Weekly Scoreboard*

Indices
S&P 500 1,278.38 -3.0%
DJIA 11,346.51 -4.19%
NASDAQ 2,315.63 -3.76%
Russell 2000 698.14 -3.80%
Wilshire 5000 13,019.88 -3.13%
Russell 1000 Growth 553.92 -3.01%
Russell 1000 Value 676.23 -3.21%
Morgan Stanley Consumer 648.60 -2.93%
Morgan Stanley Cyclical 859.97 -5.42%
Morgan Stanley Technology 559.64 -3.97%
Transports 4,909.12 -5.49%
Utilities 506.99 -2.29%
MSCI Emerging Markets 135.20 -2.69 %

Sentiment/Internals
NYSE Cumulative A/D Line 47,110 -8.26%
Bloomberg New Highs-Lows Index -1099 -67.8%
Bloomberg Crude Oil % Bulls 38.0 +31.03%
CFTC Oil Large Speculative Longs 211,137 +3.6%
Total Put/Call 1.11 -13.95%
OEX Put/Call 1.0 -30.07%
ISE Sentiment 112.0 +47.37%
NYSE Arms .90 -33.82%
Volatility(VIX) 23.44 +2.49%
G7 Currency Volatility (VXY) 10.11 +2.02%
Smart Money Flow Index 8,081.35 -3.55%
AAII % Bulls 31.25 -5.25%
AAII % Bears 52.27 +14.28%

Futures Spot Prices
Crude Oil 140.21 +4.08%
Reformulated Gasoline 350.12 +2.19%
Natural Gas 13.20 +.63%
Heating Oil 390.66 +3.69%
Gold 931.30 +3.16%
Base Metals 246.92 -.38%
Copper 387.80 +1.28%
Agriculture 483.47 +3.0%

Economy
10-year US Treasury Yield 3.97% -20 basis points
10-year TIPS Spread 2.53% +3 basis points
TED Spread 1.13 +18 basis points
N. Amer. Investment Grade Credit Default Swap Index 141.57 +17.97%
Emerging Markets Credit Default Swap Index 255.43 +7.05%
Citi US Economic Surprise Index +7.50 -39.0%
Fed Fund Futures 24.7% chance of 25 hike, 75.3% chance of no move on 8/5
Iraqi 2028 Govt Bonds 72.54 -1.18%
4-Wk MA of Jobless Claims 378,300 +.6%
Average 30-year Mortgage Rate 6.45% +3 basis points
Weekly Mortgage Applications 461,300 -9.26%
Weekly Retail Sales +2.4%
Nationwide Gas $4.07/gallon -.01/gallon.
US Cooling Demand Next 7 Days 5.0% above normal
ECRI Weekly Leading Economic Index 131.70 -.68%
US Dollar Index 72.36 -.92%
Baltic Dry Index 9,599 +1.81%
CRB Index 464.40 +1.98%

Best Performing Style
Large-cap Growth -3.02%

Worst Performing Style
Small-cap Value -4.47%

Leading Sectors
Oil Service +3.21%
Energy 1.31%
Drugs +.83%
Hospitals -.65%
Medical Equipment -.80%

Lagging Sectors
I-Banks -5.60%
Wireless -6.48%
Alternative Energy -7.58%
Airlines -10.52%
Gaming -11.40%

One-Week High-Volume Gainers

One-Week High-Volume Losers

*5-Day Change

Stocks Lower into Final Hour on Surging Oil, Rising Credit Market Angst

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Gaming longs and ETF hedges. I covered some of my (IWM/QQQQ) hedges and some of my (EEM) short today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is mixed and volume is about average. Investor anxiety is above-average. Today’s overall market action is neutral. The VIX is falling .5% and remains above average at 23.82. The ISE Sentiment Index is below average at 116.0 and the total put/call is very high at 1.18. Finally, the NYSE Arms has been running around average most of the day and is currently .98. The Euro Financial Sector Credit Default Swap Index is rising 2.72% today to 96.58 basis points. This index is up from a low of 52.66 on May 5^th, but down from 129.46 basis points on March 20^th. The North American Investment Grade Credit Default Swap Index is rising 13.5% today to 141.57, which is also a negative. The TED spread is rising 2.91% to 1.12. I still believe given record short interest, recent steep stock declines, high investor angst, quarter-end on Monday and the market’s technically oversold state, a very sharp rally will materialize soon. The heavily shorted financials are attempting a recovery, despite more negative news. Any upside traction in this sector should light a match under the broad market. A number of market leading stocks have been trading much better today and a number of sectors are rising despite losses in the major averages. Commodity, medical, road & rail, hospital, construction, hmo, drug, biotech and defense shares are all higher for the day. Nikkei futures indicate a +5 open in Japan and DAX futures indicate an +56 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, better economic data, quarter-end window dressing and bargain-hunting.

Personal Income Surges, Spending Jumps, Core Inflation Tame, Confidence Depressed

- Personal Income for May rose 1.9% versus estimates of a .4% gain and an upwardly revised .3% increase in April.

- Personal Spending for May rose .8% versus estimates of a .7% gain and an upwardly revised .4% increase in April.

- The PCE Core for May rose .1% versus estimates of a .2% increase and a .1% gain in April.

- Final Univ. of Mich. Consumer Confidence for June was 56.4 versus estimates of 56.7 and prior estimates of 56.7.

BOTTOM LINE: US consumer spending rose more than forecast in May as tax rebates drove the biggest gain in incomes in almost three years, Bloomberg reported. This data indicates that 2Q GDP will accelerate from 1Q’s 1.0% rate. Americans used their stimulus checks to buy electronics, clothes and furniture, according to the data. Economists at Morgan Stanley estimated 2Q growth at 1.6%, up from a prior estimate of a .8% gain. Disposable income, or the money left over after taxes, surged 5.7%, the most since May 1975. The US savings rate jumped to 5%, the highest since March 1995. About $70.8 billion worth of tax rebate checks were distributed through June 20, which leaves about $37 billion left to hit. The core PCE, the Fed’s preferred gauge of inflation, rose 2.1% year-over year versus the 20-year average of 2.4% and down from 2.5% in February of last year. I expect incomes and spending to exceed estimates again for June and core inflation to remain tame. The US Dollar Index is .08% lower and the 10-year yield is declining 3 basis points on today’s reports. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 1 basis point to 2.55%, which is around the average for the last four years. This is also still down 13 basis points from 2.68% on March 13^th.

Bull Radar

Style Outperformer:

Large-cap Growth (+.04%)

Sector Outperformers:

Oil Service (+1.11%), Energy (+.89%) and Road & Rail (+.62%)

Stocks Rising on Unusual Volume:

GRS, HMY, SWC, KWK, PDO, BBL, AGU, HES, ASMI, CYMI, DLB, ANDE, HUSA, UMBF, NUVA, WTFC, GOLD, AAUK, ASTE, ATPG, NCTY, PAAS, FSYS, BABY, SHLD, DBTK, AREX, TSCO, AZZ, ACN and NAVZ

Stocks With Unusual Call Option Activity:

1) CFC 2) AEO 3) TWX 4) GLW 5) GW

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
Exchange Volume vs. Average
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Real-Time Intraday Quote/Chart
Dow Jones Hedge Fund Indexes

Friday Watch

Late-Night Headlines
Bloomberg:
- Asian stocks fell, putting the region’s benchmark index on course for its worst first half since 1992, on concern accelerating inflation and rising fuel prices will erode economic growth and profits.
- Corporate bond sales in dollars, euros and yen by Asian companies have plunged 60% this year, as rising inflation and slowing economic growth douse credit demand.
- New Zealand's economy contracted last quarter, putting the nation on the brink of its first recession in 10 years as soaring credit costs damp domestic demand and a drought crimps exports.
- Crude oil fell in NY, retreating from the record $140.39 a barrel reached yesterday, as the US House of Representatives approved a bill aimed at curbing excessive energy-market speculation. The bill, which passed 402-19, would require the Commodity Futures Trading Commission to consider using position limits, or constraints on the size of the stake each speculative investor can own, and raising margin requirements, the amount of money required to trade. The vote came after the record was set. Prices veered 43.4 percent from the 30- day average yesterday, the highest volatility in 16 months, according to Bloomberg data. Emergency powers have been invoked four times since the CFTC was formed in 1976.
- The number of travelers over the US Fourth of July holiday will decline for the first time this decade after gasoline rose to a record, AAA said.
- Apple’s(AAPL) iPhone Retains Allure Among Early Buyers. Bradley Wilson was one of thousands who lined up to buy the iPhone the day it went on sale in June 2007. He’s ready to camp out again next month when Apple Inc.(AAPL) starts selling a faster, cheaper model.
- President Luiz Inacio Lula da Silva said Brazil will at least triple its oil reserves by exploring a new offshore area that includes the Western Hemisphere’s largest discovery since 1976.
- Federal Reserve officials are reviewing regulations that limit investment firms’ stakes in banks in an effort to channel more capital into the US banking system.
- Record oil prices are “a blessing in disguise” for Asian economies and currencies as high transport costs will coerce the region to become less reliant on exports and more on local demand, Morgan Stanley said.

Wall Street Journal:
- Carlyle Group and other private-equity firms are “ready and willing” to invest in struggling financial institutions and face regulatory hurdles, Carlyle’s Olivier Sarkozy and Randal Quarles wrote. Buyout firms have more than $400 billion to invest.
- An inquiry into drug industry pricing by the European Union investigators is expanding. Trading firms and drug wholesalers were sent questionnaires in recent weeks asking about distribution methods used by drugmakers and whether they are blocking competitors.

CNBC.com:
- An investor has sued a Greenwich hedge fund management firm, accusing its operators of siphoning off money and enriching themselves at the expense of investors. Westerly Capital sued Windmill Management LLC, manager of SageCrest hedge fund, and operators Alan and Philip Milton and Richard Weyand in Stamford Superior Court earlier this month.

BusinessWeek.com:
- ICANN, the nonprofit that oversees Net addresses, has approved an unlimited number of new suffixes in a move that could help business.

CNNMoney.com:
- Fed up with record gas prices, drivers often scapegoat big oil companies for high prices at the pump, but in a recent survey, more Americans directed their scorn towards Washington lawmakers. According to a Consumer Reports Auto Pulse Survey released Thursday, 77% of consumers said the root of high gas prices lies with the government's failure to implement an effective energy policy.

AP:
- FPL Group Inc.(FPL), the biggest US operator of wind-power facilities, plans a $2 billion wind farm in North Dakota. It would be built on 250 square miles in Oliver and Morton counties and involve some 667 wind turbines.
- A recent AP-Yahoo poll, conducted by Knowledge Networks, found only 53% of Democrats who favored Hillary Clinton for the nomination two months ago now back Barack Obama for president. 23% plan to vote for Republican John McCain, 16% are undecided, 5% plan to vote for Ralph Nader and 3% plan to vote for someone else. The poll also found that choosing Clinton as No. 2 would appear to be a wash for Obama's candidacy. Overall, 28 percent said they would be more likely to vote for the Democratic ticket if Clinton were the nominee, 25 percent said they would be more likely to vote for the Republican ticket if Clinton were the nominee, and 47 percent said it wouldn't make much difference.

Reuters:
- Inflation has firms rethinking Made in China.
- US Senate blocks Medicare bill with HMO cuts. By one vote, Senate Republicans on Thursday blocked a bill to shave billions of dollars from health plans that contract with the federal Medicare program and avert a pay cut for doctors. On a 59-40 count, mostly Democratic backers fell shy of the 60 needed to clear a procedural roadblock and move towards final congressional passage of the measure earlier approved by the House of Representatives.

Financial Times:
- Verizon Communications(VZ) has stepped up the pressure on Vodafone to sell out of Verizon Wireless, their mobile joint venture, saying that the second largest US telecom company intends to be “the hunter” in future industry consolidation.

Daily Telegraph:
- Gordon Brown has vowed to break Britain’s dependence on oil and to convert the country to a greener way of life. He promised to drive through changes aimed at replacing the old fossil fuels - coal, gas and oil - with 21st century clean and renewable technologies. An estimated £100 billion will be spent over the next 12 years converting to a low carbon economy involving a 10-fold increase in power generation from renewable sources.

Late Buy/Sell Recommendations
CSFB:
- Rated (RIMM) Underperform, target $100.
- Reiterated Outperform on (BAM), target $40.
- Rated (MOT) Underperform, target $7.50.
- Rated (QCOM) Outperform, target $60.

Night Trading
Asian Indices are -3.0% to -1.0% on average.
S&P 500 futures +.25%.
NASDAQ 100 futures +.21%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/EPS Estimate
- (KBH)/-.94
- (AZZ)/.54
- (SCS)/.22

Upcoming Splits
- (PDO) 5-for-4

Economic Releases
8:30 am EST
- Personal Income for May is estimated to rise .4% versus a .2% gain in April.
- Personal Spending for May is estimated to rise .7% versus a .2% gain in April.
- The PCE Core for May is estimated to rise .2% versus a .1% gain in April.

10:00 am EST
- Final Univ. of Mich. Consumer Confidence for June is estimated at 56.7 versus 56.7 in May.

Other Potential Market Movers
- The UBS Global Insurance Conference and JPMorgan Global Tobacco Conference could also impact trading today.

BOTTOM LINE: Asian indices are sharply lower, weighed down by automaker and technology shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.