Stocks Finish Sharply Higher, Boosted by Gaming, REIT, Airline, Homebuilding, Insurance, Biotech, Oil Service and Alt Energy Shares

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Stocks Soaring into Final Hour on Diminishing Healthcare Reform Worries, Short-Covering, Technical Buying, Less Economic Fear and Earnings Optimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Biotech longs, Technology longs and Financial longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, most sectors are rising and volume is heavy. Investor anxiety is very high. Today’s overall market action is very bullish. The VIX is rising 1.36% and is high at 23.79. The ISE Sentiment Index is low at 90.0 and the total put/call is about average at .85. Finally, the NYSE Arms has been running around average most of the day, hitting .97 at its intraday peak, and is currently .80. The Euro Financial Sector Credit Default Swap Index is dropping another 6.72% today to 82.33 basis points. This index is down from its record March 10th high of 208.75. The North American Investment Grade Credit Default Swap Index is falling 3.88% to 119.13 basis points. This index is also well below its Dec. 5^th record high of 285.99. The TED spread is rising .58% to 32 basis points. The TED spread is now down 434 basis points since its all-time high of 463 basis points on October 10th. The 2-year swap spread is falling .15% to 42.94 basis points. The Libor-OIS spread is falling .37% to 31 basis points. The 10-year TIPS spread, a good gauge of inflation expectations, is rising 11 basis points to 1.92%, which is down 72 basis points since July 7th. The 3-month T-Bill is yielding .18%, which is unch. today. The market is exploding higher through technical resistance today on good volume. Gaming, REIT, Homebuilding, Insurance, Biotech, Alt Energy, Construction, Bank, Telecom, Networking and Oil Service stocks are all posting very strong 3.5%+ gains. The AAII % Bulls rose to 37.6%, while the % Bears fell to 42.4% this week, which remains a large positive given recent market gains. As well, the ISE Sentiment Index hit an extraordinarily low 67.0 this morning and the VIX is actually rising this afternoon, despite today’s huge surge, which is also a big positive. The Euro Financial Sector Credit Default Swap Index is continuing its recent plunge, falling to the lowest level since August 8^th, 2008, which remains a large positive. It is noteworthy that the US Dollar is slightly higher on the day, which is very bullish considering today’s stock gains and better economic sentiment. This may portend a trading move higher in the currency, which would prevent another economic recovery-killing move higher in energy prices. Record short interest and much-better-than expected earnings are sending shares of my of my long-held longs, (ISRG), skyrocketing 26%. While the stock is extended short-term, I expect it to move substantially higher from current levels over the intermediate/long-term. Nikkei futures indicate an +278 open in Japan and DAX futures indicate an +16 open in Germany tomorrow. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, investment manager performance anxiety, technical buying, diminishing government healthcare reform worries and earnings optimism.

Today's Headlines

Bloomberg:

- U.S. stocks rose, sending the Dow Jones Industrial Average above 9,000 for the first time since January, as EBay Inc., Ford Motor Co. and AT&T Inc. posted better-than-estimated results and home resales increased more than forecast.

- Senate Majority Leader Harry Reid said the Senate will wait until September to vote on health- care legislation, missing President Barack Obama’s deadline for a vote by the August recess. Reid, a Nevada Democrat, told reporters that Republicans wanted more time to work on the measure overhauling the nation’s health-care system. “It’s better to have a product based on quality and thoughtfulness rather than just jamming something through,” he said today in Washington. “There was a decision last night not to do this legislation” before September, he said. Obama had called on the Senate and the House of Representatives to pass their separate versions of the legislation by next month and to have a bill on his desk by October.

- Home resales in the U.S. rose in June for a third consecutive month, spurred by tax incentives, lower borrowing costs and foreclosure-driven declines in prices. Purchases climbed 3.6 percent to an annual rate of 4.89 million, stronger than forecast and the highest level since October, the National Association of Realtors said today in Washington. Median prices fell 15 percent. “We have finally bottomed out,” said Stuart Hoffman, chief economist at PNC Financial Services Group in Pittsburgh. Improved affordability “is stalemating the drag from higher unemployment.” The gain last month was based by a 14 percent jump in purchases of condominiums. Sales of single-family houses increased 2.4 percent and were up 0.2 percent from June 2008, the first year-over-year gain since September. The number of houses on the market fell 0.7 percent to 3.82 million in June, NAR said. At the current sales pace, it would take 9.4 months to sell those homes, compared with 9.8 months in May.

- Ford Motor Co.(F), the only U.S. automaker to decline a federal bailout, posted a second-quarter loss that beat analysts’ estimates as Chief Executive Officer Alan Mulally pared expenses and added domestic market share. Ford rose 43 cents, or 6.7 percent, to $6.81 at 10:02 a.m. in New York Stock Exchange composite trading. The shares touched $6.99 earlier for the biggest intraday advance since April 30. They have almost tripled this year for the third-largest gain in the Standard & Poor’s 500 Stock Index. Credit-default swaps protecting Ford bonds dropped to the lowest level in a year, falling 4.2 percentage points to 30.5 percent upfront, according to CMA DataVision.

- The Panama Canal Authority has begun to see “signs of recovery” in shipping traffic, including from freighters transporting cars, said Alberto Aleman, the authority’s chief executive officer. Aleman said he expects traffic in the fiscal year ending in September to total about 295 million tons, up from a previous range he had given of about 290 million to 295 million tons. Traffic in the 95-year-old canal totaled 310 million tons in 2008. Revenue this year will be “similar” to last year’s record $2 billion, Aleman said. “Amid the crisis, amid the recession, this is good,” Aleman, who’s run the canal since 1996, said in a telephone interview from Panama City. Car shipments have “declined as was to be expected given the problems that we’ve seen in the automobile industry worldwide but we’ve seen signs of recovery in this segment.”

- The cost of protecting U.S. corporate bonds from default dropped to the lowest in 13 months as AT&T Inc. and Ford Motor Co. joined more than 100 other companies in the Standard & Poor’s 500 index posting better- than-estimated results for the second quarter. Contracts on the Markit CDX North America Investment-Grade Index, linked to 125 companies in the U.S. and Canada, declined 6 basis points to 118 basis points at 12:54 a.m. in New York, according to broker Phoenix Partners Group. That’s the lowest since June 19, 2008, according to CMA DataVision. Lower credit-default swaps signal an improvement in investor confidence, as 75 percent of the 177 companies in the S&P 500 index that have reported earnings beat analyst estimates, prompting fewer credit-rating downgrades and more upgrades. The ratio of upgrades to downgrades rose this quarter to the highest since 2007, according to S&P data. The ratio of credit-rating upgrades to downgrades is 0.64 percent in the third quarter, up from 0.24 percent in the three months ended in June, according to S&P data compiled by Bloomberg. That’s the highest since the fourth quarter of 2007.

- The Baltic Dry Index, a measure of shipping costs for commodities, fell for a fourth consecutive session in London, led by declining rates for hauling iron ore. The index tracking transport costs on international trade routes dropped 52 points, or 1.5%, to 3,355 points. “Speculation has likely played an important role over the past few months – particularly after annual negotiations between China’s steel mills and major mines ran into difficulty,” said Judy H. Zhu and Helen Henton, analysts at Standard Chartered. “Trading houses accumulated cargoes before finding buyers.”

- Aluminum Corp. of China, the nation’s largest producer of the metal, said a price recovery for the lightweight metal will lag behind other base metals because of high inventories. A demand revival from the auto and building industries hasn’t had “an obvious” impact on aluminum yet, Chairman Xiong Weiping said today in an interview in Beijing while attending a conference. Aluminum inventories monitored by the London Metal Exchange quadrupled in the past year to a record 4.6 million metric tons, forcing Chinalco and rivals including Aloca Inc. to cut output.

- Natural gas futures declined for the first time in six days in New York after a government report showed a bigger-than-average gain in U.S. supplies. “There was probably a whisper number out there in the low 60s and when that didn’t happen there was disappointment,” said Cameron Horwitz, an analyst at SunTrust Robinson Humphrey Inc. in Houston. “At the end of the day, there’s a lot of gas out there and we’re still running well above storage on a year-over- year and five-year average basis.” Below-normal to seasonal temperatures are expected to cover an area from Chicago to New York and south to Texas through Aug. 6, according to MDA Federal Inc.’s EarthSat Energy Weather of Rockville, Maryland. “This leaves us speculating on just how much can fit into storage, which has a potential capacity of 4 or 4.1 trillion cubic feet,” he said. U.S. power-plant output was down 6.9 percent from a year earlier for the week ended July 16, according to an analysis by Genscape Inc. Gas consumption at factories is forecast to tumble 8.2 percent this year because of the recession, the Energy Department said on July 7 in a monthly outlook. Overall U.S. consumption is expected to contract 2.3 percent.

- Treasuries fell for a second day as stocks rose and the U.S. announced plans to sell a record $115 billion in debt next week, accelerating the unprecedented pace of borrowing to stimulate the economy and service deficits. Ten-year notes declined the most in over a week as the Dow Jones Industrial Average touched above 9,000 for the first time since January. It will be only the second time the Treasury auctions three so-called coupon issues and an inflation-linked maturity in a single week since the U.S. started issuing debt regularly in 1976.

- The mayors of Hoboken, Ridgefield and Secaucus, New Jersey, and several rabbis are among 44 people charged today as part of a public corruption and money- laundering investigation by U.S. authorities. Hoboken Mayor Peter Cammarano, 32, Secaucus Mayor Dennis Elwell, 64, Ridgefield Mayor Anthony Suarez, 42, all Democrats, Jersey City Council President Mariano Vega Jr., 59, and State Assemblyman Daniel Van Pelt, 44, a Republican from Ocean Township, and Assemblyman L. Harvey Smith, a Jersey City Democrat, were charged by the Federal Bureau of Investigation. They will appear in federal court in Newark, New Jersey, today. The corruption probe, based in Hudson County, netted many public officials accused of pledging assistance for bribes. The money laundering suspects were accused of moving “at least tens of millions of dollars through charitable, non-profit entities controlled by rabbis in New York and New Jersey,” according to a release by acting U.S. Attorney Ralph Marra.

- Japan’s exports fell in June at the slowest pace this year as demand picked up worldwide, helping the trade surplus widen for the first time in 20 months and adding to evidence the economy is on the path to recovery. Shipments abroad dropped 35.7 percent from a year earlier, easing from a 40.9 percent decline in May, the Finance Ministry said today in Tokyo. Compared with a month earlier, shipments rose 1.1 percent.

Wall Street Journal:

- Gannett Co.'s(GCI) flagship newspaper, USA Today, said it has begun collecting Kindle book-sales data for its widely read weekly best-seller list and will include the data starting with Thursday's rankings.
- As Democrats splinter over ObamaCare, the stakes paradoxically rise for some Republicans. Democratic leaders will become more desperate than ever to get GOP cover for their anxious moderates, especially in the Senate and especially from Chuck Grassley. We trust the Iowa Republican appreciates that his choice on this issue is momentous for the country and could well define his political legacy.

CNBC:

- US Airways Group Inc. is seeing “signs of recovery that are encouraging” in the air-travel market, Chief Executive Officer Doug Parker said. “The pricing environment is still weak but on the leisure side at least it’s coming back,” Parker said.

- Prospects for the U.S. economy are picking up, but there are questions about how sustainable the rebound will be, Dallas Federal Reserve Bank President Richard Fisher said Thursday. "The outlook for real activity over the next several quarters is improving," Fisher said at a fixed income forum in Carlsbad, California.

Schaeffer’s Research:

- Stocks Advancing Amid Heavy Short Interest.

CNNMoney:

- The first big government bailout of the financial crisis -- the takeover of mortgage finance giants Fannie Mae and Freddie Mac -- is poised to be the most expensive and complicated to complete. Since Congress essentially wrote a blank check to the Treasury Department in July 2008 to do what needed to be done to inject capital into the two firms, Fannie (FNM) has received $34.2 billion of direct government support while Freddie (FRE) has received $51.7 billion. While that's lower than the $117.5 billion poured into insurer AIG (AIG) by the Federal Reserve and the $200 billion given to the nation's largest banks through the Troubled Asset Relief Program, or TARP, the current cost of the Fannie and Freddie bailouts dwarfs original estimates from a year ago. When Congress was debating the bailout of Fannie and Freddie last July, the official estimate from the Congressional Budget Office was that a bailout would most likely cost taxpayers $25 billion, with only a 5% chance of the price tag reaching $100 billion between them. In addition, both Fannie and Freddie are likely to need billions of dollars more after they report second quarter results in the coming weeks. Experts believe the cost will only continue to rise in the next year.

LA Times:

- Reporting from Beirut -- Iran's political crisis intensified Wednesday when the nation's main opposition figure announced that he would create a political organization to "lay the groundwork for a large-scale social movement" stemming from his disputed election loss to President Mahmoud Ahmadinejad. Many supporters of Mir-Hossein Mousavi had feared the announcement would amount to a disavowal of the civil disobedience campaign that has sprung up since the June election in which the government has been accused of massive vote fraud. Instead, Mousavi explicitly praised the protest movement as a cornerstone for change in Iran.

- In the complex tango between movies and video games, Hollywood may be losing its lead.

Washington Post:

- Tucked into the voluminous congressional plan for U.S. military spending next year is $160 million intended to help Mexico's police buy U.S.-made first-responder radios. It is a major purchase that one radio manufacturer got rolling, 12 members of Congress formally requested and a powerful defense appropriations chairman championed, according to records and congressional staff members. But details of the plan to pump Pentagon money into Mexico's crime-fighting efforts are cloaked in vaguely worded language in the House defense bill. The program is one of many congressional requests in the measure, which also includes 1,080 projects worth $2.7 billion tacked on at lawmakers' request. The language in the $636 billion bill, which the House Appropriations defense subcommittee approved last week, discloses neither the specific purpose of the radio project nor the dozen lawmakers who asked Chairman John P. Murtha (D-Pa.) to include it.

Rassmussen:

- The Rasmussen Reports daily Presidential Tracking Poll for Thursday shows that 29% of the nation's voters now Strongly Approve of the way that Barack Obama is performing his role as President. Thirty-six percent (36%) Strongly Disapprove giving Obama a Presidential Approval Index rating of -7 (see trends).

- Confidence in the $787-billion economic stimulus plan proposed by President Obama and passed by Congress in February continues to fall. A new Rasmussen Reports national telephone survey finds that only 25% of U.S. voters now say the stimulus plan has helped the economy. That’s a six-point drop from a month ago. Thirty-one percent (31%) say the stimulus actually hurt the economy, little changed from a month ago. However, this is the first poll showing that more voters believe the plan hurt rather than helped. A plurality (36%) says the plan has had no impact.

Politico:

- A big chunk of the House climate change bill is in the hands of Senate Environment and Public Works Committee Chairwoman Barbara Boxer — and some of its supporters are worried that she’s not up to the task. In private conversations, Senate staffers say that Boxer’s abrasive personal style helped tank the climate bill that Sen. Joe Lieberman (I-Conn.) and former Sen. John Warner (R-Va.) sponsored last year. And several recent embarrassing episodes involving the California Democrat have them worried about a repeat performance. During a committee hearing in June, Boxer upbraided a brigadier general for calling her “Ma’am” rather than “Senator.” During another hearing this month, Boxer found herself in a testy exchange with the CEO of the National Black Chamber of Commerce, who accused her of “condescending” to him.

StreetInsider.com:

- Highlights From Intuitive Surgical’s(ISRG) Q2 Conference Call; Strong Growth in Procedures and Revenues.

Reuters:
- Dendreon Corp (DNDN) hired JPMorgan Chase & Co (JPM) as an adviser to help it find an international licensing partner for its prostate cancer vaccine Provenge, a source familiar with the situation said. Dendreon is not looking to sell itself outright, but instead wants a partner for Provenge sales outside the United States, the source said.

- Shares of Celgene Corp (CELG) rose 16 percent on Thursday after it surprisingly announced that a clinical trial involving its multiple myeloma drug Revlimid showed clear benefit in newly diagnosed patients. A trial known as MM-015 showed a highly statistically significant improvement in progression-free survival for patients taking Revlimid as a first-line treatment for multiple myeloma, suggesting it could be approved for use in this setting earlier than expected.

- Shares of United Parcel Service Inc (UPS), rose on Thursday as the world's largest package delivery company said its domestic and global businesses appeared to be stabilizing.

Financial Times:
- North Korea has rejected US suggestions that a wide-ranging package of incentives could entice it to dismantle its nuclear arms, with officials launching an extraordinary verbal attack on Hillary Clinton, the US secretary of state, calling her “stupid” and “a funny lady”. In recent days, the US has said it will pursue a ”two-track” approach to North Korea, explaining it will keenly pursue sanctions but will also liaise with its allies to secure enticement to be offered to the North if it agrees to scrap its nuclear work.“The comprehensive package is nonsense,” said Ri Hung-sik, one of the relatively junior North Korean diplomats who are representing their country at the Asean Regional Forum conference in the Thai resort town of Phuket. Another North Korean official also launched a personal attack on Mrs Clinton through the official North Korean news agency. “Sometimes she looks like a primary schoolgirl and sometimes a pensioner going shopping,” an unnamed foreign ministry spokesman told the agency. “Her words suggest that she is by no means intelligent.”

National Post:

- Hezbollah may be collecting intelligence in Canada as it prepares to retaliate against the West if Iran's nuclear program is attacked, according to recently declassified intelligence reports. The Canadian government reports say Hezbollah has been "rearming and recruiting" for another war with Israel, as well as readying to strike Western targets in the event Iran's nuclear sites are destroyed.

Bear Radar

Style Underperformer:
Large-cap Growth (+2.30%)

Sector Underperformers:
Restaurants (-2.59%), Education (-1.06%) and Defense (-.91%)

Stocks Falling on Unusual Volume:
FLIR, GR, SWY, MCD, NTGR, SNDK, CYOU, LOGI and GR

Stocks With Unusual Put Option Activity:
1) MCO 2) NIHD 3) ACL 4) AEP 5) ATVI

Bull Radar

Style Outperformer:
Mid-cap Value (+2.90%)

Sector Outperformers:
Biotech (+4.38%), Gaming (+4.16%) and Telecom (+3.66%)

Stocks Rising on Unusual Volume:
NIHD, LNC, ABB, LFC, SNP, MMM, ACL, CLMT, CASY, CAKE, ESL, AIR, MEDX, POOL, ISRG, NVEC, HITK, CELG, CHDX, COHU, HUBG, TESO, CCMP, EBAY, SCHL, CYOU, FFIV, ONXX, GENZ, CHIC, CYMI, KYO, JAH, TUP, LTM, CSL, TMO and FIC

Stocks With Unusual Call Option Activity:
1) SPF 2) CELG 3) JEF 4) FITB 5) MCO

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