Stocks Finish Higher, Boosted By Airline, Construction, Hospital and Commodity Shares

Evening Review
Market Summary
Top 20 Biz Stories
Today’s Movers
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers
After-hours Real-Time Stock Bid/Ask
After-hours Stock Quote
After-hours Stock Chart
In Play

Stocks Higher into Final Hour on Bargain-Hunting, Diminishing Credit Market Angst and Lower Energy Prices

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Computer longs, Biotech longs and Retail longs. I added (IWM)/(QQQQ) hedges this morning and then covered them today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is substantially higher, most sectors are rising and volume is above average. Investor anxiety is above average. Today’s overall market action is bullish. The VIX is falling 4.5% and is historically elevated at 66.83. The ISE Sentiment Index is low at 99.0 and the total put/call is below average at .79. Finally, the NYSE Arms has been running high most of the day, hitting 1.41 at its intraday peak, and is currently 1.21. The Euro Financial Sector Credit Default Swap Index is falling 6.2% today to 96.66 basis points. This index is up from a low of 52.66 on May 5^th, but down from 157.81 on Sept. 16^th. The North American Investment Grade Credit Default Swap Index is falling 2.57% to 203.71 basis points. The TED spread is falling 1.57% to 280 basis points. The TED spread is now down 184 basis points in about three weeks. The 2-year swap spread is up 3.52% to 117.75 basis points. The Libor-OIS spread is falling 2.93% to 257 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 5 basis points to .90%, which is down 173 basis points in about four months and at the lowest level since February 1999. Many market leading stocks are posting another day of massive gains, substantially outperforming the broad market. The action in (GS)/(HIG) is a negative and likely holding back the broad market from even more substantial gains. Emerging markets are very overbought short-term and could come under pressure tonight which could lead to some weakness here tomorrow morning. However, I suspect we will see another round of meaningful short-covering before day’s end. I still expect the DJIA to test 10,000 over the coming days. Nikkei futures indicate a -70 open in Japan and DAX futures indicate an +20 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on short-covering, less financial sector pessimism, lower credit market angst, diminishing forced selling, lower energy prices and bargain-hunting.

Today's Headlines

Bloomberg:
- The cost of protecting corporate bonds from default fell to the lowest in seven days as money- market rates declined a 14th day and investors speculated U.S. regulators may enact a $500 billion plan to guarantee troubled mortgages. Benchmark credit-default swap indexes in the U.S. and Europe fell for a fourth day after the U.S. Federal Reserve yesterday cut its benchmark interest rate, fueling speculation the European Central Bank and the Bank of England will do the same next week. Contracts on banks including Morgan Stanley and Citigroup Inc. fell to the lowest in almost seven weeks. Credit-default swaps on the Markit CDX North America Investment Grade Index of 125 companies in the U.S. and Canada decreased 10.5 basis points to 197 as of 9:14 a.m. in New York, according to Phoenix Partners Group. Credit-default swaps on Morgan Stanley fell 18.5 basis points to a mid-price of 397.5 basis points, and Goldman Sachs declined 18 basis points to 299, according to CMA Datavision in London. Both are at the lowest since the week before Lehman Brothers Holdings Inc. filed for bankruptcy protection. Swaps on Citigroup fell 7 to 195 and JPMorgan Chase & Co. fell 6 to 106, CMA data show. Contracts on the financial arm of General Electric Co. declined 27 basis points to 522.5.

- Copper and zinc fell on the London Metal Exchange as an expansion of stockpiles monitored by the bourse increased speculation that supplies are outpacing demand. Copper inventories jumped 6,575 metric tons, or 3 percent, to 223,875 tons, the biggest jump in three weeks. Zinc stockpiles are the biggest since 2006.

- Crude oil fell on concern that the biggest decline in the U.S. economy since 2001 will further curb fuel demand in the world's biggest energy consuming country. U.S. fuel demand during the past four weeks averaged 18.9 million barrels a day, down 7.8 percent from a year ago, an Energy Department report showed yesterday.

- Money-market rates fell after the Federal Reserve lowered borrowing costs and agreed to pump $120 billion into Brazil, Mexico, South Korea and Singapore to help alleviate demand for dollar-based funding. The swap agreements with central banks, which also followed rate cuts from China to Norway, led to a drop in three-month rates in Asia. The London interbank offered rate, or Libor, for three-month loans in dollars slid 23 basis points to 3.19 percent today, its 14th consecutive drop, according to the British Bankers' Association. The overnight dollar rate tumbled 41 basis points to 0.73 percent, an all-time low, the BBA said.

- Corporate borrowing in the commercial paper market soared the most on record after the Federal Reserve began buying the debt directly from issuers. U.S. commercial paper outstanding rose by $100.5 billion, or 6.9 percent, to a seasonally adjusted $1.55 trillion for the week ended Oct. 29, the Fed said today in Washington. It was the first gain in seven weeks, reversing a 20 percent decline during the previous six weeks. Financial paper led this week's gain, rising $69.4 billion, or 12.4 percent, to $628.8 billion. ``The introduction of the commercial paper program is an enormous jolt of not just liquidity but stimulus to the economy,'' Tom Sowanick, chief investment officer at Clearbrook Financial LLC in Princeton, New Jersey, said in a Bloomberg Television interview. Clearbrook manages about $20 billion.

- MetLife Inc.(MET), the biggest US life insurer, is scaling back investments in hedge funds after a loss on the holding in the third quarter. MetLife reported a 38% drop in quarterly profit yesterday as hedge funds, private equity investments and other partnerships returned $120 million less than forecast.

NY Times:
- Starbucks Corp.(SBUX) will add outlets in urban areas and focus on serving drinks to satisfy local preferences, citing an interview with Arthur Rubinfeld, president of global development. The company also plans to redecorate store interiors to emphasize its roots in premium coffee and eliminate generic art, citing Rubinfeld.

Pension & Investments:

- Citadel Alternative Asset Management is closing Fusion, its $1 billion hedge fund of funds, said a source with knowledge of the firm. About 95% of the assets are internal, and that money will be moved to two CAAM seeding and incubation funds, Discovery and Pioneer. The 5% from external investors will be returned.

Reuters:
- Angola has cut the estimated benchmark oil price in its draft 2009 budget to $55 per barrel from $65, state-owned news agency Angop reported on Wednesday, citing a draft document.

Bear Radar

Style Underperformer:
Mid-cap Value (+.37%)

Sector Underperformers:
Insurance (-2.94%), HMOs (-1.40%) and Papers (-1.35%)

Stocks Falling on Unusual Volume:
RE, IRIS, LKQX, BBBB, SONO, LMDIA, BABY, SYMC, AVP, CI, AIZ and CTL

Stocks With Unusual Put Option Activity:
1) BIIB 2) WFR 3) HUM 4) RSH 5) PG

Bull Radar

Style Outperformer:
Small-cap Growth (+2.31%)

Sector Outperformers:
Gaming (+6.87%), Homebuilders (+5.72%) and Hospitals (+5.69%)

Stocks Rising on Unusual Volume:
DB, BW, CPTS, STRA, LHCG, FDRY, FSLR, AVAV, CVLT, WYNN, VARI, NATI, LPHI, ITRI, NIHD, GRMN, CETV, AUXL, IPCC, SIAL, ENER, HUGH, SNN, LVS, WF, STE, JAH, SHI, GVA and IR

Stocks With Unusual Call Option Activity:
1) UTHR 2) SPLS 3) DOX 4) HBC 5) CA

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