Bull Radar

Style Outperformer:

Large-cap Value (-.23%)

Sector Outperformers:

Airlines (+3.54%), Gaming (+1.55%) and Networking (+.58%)

Stocks Rising on Unusual Volume:

MA, BYD, RDS/A, LVS, BP, GLW, RACK, ADCT, ABT, ETE, SCOR, TSON, SBCF, CTCM, CGNX, AUTH, TXRH, TECH, GPRO, SONO, JDAS, IPAR, MPWR, MCHP, ALGT, VECO, FELE, RCII, APOG, WIRE, LEA, HGR and WPI

Stocks With Unusual Call Option Activity:

1) JWN 2) MAS 3) BUD 4) DNA 5) BP

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Tuesday Watch

Late-Night Headlines
Bloomberg:
- The US dollar traded near a two-month high against the yen on speculation the Federal Reserve will signal that it’s close to pausing interest-rate cuts.
- China may revalue the yuan by 10 to 15% in the coming months as policy makers seek to temper inflation close to an 11-year high, according to Frank Gong, head of China research at JPMorgan Chase(JPM). “Given global crude oil prices where they are now and continued rising global resource and commodity prices, the government is weighing the pros and cons of a one-step, large revaluation of renminbi,” wrote Gong.
- Obama’s Pastor Stands by Comments, Defends Church.
- Clinton to Get North Carolina Governor’s Endorsement.
- Visa Inc.(V), the world’s largest credit-card network, said profit rose 28% in the company’s first earnings report since its record $19 billion IPO last month. The shares fell 7% after the results didn’t meet the most optimistic predictions.

Wall Street Journal:
- Coal Producers Could Feel a Chill If Beijing Tries to Ease Price Rises.
- JPMorgan Chase(JPM), Goldman Sachs(GS and Berkshire Hathaway(BRK/A) emerged largely unscathed from the credit crunch that laid low their Wall Street brethren, so their willingness to step up and fund a big deal is a good sign for the financial markets and the economy.
- General Motors(GM) said it will cut production of heavy-duty pickup trucks and sport-utility vehicles by as much as 138,000 at four North American plants in the second half in reaction to declining sales as consumers shift to smaller, more fuel-efficient vehicles.

BusinessWeek.com:
- X Prize: $100 Million for Clean Fuels. In a bid to speed innovation, the foundation plans awards for breathrough in biofuels and other alternative-energy fields.

USA Today.com:
- A Silicon Valley start-up says it has developed technology that can deliver solar power in about a year at prices competitive with coal-fired electricity, a milestone that would leapfrog other more established players and turbocharge the fast-growing industry.

Dow Jones:
- International Business Machines(IBM) will team up with software companies to sell hardware and software to small and medium-sized business over the Web. The online marketplace will be called the Blue Business Platform.

Financial Times:
- Saudis to launch $5.3bn sovereign fund. Saudi Arabia’s Public Investment Fund is in the “final stages” of launching the kingdom’s first sovereign wealth fund. But its early financial commitment will disappoint those hoping for another megafund.
- Macquarie has more of its shares on loan than any other Australian-listed company in a sign that short sellers have taken a big gamble that the investment bank’s share price will tumble.

China Daily:
- Shanghai Stops Outdoor Advertising Approvals.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (ACV), target $30.
- Reiterated Buy on (VECO), target $23.
- Reiterated Buy on (MCHP), target $43.

Night Trading
Asian Indices are -.75% to +.50% on average.
S&P 500 futures +.01%.
NASDAQ 100 futures -.03%.

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Earnings of Note
Company/EPS Estimate
- (MHP)/.24
- (GLW)/.42
- (SPG)/.38
- (ADM)/.69
- (MHS)/.53
- (MSO)/-.08
- (LEA)/.50
- (TIN)/-.04
- (CBS)/.33
- (UA)/.02
- (BYD)/.32
- (BNI)/1.22
- (AG)/.46
- (GGP)/.55
- (CBG)/.22
- (PNRA)/.39
- (HTCH)/.09
- (ESRX)/.67
- (MA)/1.99
- (MAS)/.21
- (VLO)/.26
- (ENR)/1.45
- (X)/1.91
- (ODP)/.22
- (DPZ)/.24
- (LIZ)/.14
- (GLBC)/-1.15
- (BWLD)/.36
- (AVP)/.42
- (FLEX)/.23

Upcoming Splits
- None of note

Economic Releases
10:00 am EST
- Consumer Confidence for April is estimated to fall to 61.0 versus 64.5 in March.

Other Potential Market Movers
- The FOMC meeting, S&P/CaseShiller Home Price Index, (SUPG) analyst meeting, (FIC) analyst day, (SIX) analyst meeting, weekly retail sales reports and Lehman Brothers Retail Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by shipbuildering and airline shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Finish Mixed as Gains in Airline, Hospital Shares Offset Losses in Construction, Software Stocks

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In Play

Stocks Higher into Final Hour on Diminishing Credit Market Angst, Short-Covering, Less Earnings Pessimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Biotech longs, Computer longs, Internet longs and Medical longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is bullish as the advance/decline line is higher, most sectors are rising and volume is below average. Investor anxiety is slightly above average. Today’s overall market action is bullish. The VIX is falling .7%, but remains above average at 19.4. The ISE Sentiment Index is below average at 125.0 and the total put/call is about average at .91. Finally, the NYSE Arms has been running about average most of the day and is currently 1.0. Oil’s inability to rally today despite a weaker dollar and weekend production declines in the UK and Nigeria related to strikes is noteworthy. I said last week that I believed the bubble in fertilizer stocks would likely burst over the coming months. While it is still too early to tell if that is occurring now, the group trades poorly. The Philippine Stock Exchange Index fell another 1.4% last night to the lowest level since November 2006. The index is now down 29.7% from it high hit during October of last year. I continue to believe developed markets, in general, will substantially outperform emerging market indices over the next five years. According to Intrade.com, the odds of a US recession beginning this year have declined to 46.3% from 79.0% last month. This is the first time since early January that the odds of recession have fallen below 50.0%. The G-7 Currency Volatility Index(VXY) is falling another 3% today to 10.66, which is the lowest since February 28. Finally, the European Financial Sector Credit Default Swap Index is dropping another 6.7% today to a new low of 60.8 basis points, which is also a big positive. The (XLF) is near session highs, rising .6%. Nikkei futures indicate an +131 open in Japan and DAX futures indicate an +47 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less earnings pessimism and diminishing credit market angst.

Today's Headlines

Bloomberg:
- Wall Street Grain Hoarding Brings Farmers, Consumers Near Ruin. As farmers confront mounting costs and riots erupt from Haiti to Egypt over food, Garry Niemeyer is paying the price for Wall Street’s speculation in grain markets. Commodity-index funds control a record 4.51 billion bushels of corn, wheat and soybeans through Chicago Board of Trade futures, equal to half the amount held in US silos on March 1. The holdings jumped 29% in the past year as investors bought grain contracts seeking better returns than stocks or bonds. The buying sent crop prices and volatility to records and boosted the cost for growers and processors to manage risk. Index-fund investment in CBOT corn, soybeans and wheat has increased 66% to the equivalent of 902,105 futures contracts, a record, since January 2006, when the government began collecting the data. Investments in grain and livestock futures have more than doubled to about $65 billion from $25 billion in November, according to consultant AgResource Co. in Chicago. The divergence between CBOT futures and the underlying commodity is so great that some grain merchants have stopped bidding for new crops.
- Global copper production will outpace demand this year and next as consumption growth slows, the International Copper Study Group said. The surplus will be 85,000 metric tons this year and 429,000 tons in 2009. Supply fell 37,000 tons short of demand lat year, the ICSG said. Copper usage in China, the world’s largest buyer, will expand more slowly than last year’s 36%. Combined with a decline in consumption in the US, world usage will gain 2% this year, down from growth of 6.4% last year. Mine production will rise 6%, faster than last year’s 3%. In 2009, output will rise 9%.
- HBOS Plc led a decline in the cost of protecting bank debt from default to the lowest in 14 weeks on reports it will sell stock to shore up capital amid subprime-related writedowns. Credit default swaps on the benchmark Markit iTraxx European Financial Sector Index of 25 European banks and insurers dropped 5 basis points to 60, from a peak of 160 last month.
- The risk of US companies defaulting fell again, according to traders of credit-default swaps. Contracts on the Markit CDX North America Investment Grade Index of 125 companies in the US and Canada fell 3 basis points to 96.5 in NY, according to broker Phoenix Partners Group.
- Monsanto Company(MON) and Mendel Biotechnology today announced a collaborative agreement to enhance the development of Mendel’s BioEnergy Seeds & Fedstocks business. The two companies will apply Monsanto’s expertise in crop testing, breeding and seed production to perennial grass seed varieties Mendel is developing for use in biofuels and other commercial applications.
- Adverse weather and speculators are helping to buoy food prices and the European Union is taking steps to boost supply, said Mariann Fischer Boel, the EU’s Commissioner for Agriculture and Rural Development.
- Mars Inc., backed by billionaire Warren Buffett, agreed to buy Wm. Wrigley Jr. Co.(WWY)$23 billion to create the world’s biggest candy maker.
- Investor Kirk Kerkorian said he bought 100 million Ford Motor(F) shares, or 4.7%, and intends to buy more in a vote of support for CEO Alan Mulally. Ford rose 12% in NY trading.
- US newspapers reported that circulation losses accelerated in the six months through March as more readers turned to the Internet and publishers cut promotions to lower expenses.
- Rates on Eurodollar deposits compiled by the Federal Reserve suggest the cost for dollar loans at the London interbank offered rate, or Libor, are about to stabilize.
- US companies armed with more than half a trillion dollars in cash are stepping up efforts to take over rivals weakened by depressed stock valuations.
- Lehman Brothers(LEH) strategist Ian Scott, who advised investors to buy global stocks before the past month’s rebound, said better-than-expected earnings will pave the way for a bigger rally.

Wall Street Journal:
- A New Face of Hedge Funds Isn’t Shy.

NY Times:
- Senator Barack Obama is making subtle changes in his campaign style and message in an effort to strengthen his appeal to blue-collar voters and to avoid a defeat in Indiana that aides fear could give Democratic Party leaders further pause about his viability in a general election.
- Golden Years of Television Find New Life on the Web.
- Some parents reacted with outrage over the weekend when the television program “Entertainment Tonight” began showing commercials promoting a scoop: Miley Cyrus, the star of the wholesome Disney Channel blockbuster “Hannah Montana,” had posed topless, albeit with her chest covered, for the Vanity Fair photographer, Annie Leibovitz.

Financial News:
- Two groups of banks are seeking to start their own interdealer brokerages to cut the cost of trading interest-rate and credit derivatives.

LA Times:
- Pushing to fast-track its takeover of wounded home-loan goliath Countrywide Financial, Bank of America(BAC) will promise today to help 265,000 troubled borrowers keep their homes over the next two years by refinancing or modifying at least $40 billion in mortgages.

Power Online:
- Money Doesn’t Grow On Trees, But Gasoline Might. While it may be five to 10 years before green gasoline arrives at the pump or finds its way into a fighter jet, these breakthroughs have bypassed significant hurdles to bringing green gasoline biofuels to market. “Green gasoline is an attractive alternative to bioethanol since it can be used in existing engines and does not incur the 30% gas mileage penalty of ethanol-based flex fuel.” “In theory it requires much less energy to make than ethanol, giving it a small carbon footprint and making it cheaper to produce.”

NY Post:
- Fresh off his legal victory over Liberty Media, IAC/InterActiveCorp(IACI) boss Barry Diller is expected to meet with his board this week to restart the process of breaking up his company into five separate pieces.

FINalternatives:
- A decade after his Long-Term Capital Management imploded, John Meriwether has once again become the bearer of bad news. Meriwether’s JWM Partners has seen both of its hedge funds bleed red ink this year, leading the firm to offer investors an early exit.

AppleInsider:
- Long-time iPod manufacturer and current iPhone builder Foxconn Electronics has been selected by Apple to assemble the company’s upcoming 3G iPhone handset, with volume shipments expected to begin this June.

Reuters:
- United Airlines, a unit of UAL Corp.(UAUA) and US Airways Group(LCC) are in “very advanced” merger talks.

Austrian state broadcaster ORF:
- European Central Bank President Jean-Claude Trichet reiterated that he’s concerned about a surge in the euro against the dollar. “We had observed sharp fluctuations in the recent period of time and I have concerns about the repercussions of these sharp fluctuations on financial stability,” Trichet said.

Punch:
- Nigeria’s daily crude oil production has fallen to less than 1 million barrels a day after shutdowns. Strikes have closed all 860,000 barrels a day of output at an ExxonMobil facility while Shell has closed 169,000 barrels a day of exports. The combined losses are 1.03 million barrels a day out of 2.02 million barrels a day of production. Nigeria is losing $103 million a day because of the shutdowns, based on an average price of $100 a barrel.

Saudi Press Agency:
- Saudi Arabian annual inflation accelerated to a record 9.6% in March from 8.7% in February. Food costs increased 14.2%, while fuel and water prices and rents climbed 15.8%.