits issued in Alaska has increased 35% in the past t 5 years. Dennis Gartman, of the Gartman Letter, had been bullish on gold but has recently cut his positions by about 95%.
- With the Fed’s Help, Market May Be Nearing a Bottom.

Forbes.com:
- Best Places For Business and Careers. Companies in the U.S. are facing myriad challenges, from the credit crunch to soaring commodity prices to corporate tax rates that are behind only Japan's among developed countries. What is a chief executive to do? Head south.

Denverpost.com:
- Amid rising gas prices and increased dependence on foreign oil, a report by the National Research Council of the National Academies cites the work of US automakers as a beacon of hope to bring about dramatic solutions in personal transportation.

CNNMoney.com:
- Stock jitters: reasons not to sell.
- Steer clear of the new gold rush. The story of how the yellow metal offers investors the ultimate safe haven is spun from pretty thin straw.

SmartMoney:
- Akamai(AKAM) Shares Worth a Shot at These Prices.

Portfolio.com:
- Survey Confirms iPhone Users are Hard-Core Internet Junkies.

USA Today.com:
- Ford, GM, AutoNation refute doom and gloom.

Reuters:
- Al Qaeda leader Osama bin Laden threatened the European Union with grave punishment on Wednesday over cartoons of the Prophet Mohammad. In an audio recording posted on the Internet, Bin Laden said the cartoons were part of a “crusade” in which he said the Catholic Pope Benedict was involved. Bin Laaden’s message was entitled “The Response Will Be What You See, Not What You Hear.”
- Verizon Wireless(VZ), the No. 2 US mobile service, aims this year to support a “few hundred thousand” devices from outside vendors this year through its open network initiative, CEO Lowell McAdam said.
- Morgan Stanley(MS) faces major challenges in the near-term, yet CFO Colm Kelleher said on Wednesday the bank has trimmed its exposure to risky assets, bulked up on cash and now intends to take advantage of opportunities created by market turmoil.
- Volatility in the S&P 500 Index is at a 70-year high.
- Bottoming process begins with Bear, not bear market.

Financial Times:
- Assets Hurt by Mark-to-Market Rules, De Grauwe Says.
- Chrysler on road to profitability, says CEO.
- Forbidden fields: Oil groups circle the prize of Iraq’s vast reserves. According to the oil ministry, only 27 out of 80 discovered fields are producing in Iraq, the result of decades of under-investment.

TimesOnline:
- Stock market manipulators yesterday tried to bring down one of Britain’s biggest banks by spreading false rumors through the city. The Financial Services Authority(FSA) said that it would pursue traders guilty of “market abuse” by spreading untrue claims that banks were on the brink of collapse. The authorities believe that the fear and uncertainty in financial markets are allowing unscrupulous traders to make multimillion-pound profits by whipping up hysteria about the stability of big banks. It is feared that short-sellers — investors who use falling share prices to make money — were deliberately spooking the market in order to profit from plunging stocks in a practice called trash ’n’ cash. Rumors that the American investment bank Bear Stearns was short of cash contributed to its near-collapse last week after its lenders were scared into demanding that it repay them immediately.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (IGT), target $52.
- Maintained Buy on (NUAN), target $23.
- Reiterated Buy on (NKE), target $78.

Night Trading
Asian Indices are -3.25% to -1.25% on average.
S&P 500 futures -.72%.
NASDAQ 100 futures +.75%.

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Earnings of Note
Company/EPS Estimate
- (PLCE)/.92
- (WOR)/.26
- (BKS)/1.72
- (DDS)/.76
- (FDX)/.124
- (CCL)/.28

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for this week are estimated to rise to 360K versus 353K the prior week.
- Continuing Claims are estimated to rise to 2840K versus 2835K prior.

10:00 am EST
- Philly Fed for March is estimated to rise to -19.0 versus -24.0 in February.
- Leading Indicators for February are estimated to fall .3% versus a .1% decline in January.

Other Potential Market Movers
- The (GAS) analyst meeting, (PEG) analyst meeting, weekly EIA natural gas inventory report, Lehman Healthcare Conference, Cowen Healthcare Conference, BB&T Manufacturing/Materials Conference and Bear Stearns Global Oil & Gas Conference could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by mining and energy stocks in the region. I expect US equities to open modestly lower and to maintain losses into the afternoon. The Portfolio is 75% net long heading into the day.

Stocks Finish at Session Lows, Weighed Down by Commodity Shares

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In Play

Stocks Falling into Final Hour on Financial Sector Rumors, Global Growth Concerns

BOTTOM LINE: The Portfolio is slightly higher into the final hour on gains in my Internet longs, Medical longs, Biotech longs, Commodity shorts and Emerging Market shorts. I added (IWM)/(QQQQ) hedges, added to some of my commodity shorts and added to my (EEM) short today, thus leaving the Portfolio 75% net long. The overall tone of the market is bearish as the advance/decline line is lower, most sectors are declining and volume is above-average. Investor anxiety is elevated. Today’s overall market action is mildly bearish. The VIX is jumping 11.5% to a very high 28.8. The ISE Sentiment Index is a depressed 67.0 and the total put/call is a high 1.17. Finally, the NYSE Arms has been above average most of the day and is currently 1.5. The TED spread is rising to 198 basis points and the 3-month T-bill yield is dropping to .61% today, which are negatives The S&P Goldman Ag Commodity Index is breaking below its 50-day moving-average and appears to have made a major double-top. The (DBA) ETF is also breaking below its 50-day moving-average. I continue to believe a bursting of the current commodity bubble, while likely a short-term negative for the broad market, would be a major positive over the intermediate to long-term. Emerging market equities, which are especially sensitive to commodities, will likely come under meaningful pressure again tonight. On the positive side, many growth stock leaders are outperforming substantially today. The 30-day asset backed commercial paper yield is falling 28 basis points to 2.67%, the lowest level since March 2005. Nikkei futures indicate a -200 open in Japan and DAX futures indicate a -60 open in Germany tomorrow. I expect US stocks to trade modestly lower into the close from current levels on worries over global growth and financial sector rumors.

Today's Headlines

Bloomberg:
- Gold futures plunged the most since June 2006 after the Fed cut US borrowing costs less than investors expected. Silver plunged 8%.
- Crude oil fell more than $4 a barrel in NY, the most since August, after an Energy Dept. report showed that US demand dropped. Total implied fuel demand averaged 20.3 million barrels a day in the past four weeks, down 3.2% from a year earlier. “The commodity bubble is bursting,” said Phil Flynn, a senior trader at Alaron Trading Corp. in Chicago. “There is demand destruction occurring and it’s going to be hard to prop up oil prices,” Flynn said. “We can expect huge inventory builds in the weeks ahead and the economic slowdown is already affecting fuel demand,” said Rick Mueller, director of oil practice at Energy Security Analysis.
- Subprime Eyed by Blackstone(BX), Goldman(GS) for Contrarian Hedge Funds.
- Investor pessimism remained at the highest since September 1998 last week after Bear Stearns(BSC) required a bailout from the Fed and JPMorgan(JPM). The proportion of newsletter writers who were bearish increased to 44.7% from 43.3%, which was also a nine-year high, the prior week, Investors Intelligence said. Optimism fell to 30.9% from 31.1%, according to the survey.
- A record number of fund managers have pushed their cash holdings above benchmarks in March. Forty-two percent of managers worldwide said they had moved more money into cash than their funds stipulated, according to a survey released today by Merrill Lynch(MER). The number of managers who believe that the global economy is already in recession tripled to 22% from Merrill’s January survey.
- JWM Partners LLC, the investment firm run by ex-Long-Term Capital Management LP chief John Meriwether, lost 24% in its $1 billion fixed-income hedge fund this year through March 14.
- UK regulators are investigating whether traders have been trying to manipulate financial company stocks by spreading “false rumors.”
- Mortgage bonds have fallen to prices that offer buyers “hedge fund-like returns” because of the flight or disappearance of most traditional purchasers of the securities, according to UBS AG analysts. Without leverage, the securities offer returns of 8% to 12%, assuming “reasonable scenarios” for losses on the underlying home loans, they wrote.
- The risk of companies defaulting on their debt fell for a third day after securities firm Morgan Stanley said its profit fell less than analysts estimated and regulators said they will allow Fannie Mae and Freddie Mac to buy more home loans to help revive the mortgage market.

Wall Street Journal:
- The European Central Bank put an extra $39 billion into money markets yesterday in countries that use the euro to ease concerns that European banks won’t lend to one another.
- Walgreen(WAG) Converts Itself Into Health-Care Provider.

NY Times:
- Dermatology, Cosmetic Surgery Studies in High Demand. For Top Medical Students, an Attractive Field.
- Witney Museum to Receive $131 Million Gift from Leonard A. Lauder, the Cosmetics Executive.
- US Secretary of Education Margaret Spellings said provisions of the “No Child Left Behind” law will be eased to reduce the number of schools being labeled as failures.

Forbes:
- Ten Technologically Advanced Green Cars.

National Post:
- Mark-to-Market Rules Spurred Big Losses.

USA Today:
- Hillary Clinton would lose the votes of a significant number of Democrats if she wins the presidential nomination based on the backing of superdelegates instead of delegates allocated by elections.

NY Post:
- Cayne, Lewis Try to Arrange Counter-Bid for Bear.

Financial Times:
- America Must Be a Good Role Model by John McCain.

MTV3:
- Finland’s Finance Minister Jyrki Katainen said Europeans must prepare for a slowdown in economic growth.

Agrolink:
- Brazil’s ethanol consumption will surpass gasoline by April, for the first time since the 1980s, citing the country’s national petroleum, gas and fuel agency.