Bull Radar

Style Outperformer:

Large-cap Growth (-.98%)

Sector Outperformers:

Airlines (+4.26%), Software (+1.98%) and Biotech (+1.16%)

Stocks Rising on Unusual Volume:

VTAL, MMSI, DNA, OSIP, BMY, ABT, BEXP, BK, ISYS, JBHT, CSGS, GENZ, CBSH, AMGN, WINN, FCSX, ADBE, BIIB, CEPH, WRLD, CYBX, ONXX and WMGI

Stocks With Unusual Call Option Activity:

1) BCO 2) ACF 3) AFL 4) ONNN 5) NT

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Tuesday Watch

Late-Night Headlines
Bloomberg:
- Copper will fall 9.4% in London by the fourth quarter as global demand for the metal used in pipes and wires weakens, according to Standard Chartered Plc. Copper for delivery in three months will sink to $7,500 a metric ton as demand growth slows in China, the world’s largest user, Judy Zhu and Dan Smith, analysts for the London-based investment bank, said in a report. They said consumption in the major industrialized nations fell 3.1% in the first half of the year compared with a year earlier, driven lower by slowing housing and automotive sales. Labor strife in Peru and Chile, as well as speculative investment and the dollar’s decline this year helped push copper up 27% in the first half in London, the analysts said. Standard Chartered said copper will fall 21% next year to $6,500 a ton in London.
- Petroleo Brasileiro SA(PBR), Brazil's state-controlled oil company, said it found oil in an offshore well in the Espirito Santo basin that may hold 150 million barrels of oil.
- Genentech Inc.(DNA), the biggest U.S. maker of cancer drugs, raised its 2008 forecast and said second- quarter profit increased 4.7 percent on higher sales of its Avastin treatment for colon, lung and breast tumors. The stock rose 1.2% in after-hours trading.
- Tribune Co.(TRB) said Los Angeles Times Publisher David Hiller and Chicago Tribune Editor-in-Chief Ann Marie Lipinski resigned, seven months after real-estate billionaire Sam Zell completed his buyout of the company.
- The Treasury Department is taking the right steps to bolster Fannie Mae(FNM) and Freddie Mac(FRE), and anyone who says the mortgage-finance companies must be left to fail is ``silly,'' hedge fund manager Barton Biggs said.
- Washington Mutual Inc.(WM), after dropping the most since its initial public offering in 1983, said it is ``well capitalized'' with more than $40 billion in liquidity and $150 billion in retail deposits. The company's tangible equity to tangible assets ratio is 7.8 percent as of June 30, Seattle-based Washington Mutual said in a Business Wire statement after the close of regular trading. Details will be provided on its July 22 earnings call, the company said. The stock gained 10% in extended trading.
- South Korea's government is working on a series of price controls designed to cool the fastest inflation in a decade, Vice Finance Minister Kim Dong Soo said.

Wall Street Journal:
- China’s government, stuck in a policy bind of its own making, is facing a growing risk of stumbling in its battle against a global wave of inflation.

CNBC.com:
- SEC to Crack Down on Short-Sellers’ Stock Manipulation. "I think there should be criminal prosecution at a high level because that’s the only thing that stops those people," said Jon Najarian, co-founder of Optionmonster.com. "Otherwise they just pay a fine and move on." "People hear rumors at cocktail parties, but there’s really something sinister going on today, particularly with the banks spreading rumors that customers are stopping doing business with Lehman Brothers. That has a tremendous effect on the market," he said. "In this market, any kind of rumor is being taken seriously," said Jake Zamansky, a lawyer at Zamansky & Associates Securities. "People spreading these rumors, in many cases have driven out the likes of [Bear Stearns] and potentially Lehman Brothers. People spread false information, outright lies, to drive these companies down."

BusinessWeek.com:
- What Capital Crunch? Despite the turmoil in housing and the stock market, big investors continue to pump money into venture capital.

CNNMoney.com:
- 100 Best Places to Live.

USA Today.com:
- Intel vs. AMD: Better computer chips raise laptops’ abilities.

Reuters:
- A crackdown on rumor-mongering by U.S. securities regulators is likely to see many in the financial markets take a lot more care about how they pass on both serious views and scuttlebutt, at least for a while. The big fear is that regulators will show up at hedge funds and brokerages, armed with subpoenas, demanding trading, phone and e-mail records to determine if any of them are to blame for declines in the shares of major financial companies such as Lehman Brothers Holdings(LEH). The SEC's actions may also be directed at the people many chief executives have publicly blamed for hammering their stocks -- hedge funds that focus on selling stocks short. For years so-called short sellers, hedge funds that concentrate on betting a stock price will go down, have been called nasty names and sometimes accused of trying to manipulate situations to make money.

Financial Times:
- The Children's Investment Fund, the London hedge fund, lost more than $1bn in its worst month ever in June as activists were hit particularly badly by the poor markets.
- New Yorker attacked for Obama cover. The magazine considered the bible of the white, liberal US intelligentsia was under attack on Monday for a satirical cover depicting Barack Obama as a Muslim and his wife Michelle as a terrorist.

TimesOnline:
- UK home sales fell to their lowest level in 30 years last month as the seizure in the mortgage market continued to drag house prices down.

Late Buy/Sell Recommendations
Pacific Growth:
- Rated (FDRY), (FFIV) Buy.

RBC Capital:
- Rated (CPHD) Outperform, target $34.

Night Trading
Asian Indices are -2.50% to -.75% on average.
S&P 500 futures -.16%.
NASDAQ 100 futures -.11%.

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Earnings of Note
Company/EPS Estimate
- (ETN)/1.94
- (PII)/.67
- (JNJ)/1.13
- (USB)/.59
- (STT)/1.36
- (GWW)/1.46
- (ALTR)/.28
- (INTC)/.27
- (CTAS)/.56
- (VFC)/.87
- (CSX)/.90
- (ADTN)/.30
- (SCHW).26

Upcoming Splits
- (FLR) 2-for-1

Economic Releases
8:30 am EST
- The Producer Price Index for June is estimated to rise 1.4% versus a 1.4% gain in May.
- The PPI Ex Food & Energy for June is estimated to rise .3% versus a .2% gain in May.
- Advance Retail Sales for June are estimated to rise .4% versus a 1.0% increase in May.
- Retail Sales Less Autos for June are estimated to rise 1.0% versus a 1.2% increase in May.
- Empire Manufacturing for July is estimated to rise to -8.0 versus -8.7 in June.

10:00 am EST
- Business Inventories for May are estimated to rise .5% versus a .5% increase in April.

Other Potential Market Movers
- The Fed’s Bernanke speaking, Fed’s Yellen speaking, weekly retail sales reports, IBD/TIPP Economic Optimism Index, (THQI) analyst meeting, (LRCX) analyst meeting, (KLAC) analyst briefing, (VRGY) analyst meeting, (AEO) analyst day, (DNB) investor day, (GE) analyst meeting and SEMICON West could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial 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.

Stocks Finish Lower, Weighed Down by Financial and Airline Shares

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In Play

Stocks Lower into Final Hour on Financial Sector Worries and Global Growth Concerns

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Internet longs and Gaming longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is above average. Investor anxiety is high. Today’s overall market action is bearish. The VIX is rising 3.97% and is high at 28.55. The ISE Sentiment Index is very low at 78.0 and the total put/call is high at 1.14. Finally, the NYSE Arms has been running around average most of the day and is currently .85. The Euro Financial Sector Credit Default Swap Index is falling 2.52% today to 88.11 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 unch. today at 138.48. The TED spread is rising 10.11% to 1.34. Growth stocks are outperforming value stocks by a very wide margin again today. Many growth stock leaders are flat-to-higher on the day. The market is trading as if something will soon trigger another spike in angst, which should provide the necessary washout for a more durable bottom. Nikkei futures indicate a -60 open in Japan and DAX futures indicate an +9 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain-hunting.

Today's Headlines

Bloomberg:
- The cost of protecting companies from default fell to the lowest in more than two weeks after the U.S. Treasury sought authority from Congress to buy stakes in Fannie Mae(FNM) and Freddie Mac(FRE), the nation's two biggest mortgage lenders. Credit-default swaps on the Markit iTraxx Europe index of 125 companies with investment-grade ratings fell 6.25 basis points to 97, the lowest since June 26, according to JPMorgan Chase & Co. prices at 11:20 a.m. in London. Contracts on the Markit iTraxx Japan index dropped 8 basis points to close at 132, Morgan Stanley prices show.
- Corn fell to a one-month low and soybeans declined as a favorable mix of sunshine and rain may boost crop conditions in the U.S. Midwest, easing concern that June flooding will cut production.
- President George W. Bush said today he's lifting a presidential ban on drilling for oil and natural gas on the U.S. Outer Continental Shelf, setting up a showdown with Congress over a separate ban it put in place in the 1980s. ``Today I've taken every step within my power to allow offshore exploration of the OCS,'' Bush said in a statement at the White House. ``This means the only thing standing between the American people and these vast oil resources is action by the U.S. Congress.''
- Freddie Mac(FRE) received higher-than- average demand for its $3 billion of short-term notes as the U.S. Treasury's rescue plan buoyed confidence the government will back the company's debt.
- Apple Inc.(AAPL) sold 1 million of its new iPhones in the first three days after the handset made its debut, more than double what some analysts anticipated, sending the stock up 3.5 percent.
- European industrial production fell the most in almost 16 years in May, as the euro's gain against the dollar, soaring energy costs and cooling global growth weighed on the region's largest economies.

Wall Street Journal:
- In a milestone for the fast-changing business of trading on Wall Street, the Nasdaq Stock Market eclipsed the NYSE on Friday in the number of shares traded for NYSE-listed stocks.
- No Reason to Panic About Fannie Mae(FNM), Says Wallison.

NY Times:
- Hedge Funds Show Obama the Money.

Daily Telegraph:
- UK advertising budgets are being cut at the fastest rate since the Sept. 11, 2001, terrorist attacks as retail spending slows, citing a quarterly survey by the Institute of Practitioners in Advertising. Every advertising medium except the Internet is experiencing reductions.

The Scotsman:
- Scottish companies are shedding jobs at the fastest rate in more than five years as they battle an “uneasy combination” of weaker activity and higher inflation, experts will warn today. The findings of the influential report from the Royal Bank of Scotland show output across the service and manufacturing sectors falling at the sharpest pace on record.

Irish Times:
- Construction in Ireland contracted at a record rate in June.

Korea Economic Daily:
- South Korea plans to invest $11.9 billion in alternative energy by 2012 to reduce its dependence on crude oil. The country will spend a further $15 billion on renewable energy, including solar and wind power, from 2013 to 2018.

Middle East Economic Survey:
- OPEC will tomorrow say demand for its own crude oil in 2009 will be less than its forecast for 2008. The 13-member OPEC will say in its July 15 Monthly Oil Market Report that the call on its crude next year will be 500,000 barrels a day less than the corresponding figure for 2008. Keeping OPEC’s production at the current level of 32.2 million barrels a day would increase global crude inventories at a rate of 800,000 barrels a day in 2009, according to MEES.