Bear Radar

Style Underperformer:
Mid-cap Growth (-1.77%)

Sector Underperformers:
HMOs (-3.89%), Steel (-2.85%) and Computer Hardware (-2.35%)

Stocks Falling on Unusual Volume:
CETV, VIP, EQIX, BBL, VRSN, PALM, TNDM, TITN, SSRI, ALNY, GROW, BUCY, BOOM, SPWRA, EQIX, CSIQ, JOYG, AFAM, CASY, TNH, RTI and FSF

Stocks With Unusual Put Option Activity:
1) SLM 2) FMCN 3) MBI 4) UAUA 5) PALM

Bear Radar

Style Outperformer:
Large-Cap Value (-.44%)

Sector Outperformers:
Education (+1.35%), Banks (+1.0%) and Road & Rail (+.83%)

Stocks Rising on Unusual Volume:
ESRX, CNSL, ATHN, FUQI, MANT, CEPH, GMCR, AKO/A and PNY

Stocks With Unusual Call Option Activity:
1) STAR 2) ARNA 3) SOL 4) RTI 5) STJ

Links of Interest

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Top 20 Biz Stories
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In Play
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HFR Global Hedge Fund Indices

Monday Watch

Weekend Headlines
Bloomberg:

- Under a draft bill to overhaul the U.S. health-care system all employers would be required to supply health insurance for workers or contribute to the cost. The bill, by Senator Edward M. Kennedy, would create a public health plan to compete with private insurers, a priority of President Barack Obama’s that is opposed by Republicans. It would provide all Americans with health benefits, penalize those who don’t buy them and bar insurers from limiting coverage.

- The US dollar advanced the most against the yen in more than three months and rose versus the euro as economic data showed evidence the U.S. recession is easing, boosting demand for the nation’s assets. The greenback climbed this week as a government report indicated slower deterioration of the labor market, supporting bets dollar-denominated assets will gain as the U.S. leads the global economy out of its slump. “There’s no denying the dollar’s had a strong move in a week of decent data,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “It’s a tantalizing possibility. If so, that would be good news because that’s the way we were all raised to understand the relationship between yields, currencies and data.”

- Iranian president Mahmoud Ahmadinejad touted his economic achievements in a televised debate while his challenger, Mehdi Karrubi, accused the incumbent of misrepresenting his record.

- Japan’s former Economic and Fiscal Policy Minister Hiroko Ota said the world’s second-largest economy is likely to stumble again later this year after a temporary rebound. “Japan’s recovery may be W-shaped,” Ota, 55, said in an interview in Tokyo on June 4. “The worst is over but I can’t say the economy is heading for a recovery at all.”

- Brazilian and French salvage teams recovered 17 bodies from the Atlantic Ocean where planes and ships are searching for the wreckage of Air France flight 447, which went down with 228 people aboard last week.

Wall Street Journal:

- Governments from Germany to Ireland lost seats to rivals and extreme-right fringe parties in European Parliament elections, as voters punished ruling parties in many parts of the Continent on Sunday. Political leaders and analysts described the vote, involving an electorate of 385 million across 27 nations, as a bellwether for the public's mood in the wake of a crisis that has cost hundreds of thousands of jobs. Voters voiced their unease by sending record numbers of far-right candidates to Brussels -- or by staying home. Turnout fell for the seventh straight time, to a record low of 43.01%, according to preliminary estimates, despite a concerted effort by European Union civil servants to get out the vote through splashy ad campaigns.

- The Obama administration rushed an alliance between Chrysler LLC and Fiat SpA despite Chrysler's worries about Fiat's financial health and its willingness to share technology, according to internal company emails. The emails show Fiat ignoring requests for documents and trying to change contract terms late in the talks. A Chrysler adviser at one point said the deal risked looking as if the U.S. auto maker and the Treasury Department, which helped broker the pact, were "in bed with a shady partner." In another note, an official referred to the Treasury Department as "God."

- China plans to require that all personal computers sold in the country as of July 1 be shipped with software that blocks access to certain Web sites, a move that could give government censors unprecedented control over how Chinese users access the Internet. The government, which has told international PC makers of the requirement but has yet to publicly announce it, says the effort is aimed at protecting young people from "harmful" content.

- Secretary of State Hillary Clinton said the Obama administration is considering putting North Korea back on the U.S. list of nation's that sponsor terrorism after a nuclear test and missile launches by Pyongyang last month. She said the U.S. is "just beginning to look at" whether there is any recent evidence that Pyongyang had supported international terrorism, such as by shipping nuclear materials to those engaged in terrorist activities. "If we do not take significant and effective action against the North Koreans now, we'll spark an arms race in Northeast Asia," said Mrs. Clinton, in an appearance on ABC News's "This Week with George Stephanopoulos" airing Sunday. "I don't think anybody wants to see that."

IBD:
- George "Doc" Lopez, a medical doctor and inventor, has a goal: to turn ICU Medical (ICUI) into a $1 billion company. He's better than halfway there.

NY Times:

- President Obama was getting his daily economic briefing one recent morning when a fly distracted him. The president swatted and missed, just as the pest buzzed near the shoes of Lawrence H. Summers, the chief White House economic adviser. “Couldn’t you aim a little higher?” deadpanned Christina D. Romer, the chairwoman of the Council of Economic Advisers. Mrs. Romer was joking, she said in an interview, adding, “There are only a few times that I felt like smacking Larry.” Yet few laughed in the president’s presence. If the Oval Office incident was meant as a lighthearted moment, it also exposed the underlying tensions that have gripped Mr. Obama’s economic advisers as they have struggled with the gravest financial crisis since the Depression, according to several dozen interviews with administration officials and others familiar with the internal debates. By all accounts, much of the tension derives from the president’s choice of the brilliant but sometimes supercilious Mr. Summers to be the director of the National Economic Council, making him the policy impresario of the team. The widespread assumption, from Washington to Wall Street, was that the job would be Mr. Summers’s way station until the president could name him chairman of the Federal Reserve when Ben S. Bernanke’s term expires early next year. But Mr. Bernanke’s aggressive response to the crisis has so improved his reputation that people close to Mr. Obama increasingly suggest the president could well reappoint him in the interests of financial stability — just as Presidents Ronald Reagan and Bill Clinton retained Fed chiefs who had been picked by predecessors of the other party.

- Russian Reporter Kanev Covers Crime, Defies Threats.
- The Obama administration has made a serious proposal to regulate derivatives — the multitrillion-dollar market in financial contracts that malfunctioned so disastrously last year. The plan goes further than many thought politically possible, especially in its call for federal oversight of all large derivatives dealers. But it does not go far enough. Those dealers — including big banks like JPMorgan Chase, Goldman Sachs and Morgan Stanley — trade derivatives mainly as one-to-one private contracts, largely without any regulation. The plan would allow regulators to impose rules on dealers and track their activities and presumably put a timely halt to abuses. But it does not demand the full transparency that would come from trading all derivatives on exchanges, like stocks.

- Developers of programs for the iPhone have already managed to make a decent living selling hundreds of thousands of copies of games from their living rooms or garages. But now, a new way to profit from writing software for the iPhone is emerging: Sell the apps, then sell your company. With the number of downloads through Apple’s App Store topping one billion and more than 40 million iPhones and iPod Touches sold since 2007, an increasing number of companies are seeing the mobile industry as a source of sustained revenue. Recently, IAC/InterActiveCorp, the Internet media conglomerate founded by Barry Diller, and Amazon.com, have bought app developers. Smaller companies have begun to assemble properties.

- LOOK closely at recent supermarket coupons, and you may see some new markings on them near the traditional bar code: sets of neat black bars stacked in two rows. The new symbols, called GS1 DataBars, can store more data than traditional bar codes, promising new ways for stores to monitor inventory and for customers to save money.

- Nickelodeon is moving its teenage and adult fare an hour earlier in the evening — but not because of any earlier bedtime for its young viewers. Instead, it is the network’s attempt to encourage children and parents to watch television together.

Business Week:
- A new study says rising Chinese mainland wages and higher shipping costs, among other things, make Mexico a better choice for manufacturing.

- Citi denies a shuffle impends, but published reports say the FDIC's Sheila Bair wants new management. Will Jerry Grundhofer take over?

Politico:

- Sen. Richard Shelby (R-Ala.) told Chris Wallace on "Fox News Sunday" that President Barack Obama's proposed health care plan is the "first step in destroying the best health care system the world has ever known." "When the government is involved more and more in the details," Shelby said, "and you start the one-pay deal and you got the government competing with private enterprise with all the incentives the government has and the power, they can destroy the marketplace for health care and it will be a mistake and the American people better be careful in what they want."

- Sen. Mel Martinez (R-Fla.), a Cuban-American, has been suspicious of Havana's overtures to the Obama administration -- now he wants to slam the opening door after the feds uncovered a pair of longtime Cuban spies in the State Department. Martinez, whose opinions on Cuba are respected on both sides of the aisle, wants to put negotiations between the two countries on hold pending a review of the damage done by Walter Kendall Myers and Gwendolyn Steingraber Myers during their more than two decades of espionage.

USA Today:

- A solo fund manager pleaded guilty Friday to operating an $80 million Ponzi scheme that defrauded more than 70 victims, including a family foundation and a couple who lost their life savings. Joseph S. Forte, 53, of Broomall admits he lured investors by promising returns ranging from 18% to 38% — and pledged they would never lose money.

Rasmussen Reports:

- The latest Rasmussen Reports national telephone survey found that 53% of Americans believe the GM bailout was a bad idea. Of this group, 30% favor a boycott, 54% oppose the idea and 16% are not sure. Men are more supportive of a boycott than women. Middle income Americans are also more supportive of a boycott than those at either end of the income scale. Democrats are evenly divided as to whether the government takeover was a good idea or not. By wide margins, Republicans and those not affiliated with either major party believe it was a bad idea.

LA Times:

- Reporting from Tehran -- Powerful reformists and conservatives within Iran's elite have joined forces to wage an unprecedented behind-the-scenes campaign to unseat President Mahmoud Ahmadinejad, worried that he is driving the country to the brink of collapse with populist economic policies and a confrontational stance toward the West. The prominent figures have put their considerable efforts behind the candidacy of reformist Mir-Hossein Mousavi, who they believe has the best chance of defeating the hard-line Ahmadinejad in the presidential election Friday and charting a new course for the country.

Denverpost.com:

- Biotechnology entrepreneur Fred Mitchell fretted last month as swine- flu cases mounted. Existing tests can take several days to confirm a swine-flu diagnosis — a period in which infected people may unknowingly be spreading the virus. Mitchell's firm, Beacon Biotechnology, says it has a medical tool that could dramatically speed up the diagnosis of flu and other diseases and even the detection of biological warfare agents. Aurora-based Beacon has developed a disposable computer chip, the size of a pencil eraser, that it says can use a single drop of body fluid to detect up to 112 diseases or genetic conditions in as little as 15 minutes.

Reuters:

- Indiana pension funds and consumer groups asked the U.S. Supreme Court on Sunday to stop the sale of bankrupt automaker Chrysler LLC to a group led by Italian carmaker Fiat SpA while they challenge the deal. The separate requests, which moved the legal battle to the nation's highest court, were filed after a U.S. appeals court in New York approved Chrysler's sale to a group led by Fiat, a union-aligned trust and the U.S. and Canadian governments. The Chrysler case could set a precedent for General Motors Corp, which is using a similar quick sale strategy in its bankruptcy in New York. The three state pension funds, which hold about $42 million of Chrysler's $6.9 billion in secured loans, argued the sale unlawfully rewarded unsecured creditors such as the union ahead of secured lenders. "The need for the court to review the profound issues presented by Chrysler's novel bankruptcy sale far outweighs the cost of delaying" a sale, lawyers for the pension funds and the Indiana attorney general said in seeking an immediate stay. The pension and construction funds also argued the U.S. government, which kept Chrysler afloat with emergency loans before the automaker's bankruptcy and financed its Chapter 11 filing, overstepped its legal authority by using bailout funds Congress intended for banks. "The public is watching and needs to see that, particularly, when the system is under stress, the rule of law will be honored and an independent judiciary will properly scrutinize the actions of the massively powerful executive branch," the lawyers said. "The issues presented by this case are of immediate and enduring national significance," they said.

- The dwindling U.S. financial bailout fund will get a boost this week with repayments from some large banks and could see more resources freed up as once-ambitious programs to buy up toxic bank assets shrink. This could present the U.S. Treasury with a welcome dilemma: what to do with potentially more than $100 billion in unallocated funds as financial market confidence strengthens. Among the options are increased aid for the housing sector, programs to support mortgage insurers and municipal borrowers that have been clamoring for help, or perhaps just socking the money away for a future emergency.

- The Obama administration is expected to announce next week that a higher-than-expected number of large financial institutions will be allowed to repay their government bailout funds, the Washington Post reported in its Saturday edition. Citing unnamed sources who spoke on the condition of anonymity because the official announcement has not been made yet, the newspaper report said the size of the repayments may be twice the initial estimate of $25 billion. That could mean that nearly all of the nine institutions found to have sufficient reserves in a recent government-run "stress test" might be allowed to return the money under the Treasury Department's Troubled Asset Relief Program. The companies include JPMorgan Chase & Co, American Express Co, Bank of New York Mellon Corp, BB&T Corp, Capital One Financial Corp, Goldman Sachs Group Inc, State Street Corp and U.S. Bancorp. MetLife Inc>, the ninth company, did not take money from TARP.

Financial Times:

- The controversial US toxic asset clean-up plan, aimed at clearing bad loans from US banks’ books to enable them to raise capital and lend freely, has fallen behind schedule, and may never be fully implemented. The plan has fallen prey to concerns from potential investors and regulators and waning interest from the banks themselves. Investors fear that Congress may set caps on pay while regulators are beginning to doubt whether the plan is really necessary. “Banks have been able to raise capital without having to sell bad assets through the LLP [limited liability partnership], which reflects renewed investor confidence in our banking system,” Sheila Bair, chairman of the FDIC, said last week.

- Gordon Brown faces a showdown with his MPs on Monday after his party suffered a humiliating night in the European elections, with early indications that Labour support had slumped. With counting under way across the country, there were reports that in some areas Labour had fallen behind the Conservatives and UK Independence party, in a sign that the British electorate remains Eurosceptic.

- Much of the advance debate devoted to the Apple(AAPL) conference that begins on Monday in San Francisco has concerned the features and pricing of forthcoming iPhone models. It was the sleek design and intuitive user interface of the iPhone that vaulted Apple from nowhere into a leading position in the smartphone market. But Apple has held on to that position because of the tens of thousands of applications for the handset available through Apple’s year-old online store, which Nokia, BlackBerry maker Research in Motion and, most recently, Palm have been unable to match. “This is a race to capture developer resources, and Apple is way ahead,” said Kathryn Huberty, Morgan Stanley technology analyst. “It’s all about gaining share, and then the hardware sales will follow.” In the long run, the most important thing to come out of the Worldwide Developers Conference will probably not be the latest phones. It will be the revisions to iPhone software and the App Store, which aim to widen Apple’s lead. A big innovation is that the store will start allowing developers to collect money not just when a user buys and downloads an application, but through follow-on transactions or subscriptions. Apple is likely to show off some of the most compelling repeat-purchase offerings at the conference. The change dramatically increases the potential pay day for developers, provides Apple with an additional revenue stream from the percentage it takes on app sales, and gives users more choice – and more reasons to stick with the iPhone instead of switching to the me-too hardware reaching the marketplace.

Telegraph:

- Barclays(BCS) is finalizing a deal to merge its $1trillion fund management arm with BlackRock(BLK) of the US.

Yonhap News:

- The United States has agreed to guarantee South Korea's defense against nuclear armed North Korea in writing, stipulating an extended provision of its nuclear umbrella, South Korea's foreign minister said Friday.

Nikkei English News:
- Hitachi Ltd., Toshiba Corp. and Fuji Electric Holdings Co. are among a group of Japanese companies expected to build a smart grid in the US that could begin operations in 2010.

Haaretz.com:

- Hezbollah is still trying to undermine the Egyptian regime, Egyptian sources said. The Lebanese Shi'ite group is also funding militants in the Gaza Strip, at times without Hamas' approval, and instructing them to carry out attacks on Israel, Egyptian and Israeli sources said.

Jerusalem Post:

- Just after US President Barack Obama's landmark address in Cairo, and just before US Mideast envoy George Mitchell returns to the region on Tuesday, the dispute between Washington and Jerusalem over settlement construction ratcheted up a notch.

Aswat al-Iraq:

- Iraq raised oil production from its northern Kirkuk fields to 670,000 barrels a day from 580,000 barrels a day, citing an official in the state-run North Oil Company. Improved security and an increase in the number of wells helped raise production, citing the North Oil Company Planning Chief.

Al-Hayat

- Saudi King Abdullah urged US President Barack Obama to “impose a solution” to achieve peace in the Middle East. King Abdullah told President Obama in Riyadh that the Arab world was losing patience with the pace of the peace process.

Weekend Recommendations
Barron's:
- Made positive comments on (AAPL), (CORE), (CYBS), (VPRT), (EPIQ), (UNG), (HD), (ALL) and (FCX).

- Made negative comments on (AAPL).

Citigroup:

- Reiterated Buy on (ORCL), raised target to $25.

Night Trading
Asian indices are -1.0% to +.50% on avg.
S&P 500 futures -.55%.
NASDAQ 100 futures -.59%.

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Conference Calendar

Who’s Speaking?
Upgrades/Downgrades
Rasmussen Business/Economy Polling

Earnings of Note
Company/Estimate
- (PLL)/.42

- (ZQK)/.06

Upcoming Splits

- None of note

Economic Releases

- None of note

Other Potential Market Movers
- The Fed’s Tarullo speaking, UBS Tech & Service Conference and the Merrill Lynch Samurai Conference could also impact trading today.

BOTTOM LINE: Asian indices are most lower, weighed down by technology and commodity stocks in the region. I expect US stocks to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 100% net long heading into the week.

Weekly Outlook

Click here for Wall St. Week Ahead by Reuters.

Click here for stocks in focus for Monday by MarketWatch.

There are some economic reports of note and just a few significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. – None of note

Tues. – Wholesale Inventories, weekly retail sales reports, IBD/TIPP Economic Optimism Index, US Sells $35B 3-Year Notes

Wed. – Bloomberg Global Confidence, weekly MBA mortgage applications report, weekly EIA energy inventory report, Trade Balance, Monthly Budget Statement, Fed’s Beige Book, US Sells $19B 10-Year Notes

Thur. – Advance Retail Sales, Initial Jobless Claims, Business Inventories, US Sells $11B 30-Year Bonds

Fri. – Import Price Index, Univ. of Mich. Consumer Confidence

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. – Quiksilver Inc.(ZQK)

Tues. – Korn/Ferry(KFY), Talbots(TLB), Navistar Intl(NAV), PEP Boys(PBY)

Wed. – Brown-Forman(BF/B), Men’s Wearhouse(MW)

Thur. – National Semi(NSM), Del Monte(DLM)

Fri. – Genentech(DNA)

Other events that have market-moving potential this week include:

Mon. – The Fed’s Tarullo speaking, UBS Tech & Service Conference, Merrill Lynch Samurai Conference

Tue. – UBS Tech & Service Conference, CSFB Convergence Conference, Needham Internet & Digital Media Conference, (IP) Investor Day, William Blair Growth Stock Conference, Piper Jaffray Consumer Conference, Goldman Sachs Healthcare Conference, Merrill Lynch Samurai Conference, RBC Capital Tech/Communications/Media Conference, Morgan Stanley Shipping/Commodities Conference

Wed. – The Fed’s Lacker speaking, Fed’s Duke speaking, William Blair Growth Stock Conference, RBC Capital Tech/Communications/Media Conference, UBS Tech/Service Conference, Needham Biotech & Medtech Conference, BofA/Merrill Transportation Conference, Deutsche Bank Alt Energy Conference, (HD) Investor Conference, Piper Jaffray Consumer Conference, Goldman Sachs Healthcare Conference, CSFB Convergence Conference, (AGU) Investor Day

Thur. – The Fed’s Lockhart speaking, UBS Electronic Payments Summit, BofA/Merrill Transportation Conference, William Blair Growth Stock Conference, Needham Biotech & Medtech Conference, Goldman Sachs Healthcare Conference, UBS Basic Materials Conference, (SYMC) Analyst Meeting, CSFB Convergence Conference

Fri. – The Treasury’s Geithner speaking at G-8 Meeting

BOTTOM LINE: I expect US stocks to finish the week mixed as rising long-term rates, profit-taking, more hawkish Fed commentary and more shorting offset technical buying, less economic fear, falling credit market angst, investment manager performance anxiety and lower energy prices. My trading indicators are giving bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 940.09 +2.28%*

Click here for the Weekly Wrap by Briefing.com.

*5-Day Change