Stocks Finish Higher Boosted by Technology, Airline, REIT, Homebuilding, I-Banking 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 Rising into Final Hour on Diminishing Credit Market Angst, Less Economic Pessimism, Short-Covering, Bargain-Hunting

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Retail longs, Technology longs and Financial longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is bullish as the advance/decline line is substantially higher, most sectors are rising and volume is about average. Investor anxiety is above average. Today’s overall market action is bullish. The VIX is falling 2.43% and is very high at 38.13. The ISE Sentiment Index is below average at 123.0 and the total put/call is below average at .77. Finally, the NYSE Arms has been running above average most of the day, hitting 1.21 at its intraday peak, and is currently 1.10. The Euro Financial Sector Credit Default Swap Index is falling 7.97% today to 97.48 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 1.04% to 198.58 basis points. The TED spread is down 4.40% to 128 basis points. The TED spread is now down 338 basis points in about three months. The 2-year swap spread is plunging 14.78% to 67.75 basis points. The Libor-OIS spread is rising .57% to 123 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is up 12 basis points to .25%, which is down 236 basis points in about six months and at the lowest level since Bloomberg record-keeping began in August 1998. The 10-year TIPS spread bottomed at .65% in October 1998 during the Asian financial crisis and at 1.24% in October 2001 during the technology bubble-bursting meltdown. The 3-month T-Bill is yielding .13%, which is up 5 basis points today. The broad market is performing better again today than the major averages suggest. Market leading stocks are especially strong again with many posting 3-5% gains. As well, despite more weak economic data, the most economically sensitive shares are top-performers again. Homebuilders, reits, i-banks, techs and energy shares are all posting 4%+ gains. The US dollar continues to trade very well. It is a positive to see t-bill yields moving higher, as well. (BAC) just said it expects final 08 results to be below estimates, but the stock is still 2% higher on the day, which is a big positive. The positive ramifications of the ongoing plunge in mortgage rates remains underappreciated, in my opinion. Nikkei futures indicate an +185 open in Japan and DAX futures indicate an +38 open in Germany tomorrow. I expect US stocks to trade modestly higher into the close from current levels on bargain-hunting, diminishing credit market angst, less economic pessimism, seasonal strength, less forced selling and short-covering.

Today's Headlines

Bloomberg:

- Federal Reserve officials are focused on driving down the spreads between U.S. Treasury yields and consumer and corporate loans, after cutting the main interest rate to almost zero failed to revive lending. Credit costs for households and businesses haven’t followed yields on government debt lower. Fifteen-year fixed-rate mortgages were at 5.06 percent last week, 2.59 percentage points above 10-year Treasury yields; the spread averaged 0.88 point in 2003, when the Fed slashed rates to 1 percent.

- Yields on Fannie Mae, Freddie Mac and Ginnie Mae mortgage securities tumbled to the lowest since October 2007 relative to government notes, after the Federal Reserve began a $500 billion program to buy the bonds. The difference between yields on Fannie’s current-coupon 30-year fixed-rate mortgage bonds and 10-year Treasuries fell about 24 basis points to 133 basis points as of 1:30 pm in NY. Yields on Fannie’s mortgage bonds fell 25 basis points, or .25 percentage point, to 3.80%, the lowest on record.

- The cost of protecting corporate bonds from default fell on speculation the U.S. government will spend about $775 billion on an economic stimulus package and Germany will invest extra funds to combat the recession. Credit-default swaps on the Markit iTraxx Crossover Index of 50 companies with mostly high-risk, high-yield credit ratings dropped 20 basis points to 1,025, according to JPMorgan Chase & Co. prices at 11:56 a.m. in London.

- Copper prices jumped to a one-month high in New York on speculation that a government stimulus package will help bolster the U.S. economy and revive demand for industrial metals. Copper futures for March delivery rose 8.1 cents, or 5.6 percent, to $1.54 a pound at 11:54 a.m. on the New York Mercantile Exchange’s Comex division. Earlier, the price reached $1.558, the highest for a most-active contract since Dec. 4.

- Leon Panetta’s selection by President- elect Barack Obama to become CIA chief surprised two top Democrats on the Senate intelligence panel, who expressed reservations about his lack of background in the spy world.

- One of New Mexico Governor Bill Richardson’s senior political advisers lobbied the state on behalf of JPMorgan Chase & Co., which won a leading role on municipal bond deals under federal scrutiny and a factor in his decision to withdraw from becoming U.S. commerce secretary.

- China’s central bank and foreign- exchange regulator today warned of rising risks to the nation from “abnormal” capital flows caused by the worst financial crisis since the Great Depression. “Due to the world economic recession and financial turbulence, the abnormal movement of cross-border capital will bring potential risks,” the State Administration of Foreign Exchange said in a statement on its Web site. “The direction that the flows will take is largely uncertain.”

- The euro fell to a three-week low against the dollar on speculation slowing inflation will prompt the European Central Bank to cut interest rates more than forecast. The common currency had a record two-day loss versus the pound and dropped against the yen as derivatives trading showed investors are betting the ECB will cut its key rate by at least 25 basis points next week.

- Emerging-market currencies are poised for further losses as recessions force wealthier nations to rein in overseas investment, Morgan Stanley said. One-third of the world’s wealth has been wiped out by the financial crisis and this will have a lasting effect on global consumption, wrote London-based Stephen Jen, chief strategist for emerging markets in the bank’s sales and trading arm. Foreign direct investment in the developing nations of Asia, Europe and Latin America is already starting to cool, he said.

- German billionaire investor Adolf Merckle has died, Die Welt newspaper reported today. Merckle was hit by a train near his hometown of Blaubeuren yesterday evening, according to Die Welt. It’s possible that he committed suicide, the report said, citing unidentified police officials. Merckle, whose holdings span the cement, machinery and drug industries, was battered by wrong-way bets on Volkswagen AG, a drop in the value of his HeidelbergCement AG stock and increasing debt.

Wall Street Journal:

- Some of Asia's memory-chip makers are moving to raise contract chip prices in early January following a rise in the spot market, reflecting their belief that current prices are too low.

- The U.K. government has quashed what little optimism was left in its outlook for 2009, saying previous predictions that the economy will start to recover in the second half look doubtful. "The Treasury and everybody else would acknowledge these are uncertain times," a spokesman for Prime Minister Gordon Brown said Monday.

- A derivatives clearinghouse owned by Nasdaq OMX Group Inc.(NDAQ) has gone live in recent days and started clearing over-the-counter contracts tied to interest rates. The exchange operator's chief executive, Bob Greifeld, said it is looking to sell equity stakes in the clearinghouse in the coming months.

- The main business tax cuts proposed by President-elect Barack Obama are likely to be a windfall for two industries particularly tied to the current economic meltdown: Wall Street investment banks and home builders.

NY Times:

- Cities Use Creative, Targeted Lending to Speed Energy Projects.

PC Magazine:

- Apple(AAPL) Intros New MacBook, Apps, and Big Changes for iTunes.

recast to "

CityNews:

- Consumer Electronics Show Gadgets Prove Good Technology Stays Ahead Of Bad Economy. In addition to the latest HDTVs, computers, cell phones, digital cameras, handhelds and High Definition DVD and MP3 players, here are just a few other products being highlighted at the show:

Press Trust of India:

- Steel prices in India may fall by $61 a metric ton after June because long-term global rates for coking coal are expected to decline, citing Steel Secretary Pramod Rastogi. Coking coal prices in the intermediate delivery market have fallen by a third to $200 a ton, according to the report. Indian steelmakers will likely lower metal prices in June following the fall in long-term fuel prices, Rastogi said.

Sina.com:
- China Mobile Ltd. will receive a license to operate third-generation wireless services from the Chinese government tomorrow.

Bear Radar

Style Underperformer:
Large-cap Value (+.33%)

Sector Underperformers:
Tobacco (-2.34%), Biotech (-1.33%) and Utilities (-1.20%)

Stocks Falling on Unusual Volume:
ENDP, IDXX, DCM, CV, QDEL, LOGI, CERN, CELG, GRMN, LH, ICE and DGX

Stocks With Unusual Put Option Activity:
1) ERTS 2) BSX 3) ICE 4) NRG 5) AMD

Bull Radar

Style Outperformer:
Small-cap Value (+1.24%)

Sector Outperformers:
Oil Service (+5.03%), Semis (+3.54%) and I-Banks (+3.39%)

Stocks Rising on Unusual Volume:
RTP, PRU, XCO, WFT, MWE, LNC, LGCY, SU, BBL, MYL, NIHD, MDVN, TSU, STC, AZN, GSK, PNM, CSKI, AMED, MYRG, MFLX, DGIT, DRYS, AFAM, SSYS, OFIX, TTES, TBSI, MANT, AMAT, FSYS, SHPGY, MTK, MVC, ORA, YPF, CSC and BPT

Stocks With Unusual Call Option Activity:
1) MOT 2) ERTS 3) ICE 4) WYNN 5) HOT

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