Bear Radar

Style Underperformer:

• Large-Cap Value (+.06%)

Sector Underperformers:

• 1) HMOs -.46% 2) Utilities -.42% 3) Telecom -.38%

Stocks Falling on Unusual Volume:

• TSN, VIP, MATK and PSS
  

Stocks With Unusual Put Option Activity:

• 1) APA 2) PAR 3) GCI 4) BKC 5) ESV
  

Stocks With Most Negative News Mentions:

• 1) ME 2) BONT 3) DISCA 4) BKE 5) DEST
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+3.19%)

Sector Outperformers:

• 1) Gold +1.89% 2) Restaurants +1.67% 3) Semis +1.43%

Stocks Rising on Unusual Volume:

• SCMR, FRED, BKS, CY, CRUS, TIN, SWC, WBD, DF, AA, ASYS, GIII, JACK, UTIW, SSRI, SPRD, EZCH, ZUMZ, DGIT, DRIV, SOLF, CRUS, JOSB, ULTA, SFSF, CYOU, JDAS, HURN, CPHD, EMV, JKG, FRX and OXM
  

Stocks With Unusual Call Option Activity:

• 1) NVS 2) CIEN 3) COST 4) GT 5) APC
  

Stocks With Most Positive News Mentions:

• 1) BKC 2) AAPL 3) COST 4) JWN 5) GOOG

Thursday Watch

Evening Recommendations
Citigroup:

• Reiterated Buy on (AAPL), target $350.

Morgan Stanley:

• Reiterated Overweight on (NFLX).
• Reiterated Overweight on (AAPL), target $346.
  

Stifel Nicolaus:

• Rated (ZMH) Buy, target $58.
  
• Rated (NUVA) Buy, target $37.

Night Trading

• Asian equity indices are +.50% to +1.0% on average.
• Asia Ex-Japan Investment Grade CDS Index 127.0 -6.0 basis points.
  
• Asia Pacific Sovereign CDS Index 120.50 -5.75 basis points.
  
• S&P 500 futures -.43%.
  
• NASDAQ 100 futures -.34%.

Morning Preview Links

Earnings of Note
Company/Estimate

• (DLM)/.26
• (COO)/.71
• (HRB)/-.41
• (ULTA)/.20
• (TTWO)/-.08

Economic Releases
8:30 am EST

• Final 2Q Non-farm Productivity is estimated at -1.9% versus a prior estimate of a -.9% decline.
• Final 2Q Unit Labor Costs are estimated at +1.2% versus a prior estimate of a +.2% gain.
• Initial Jobless Claims for last week are estimated to rise to 475K versus 473K the prior week.
• Continuing Claims are estimated to fall to 4450K versus 4456K prior.
  

10:00 am EST

• Factory Orders for July are estimated to rise +.2% versus a -1.2% decline in June.
• Pending Home Sales for July are estimated to fall -1.0% versus a -2.6% decline in June.
  

Upcoming Splits

• None of note
  

Other Potential Market Movers

• Bernanke's testimony before the Crisis Inquiry Commission, the Fed's Rosengren speaking, Fed's Pianalto speaking and the ICSC Chain Store Sales report for August could also impact trading today.
  

BOTTOM LINE: Asian indices are higher, boosted by technology and commodity shares in the region. I expect US stocks to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Surging into Final Hour on Less Economic Fear, Declining Sovereign Debt Angst, Short-Covering, Bargain-Hunting

Broad Market Tone:

• Advance/Decline Line: Substantially Higher
  
• Sector Performance: Almost Every Sector Rising
  
• Volume: Around Average
  
• Market Leading Stocks: Outperforming
  

Equity Investor Angst:

• VIX 24.38 -6.41%
  
• ISE Sentiment Index 108.0 +16.13%
  
• Total Put/Call .72 -21.74%
  
• NYSE Arms .29 -67.42%
  

Credit Investor Angst:

• North American Investment Grade CDS Index 110.05 bps -3.25%
  
• European Financial Sector CDS Index 123.02 bps -6.78%
  
• Western Europe Sovereign Debt CDS Index 149.0 bps -4.28%
  
• Emerging Market CDS Index 255.85 bps -2.38%
  
• 2-Year Swap Spread 18.0 unch.
  
• TED Spread 17.0 unch.
  

Economic Gauges:

• 3-Month T-Bill Yield .13% unch.
  
• Yield Curve 207.0 +8 bps
  
• China Import Iron Ore Spot $141.80/Metric Tonne +.21%
  
• Citi US Economic Surprise Index -43.20 +9.9 points
  
• 10-Year TIPS Spread 1.58% +3 bps
  

Overseas Futures:

• Nikkei Futures: Indicating +163 open in Japan
• DAX Futures: Indicating -17 open in Germany

Portfolio:

• Higher: On gains in my Tech, Biotech, Retail, Ag and Medical long positions
  
• Disclosed Trades: Covered all of my (IWM)/(QQQQ) hedges, some of my (EEM) short and added to my (MOS) long
  
• Market Exposure: Moved to 100% Net Long

BOTTOM LINE: Today's overall market action is very bullish as the S&P 500 breaks substantially higher from its recent range despite mixed economic data and a -.6% decline in the Shanghai Composite overnight. On the positive side, Road&Rail, Hospital, Paper, Steel, Oil Service, Coal, Bank, Disk Drive and Computer shares are especially strong, rising 3.75%+. (XLF) has outperformed throughout the day. Cyclicals and small-caps are also outperforming. Copper is jumping +2.97% and the S&P GSCI Ag Spot Index is rising +2.2%. Moreover, the 10-year yield is rising 11 bps to 2.58%, which is also a big positive. The European Investment Grade CDS Index is dropping -6.21% to 104.33 bps and the US Muni CDS Index is dropping -2.65% to 228.29 bps. As well, the Spain sovereign cds is dropping -5.6% to 230.52 bps, the Portugal sovereign cds is falling -4.33% to 319.56 bps and the Ireland sovereign cds is dropping -3.86% to 327.91 bps. On the negative side, Gold, Telecom and Food shares are underperforming. The Japan sovereign cds is rising +2.1% to 70.75 bps. With S&P 500 1,040 holding, investor pessimism high, recent weak economic data mostly priced in and hedge fund market exposure low, I suspect stocks can build on today's large gain over the next few weeks. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, bargain-hunting, less economic fear, diminishing sovereign debt angst, declining financial sector pessimism, buyout speculation and technical buying.

Bear Radar

Style Underperformer:

• Large-Cap Value (+2.63%)

Sector Underperformers:

• 1) Gold -.43% 2) Telecom +1.38% 3) Foods +1.58%

Stocks Falling on Unusual Volume:

• IAG, ULTA, SFSF, CSTR and BF/B
  

Stocks With Unusual Put Option Activity:

• 1) BKC 2) SVU 3) SUN 4) A 5) INTU
  

Stocks With Most Negative News Mentions:

• 1) BGP 2) CHK 3) WINN 4) AGN 5) OWW
  

Bull Radar

Style Outperformer:

• Small-Cap Growth (+3.19%)

Sector Outperformers:

• 1) Oil Service +5.27% 2) Steel +4.41% 3) Semis +4.04%

Stocks Rising on Unusual Volume:

• PHG, RTP, IVN, STD, AIXG, REP, STO, CHA, AMX, GIII, BCSI, JOSB, AIRM, JOYG, RADS, PRSP, FWRD, APSG, CASY, OSIS, VICR, THRX, SAIA, MCRS, CMCSA, CAAS, LSTR, INFY, ASYS, NY, RZG, PKB, XBI, JKG, IYJ, EWL, JKH, JKI and TCB
  

Stocks With Unusual Call Option Activity:

• 1) BRCD 2) NETL 3) CSX 4) JOYG 5) MFE
  

Stocks With Most Positive News Mentions:

• 1) AAPL 2) MOT 3) GOOG 4) RIMM 5) VMW