Friday Watch

Late-Night Headlines
Bloomberg:
- Bank of America(BAC) is in talks to acquire Countrywide Financial Corp.(CFC), the biggest US mortgage lender, a person with knowledge of the discussions said.
- Clients of James Siomon’s Renaissance Technologies Corp. withdrew $4 billion from the firm’s largest hedge fund in the past four months after returns trailed peers.
- The number of individual investors who are bearish on US equities exceeds those who are bullish by the most since November 1990, a signal to some investors that stocks may be poised to rebound. The percentage of AAII respondents who are bearish has exceeded those who are bullish by more than 33 percentage points only three other times since 1990 – in October 1992, February 2003 and July 2006. In the 12 months that followed those periods, the S&P 500 rose 14%, 35% and 24%, respectively. Assets in US money-market funds increased by $61.3 billion during the week ended Jan. 8, the sixth-largest increase on record, to an all-time high of $3.15 trillion, according to iMoneyNet.
- PIMCO’s Bill Gross, manager of the world’s biggest bond fund, reduced some of the pool’s cash and bought investment-grade corporate debt last month, pushing holdings to the highest since September 2003.
- Intel Corp.(INTC) former CEO Andy Grove plans to give as much as $40 million from his estate to the Michael J. Fox Foundation, a group devoted to Parkinson’s disease research.
- The yen fell against all 16 of the most-active currencies on speculation central banks will ease a credit crunch, giving traders confidence to resume buying higher-yielding investments funded in Japan.

Wall Street Journal:
- Kenneth Lewis’s move to buy hobbled mortgage lender Countrywide Financial Corp.(CFC) is a bullish bet on Bank of America’s own future and that of the battered financial system.
- Republicans Back Tax, Spending Cuts in Debate.
- Fed Chief Opens the Door To ‘Substantive’ Rate Cuts.

MarketWatch.com:
- Older adults eager to volunteer have their pick of a growing number of innovative new options, with many nonprofits trying to meet volunteers halfway by giving them flexibility, new challenges and, in some cases, a nominal paycheck in exchange for their skilled work.

NY Times:
- A huge underwater oil field discovered late last year has the potential to transform South America’s largest country, Brazil, into a sizable exporter and win it a seat at the table of the world’s oil cartel.
- Merrill Lynch(MER) is expected to suffer $15 billion in losses stemming from soured mortgage investments.

BusinessWeek.com:
- Marcial: Inside Wall Street. This week, Gene Marcial looks at DryShips, Microchip Technology, and Chicago Bridge & Iron.
- S&P Picks and Pans: Delta, UPS, Intel, Citi, Merrill, Tata.

CNNMoney.com:
- Tata unveils world’s cheapest car.
- Here come the hot IPOs of ’08.

DigiTimes:
- AU Optronics Corp.(AUO), Taiwan’s largest liquid-crystal display maker, and four rivals will earn a combined record profit of $6.2 billion this year as tight supplies prevent prices from falling.

USA Today.com:
- Tech, toy giants join discussion over kids’ cyber-centered lives.
- The average 30-year mortgage rate plunged 20 basis points to 5.87% this week, the lowest level in more than two years.

Reuters:
- Delta wants merger talks with UAL, Northwest: report.
- Third Avenue Mgmt. has 10.9% stake in MBIA Inc.(MBI).

Financial Times:
- Americans bought more Toyota Prius hybrid petrol-electric hatchbacks in 2007 than Ford Explorer sports utility vehicles, the top selling SUV for more than a decade.

Commercial Times:
- Taiwan Semiconductor Manufacturing may report record quarterly sales in the second half of 2008 because of increased demand for chips used in handsets with more advanced features.

Late Buy/Sell Recommendations
Citigroup:
- Upgraded (NUAN) to Buy, target $23.
- No Visible Warning Flags. We hosted 10 software co’s at Citi’s San Francisco office on Thursday 1/10. Key takeaways include: co’s are not seeing any weakness though we think there is still risk + we face seasonal headwinds in 1H; on-demand sector (CRM) sounded most confident; large diversified businesses are also relatively defensive (ADBE ADSK); (BEAS) may yet get acquired.
- We favor Hologic(HOLX) as our top pick in the Emerging Medtech sector followed by Spectranetics(SPNC) and Varian Medical(VAR). We expect strong upcoming quarters from all three companies and are increasing our price targets for (HOLX) to $81 from $74 and on (VAR) to $62 from $51.
- Reiterated Buy on (DPZ), target $20.

Night Trading
Asian Indices are -1.25% to +.50% on average.
S&P 500 futures -.54%.
NASDAQ 100 futures -.50%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- None of note

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Trade Deficit for November is estimated to widen to -$59.5 billion versus -$57.8 billion in October.
- The Import Prices Index for December is estimated to rise .1% versus a 2.7% rise in November.

2:00 pm EST
- The Monthly Budget Surplus for December is estimated to rise to $50.0 billion versus $42.0 billion in November.

Other Potential Market Movers
- The Needham Growth Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by mining and financial stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Finish Higher on Bernanke Comments, Lower Energy Prices, Buyout Speculation

Evening Review
Market Summary
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 Stock Quote
In Play

Stocks Soaring into Final Hour on Bernanke Comments, Buyout Speculation, Lower Energy Prices, Less Economic Pessimism

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Medical longs, Software longs and Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The overall tone of the market is positive today as the advance/decline line is higher, sector performance is mostly positive and volume is heavy. Investor anxiety is high again, despite today’s gains. Today’s overall market action is bullish. The total put/call hit a high 1.23 again and the ISE Sentiment Index hit a depressed 82.0 this morning. The TED spread is dropping another 7 basis points today to 115 basis points, the lowest level since November 1. Moreover, the 30-day asset backed commercial paper yield is plunging another 18 basis points today to 4.34%, the lowest since December 2005. Given today’s news, I am surprised the major averages aren’t rising more than they are. Bear complacency is extraordinarily high. While I am not predicting it, I believe Bernanke set the stage for a rate cut before the January 29 meeting with the wording of his statements today. I suspect the Fed will no longer be perceived as being “behind the curve” over the coming weeks. As well, the acquisition of Countrywide(CFC) by Bank of America(BAC) would be a huge positive for the broad market. An eventual acquisition by another suitor of Washington Mutual(WM) is also likely, in my opinion. Today’s news and market action continues to be indicative of another meaningful stock market bottom. Illumina Inc.(ILMN) is jumping 16% today to another record high. I remain long the stock and still see further substantial upside from current levels. I expect US stocks to trade modestly higher into the close from current levels on short-covering, lower energy prices, diminishing credit angst, less economic pessimism and bargain hunting.

Today's Headlines

Today’s Headlines
Bloomberg:
- US stocks are surging for a second day after Fed Chairman Bernanke said the Fed is ready to take “substantive additional action” in a “timely and decisive manner.”
- Bank of America(BAC) is in advanced talks to buy Countrywide Financial(CFC), the biggest US mortgage lender. Shares of Countrywide soared as much as 72% on the report.
- The US asset-backed commercial paper market expanded for a second straight week, bolstering optimism that the worst rout in short-term credit markets in more than seven years may be ending.
- Micron Technology(MU) said on its conference call today that nothing has changed since December call and demand looks pretty good.
- FTI Consulting Inc.(FCN), a provider of forensic accounting, and Comtech Telecom(CMTL) were recommended by Jason Votruba, portfolio manager at UMB Scout Small Cap Fund.
- Blackstone Group(BX), the world’s largest buyout firm, agreed to buy hedge fund manager GSO Capital Partners LP for $930 million in cash and stock, a sign it expects debt markets to rebound from subprime-loan losses.
- Despite Bernanke’s comments today, a weaker dollar and rising gold, crude oil is falling $2/bbl. on worries over slowing global demand and rising production. Global oil production reached 87.3 million barrels per day during the latest month, a new record high.
- Citigroup Inc.(C) rose in Germany and Japan after the Wall Street Journal reported that the biggest US bank is seeking as much as $10 billion from foreign investors.

Wall Street Journal:
- Iraq Surge Worked, McCain, Lieberman Write.
- Start-Up Can Cool Specific Parts of Chips That Get Too Hot.
- Verizon Communications’(VZ) software on the new Voyager mobile phone isn’t as capable as that on Apple’s iPhone, nor is it as well-designed, Walter Mossberg wrote.

NY Times:
- Murdoch Said to Offer $4.8 Billion for Monster(MNST).

NY Post:
- Time Warner(TWX) is joining media heavyweights like Disney, Viacom and Sony in making financial best on online virtual worlds.

MSNBC.com:
- Senator John Kerry of Massachusetts, the 2004 Democratic presidential nominee, endorsed Senator Barack Obama for the White House Thursday in a timely slap at Senator Hillary Rodham Clinton as well as his own vice presidential running mate.

USA Today:
- The number of slot machines is soaring as states seek more revenue and gamblers increasingly move from table games to the flashy electronic devices.

Jobless Claims Fall, Unemployment Falls, Wholesale Sales Surge Most Since 05, Inventories Hit New Record Low

- Initial Jobless Claims for this week fell to 322K versus estimates of 340K and 337K the prior week.

- Continuing Claims fell to 2702K versus estimates of 2730K and 2754K prior.

- Wholesale Inventories for November rose .6% versus estimates of a .4% gain and unch. in October.

BOTTOM LINE: The number of Americans filing first-time claims for jobless benefits unexpectedly fell 15,000 this week to a two-month low, Bloomberg reported. The four-week moving average of new claims fell to 341,000 from 344,000 the prior week. The unemployment rate among those eligible to collect benefits, which tracks the US unemployment rate, fell to a historically low 2.0% from 2.1% the prior week. This is a very positive data point. As well, the National Retail Federation said that total sales for November and December combined rose 4% this past holiday season, which is better-than-expected and not the disaster that is being portrayed in the financial press today. A huge crack in the imminent recession thesis will develop should jobless claims stay around these levels over the next couple of weeks, as I suspect. I continue to believe the job market will remain healthy over the intermediate-term without generating substantial unit labor cost increases.

Inventories at US wholesalers rose more than forecast in November and sales jumped, Bloomberg reported. Sales rose 2.2%, the most since September 2005. The increase in sales brought the supply of goods on hand down to 1.07 months, the lowest in US history. The rise in stockpiles was led by a 2.6% jump in petroleum products and a 2.3% increase in autos. I continue to believe manufacturing will help boost US economic growth over the intermediate-term as companies gain confidence in the sustainability of the current expansion and rebuild depleted inventories as a result of booming exports.

Bear Radar

Style Underperformer:

Small-cap Growth (-.02%)

Sector Underperformers:

Oil Tankers (-3.0%), Oil Service (-1.54%) and Energy (-.97%)

Stocks Falling on Unusual Volume:

MW, HRS, ANN, BKS, BRP, USMO, ININ, ANW, PZE, CGV and SNP

AAII % Bears 58.9, Highest Since October 18, 1990 After Iraq’s Invasion of Kuwait and During Peak of Recession

* Notwithstanding historical individual investor pessimism, corporate insiders continue to buy their own stocks.

The AAII percentage of bulls dropped to 19.6% this week from 25.7% the prior week. This reading is now at a very depressed level. The AAII percentage of bears rose to 58.9% this week from 55.2% the prior week. This reading is now at an extraordinarily elevated level. The last time the AAII % Bears was this high was October 18, 1990 after Iraq’s invasion of Kuwait and before Operation Desert Storm began on January 17, 1991. Moreover, the peak of the 1990-1991 recession also occurred during 4Q 1990 as US GDP contracted 3.0%. The S&P 500 rose 65% over the next three years after this peak in bearish sentiment.

As well, the 10-week moving average of the percentage of bears is currently at 49.7%, also an extraordinarily elevated level. It has only been higher one other period in its history, which was September 1990-December 1990. Moreover, the 10-week moving average of the percentage of bears peaked at 43.0% right near the major bear market low during 2002. It is astonishing that the 10-week moving average of the % bears is currently 6.7 percentage points greater than at any time during the bubble bursting meltdown of 2000-2003, which was arguably the worst stock market decline since the Great Depression.

Furthermore, the 50-week moving average of the percentage of bears is currently 39.7%, also an extraordinarily elevated level seen during only one other period since tracking began in the 80s. That period was October 1990-July 1991, right near another major stock market bottom. The extreme reading of the 50-week moving average of the percentage of bears during that period peaked at 41.6% on Jan. 31, 1991. The current reading of 39.7% is above the peak during the 2000-2003 bear market, which was 38.1% on April 10, 2003. I find this even more astonishing, notwithstanding the recent pullback, given that the S&P 500 is currently 94.1% higher from the October 2002 major bear market lows and 9.2% off its recent record high.

Individual investor pessimism towards US stocks is currently deep-seated and historical in nature, which bodes very well for further outsized gains over the intermediate-term. This is just more evidence of the current “US negativity bubble.” It is also noteworthy that as investor pessimism grows ever thicker, corporate insiders continue to display downright giddy behavior with their recent stock activity during this pullback. It is even more interesting that the retail sector is seeing substantial insider buying, notwithstanding the current extreme investor pessimism towards the prospects for consumer spending. During the 2000 economic downturn, insiders were bailing in droves. I still expect US stocks to turn in a positive return for this quarter, notwithstanding the poor start, as the undying belief in an imminent recession begins to fade and the uncertainty currently surrounding the financial sector lifts substantially.

Bull Radar

Style Outperformer:

Mid-cap Value (-.07%)

Sector Outperformers:

Airlines (+7.91%), Steel (+1.73%) and Homebuilders (+1.41%)

Stocks Rising on Unusual Volume:

TNE, NCR, ILMN, LOGI, UAUA, AKNS, GHDX, APOL, THOR, GYMB, ENOC, VOLC, ROST, COST, PCAR, PDLI, MTRX, IMCL, SIRF, ARGN, ACGL, LCC, DDS, FIG, JCP, UPS, CNA, ALY, DOX, HNR, HERO and IR

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
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Thursday Watch

Late-Night Headlines
Bloomberg:
- Holiday sales in the US climbed 4.5%, ahead of ShopperTrak RCT’s forecast, as retailers lured customers with discounts on clothing and electronics.
- Republican presidential contender Rudy Giuliani proposed a new tax plan that would cut capital gains and corporate tax rates while simplifying the tax form most Americans fill out. Giuliani said that if all of his tax proposals were enacted, “it would be the biggest tax cut in American history.”
- Target Corp.(TGT) said CEO Bob Ulrich will retire effective May 1 and be replaced by President Gregg Steinhafel.
- United Parcel Service(UPS) will boost its stock buyback plan fivefold to $10 billion.
- Alcoa Inc.(AA) said fourth quarter profit roes 76% as a $323 gain from the sale of a packaging unit more than offset declining metal prices and higher raw-material costs. The stock gained 4.2% in after-hours trading.
- A US panel created to recommend ways to fund road construction plans to propose that federal gasoline taxes rise as much as 40 cents per gallon over five years.
- General Electric(GE), the world’s biggest maker of electricity generation equipment, will take a majority stake in a $350 million wind-turbine project that will supply power to Austin, Texas. Closely held developer Renewable Energy Systems Americas will begin construction of the Hackberry wind farm 30 miles northeast of Abilene this month.

MarketWatch.com:
- Reading the Nasdaq tea leaves. There’s a good chance that the key US benchmark will rebound later this year.
- New crop of Internet-based retailers is gaining traction.
- ‘Shortsighted’ investment pros blew it: Poole Economy strong enough to avoid recession, St. Louis Fed chief says.

CNBC:
- Bear Stearns(BSC) won’t take more wirtedowns because the firm is “adequately marked” to market on its investments, CEO Alan Schwartz said in an interview. Schwartz said the company is “comfortable” with its positions and isn’t looking to raise capital.

NY Times:
- The Consumer Electronics Show has always been a hardware-focused, but his year software, information and entertainment content edged toward center stage.

CNNMoney.com:
- Green energy’s hottest stocks for 2008.
- Lawmakers are considering a host of options to stimulate the economy, and some may mean more for your bottom line.

SmartMoney.com:
- Chico’s Managers Betting on Comeback.

IBD:
- BlackRock’s Doll Sees ’08 Bright Spots.
- Today’s young people might be called the wired generation, but judging from this year’s Consumer Electronics Show they might not have to deal with actual wire for much longer.

USA Today.com:
- ‘Pimp my ride’ turns into ‘tech my ride’
- Race is on for Mobile Web’s pot of gold.
- Mortgage rates lowest since 2005, refinancing jumps.

Financial Times:
- Tony Blair takes advisory position at JPMorgan(JPM).
- Bear Stearns(BSC) held preliminary talks with Fortress Investments, a listed alternative asset management firm, regarding a possible combination in the weeks before Jimmy Cayne stepped down as chief executive of the investment bank.

Late Buy/Sell Recommendations
Citigroup:
- Maintain Buy on (CELG), target $82.
- Maintain Buy on (GILD), raised target to $56.
- Reiterated Buy on (UNH), target $83.
- Reiterated Buy on (UPS), target $85

Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 futures +.10%.
NASDAQ 100 futures +.18%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (MSM)/.70
- (SHFL)/.10
- (IHS)/.43
- (CRAI)/.75

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for this week are estimated to rise to 340K versus 336K the prior week.
- Continuing Claims are estimated to fall to 2730K versus 2761K prior.

10:00 am EST
- Wholesales Inventories for November are estimated to rise .4% versus unch. in October.

Other Potential Market Movers
- The Fed's Bernanke speaking, Fed’s Hoenig speaking, ICSC Chain Store Sales, weekly EIA natural gas inventory report, (MMSI) Investor Meeting, Needham Growth Conference, Consumer Electronics Show, JPMorgan Healthcare Conference and the Citigroup Entertainment Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by commodity and real estate stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 100% net long heading into the day.

Stocks Finish at Session Highs, Reversing Losses on Heavy Volume

Evening Review
Market Summary

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 Stock Quote
In Play

Stocks Rebounding into Final Hour on Short-Covering, Bargain-Hunting, Reversal Lower in Oil

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Computer longs and Biotech longs. I added to my QQQQ/IWM hedges and then covered all of them today, thus leaving the Portfolio 100% net long. The overall tone of the market is neutral today as the advance/decline line is lower, sector performance is mostly positive and volume is heavy. Investor anxiety is high again. Today’s overall market action is bullish. This is the type of action I would expect to see at the very least at a tradable bottom. The (XLF) has turned higher on the day and market leading stocks are gaining significant upside traction. It has become way too easy to make money on the short side, which also usually indicates a vigorous move higher is close at hand. I expect US stocks to trade higher into the close from current levels on short-covering, lower energy prices, diminishing credit angst and bargain hunting.

Today's Headlines

Bloomberg:
- Mortgage applications in the US jumped last week, led by a surge in refinancing as long-term interest rates fell to the lowest level in two years.
- Countrywide Financial Corp.(CFC) said home loans in December were a better-than-forecast $24 billion. “Our fourth quarter ended with a number of positive operational trends,” President and COO Sambol said.
- Crude oil is unch., falling more than $1 bbl. from session highs, on worries over slowing demand, a rising dollar and rising gasoline supplies.
- Federal Reserve Bank of St. Louis President William Poole said risks to economic growth are more “uncertain” than inflation.
- QLogic Corp., whose computer-networking storage products are used by Hewlett-Packard(HPQ) and Sun Microsytems(JAVA), rose the most since October in US trading after sales and earnings exceeded its forecast.
- DuPont Co.(DD) climbed the most in five years in NY trading after it said profit gained last year and that 2008 earnings will be higher than previously forecast.

Wall Street Journal:
- Key Union May Back Obama Run.
- Faced with recession fears, the White House is considering tax rebates for individuals to encourage spending and tax breaks for businesses to encourage investment.
- SEC Provides Incentive For Mortgage Companies To Renegotiate Loans.
- NYSE Euronext(NYX) is the frontrunner to acquire the American Stock Exchange. A deal may be announced as soon as this month that values the exchange at $350 million.

NY Times:
- Clinton’s Emotional Moment May Have Won Over Voters.

Washingtonpost.com:
- New York Presses To Deploy More Bioweapons Sensors.

Bear Radar

Style Underperformer:

Small-cap Growth (-.9%)

Sector Underperformers:

Coal (-4.88%), Construction (-4.51%) and Airlines (-4.53%)

Stocks Falling on Unusual Volume:

PZE, CYT, NFP, CTL, CMI, WCBO, HELE, VRUS, LYTS, GRMN, AKNS, VSAT, ASTE, LOOP, ISIS, CBEY, AIXG, ADVS, UEIC, SIRF, EPAY, NCT, TIE and AIXG

Bull Radar

Style Outperformer:

Large-cap Growth(+.92%)

Sector Outperformers:

Drugs (+1.62%), Computer Hardware (+1.48%) and Software (+1.24%)

Stocks Rising on Unusual Volume:

RBN, RC, TXI, TNE, PPDI, APOL, REXX, SUNH, PRFT, QLGC, SFLY, CPLA, GHDX, CVCO, BMRN, MATK, FWRD, SHPGY, OSIP, PERY, ZUMZ, ULTA, NILE, ICFI, ROS, CHA, AZN, MYL, REP, SFD, BMA, PSA and UTX

Economic Releases

- None of note

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
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Alliant Techsystems(ATK), the only supplier of solid-rocket motors for US space shuttles, will buy a unit of Canada’s MacDonald, Dettwiler and Associates Ltd. for $1.32 billion to build complete satellite systems.
- Bear Stearns Cos.’(BSC) James “Jimmy” Cayne handed over the CEO role to his hand-picked successor, staying on as chairman as the firm tries to recover from the collapse of the subprime mortgage market.

Wall Street Journal:
- McCain, Clinton Win Primary; White House Race Is Wide Open.

MarketWatch.com:
- Corporate insiders continue to be bullish on their firms’ stock.

BusinessWeek.com:
- Playing the 2008 Election.

USA Today.com:
- Colleges serve up job hopefuls as hotels’ hiring needs jump.

Reuters:
- Bear Stearns(BSC) may become takeover target amid unrest.
- Hynix sees DRAM rebound in 2008.

TimesOnline:
- Shell and Total are vying to develop a huge gasfield in what was Iraq’s most violent province as a source for exports to Europe.

Late Buy/Sell Recommendations
Citigroup:
- Maintain Buy on (FORM), target $44.

Lehman Brothers:
- Upgraded (AUO) to Overweight.

Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 futures +.26%.
NASDAQ 100 futures +.34%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (MOS)/.73
- (SGR)/.49
- (RT)/-.20
- (VOXX)/.35
- (AA)/.34
- (RBN)/.67
- (ETP)/.49
- (TONS)/.95
- (WDFC)/.38

Upcoming Splits
- None of note

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil inventory decline of 2,100,000 barrels versus a 4,056,000 barrel decline the prior week. Gasoline inventories are expected to rise by 1,600,000 barrels versus a 1,985,000 barrel rise the prior week. Distillate supplies are expected to rise by 1,000,000 barrels versus a 569,000 increase the prior week. Finally, Refinery Utilization is estimated to rise .1% versus a 1.29% gain the prior week.

Other Potential Market Movers
- The weekly MBA Mortgage Applications report, (VFC) analyst meeting, JPMorgan Healthcare Conference, Consumer Electronics Show, Needham Growth Conference and Citigroup Entertainment Conference could also impact trading today.

BOTTOM LINE: Asian indices are mostly lower, weighed down by automaker and technology stocks in the region. I expect US equities to open mixed and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Evening Review

Market Summary
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 Stock Quote
In Play

Stocks Sharply Lower into Final Hour on Rising Energy Prices, AT&T Comments and Financial Sector Weakness

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Medical longs, Software longs and Internet longs. I have not traded today, thus leaving the Portfolio 75% net long. The overall tone of the market is negative today as the advance/decline line is lower, sector performance is mostly negative and volume is above average. Investor anxiety is above average again. Today’s overall market action is bearish. The ISE Sentiment Index hit a very depressed 46.0 this morning, near the historic low of 36.0 that occurred on July 3, 2006. The S&P 500 rose 16.3% over the next 8 months. The fact that negative news is still having such an impact on the broad market is a near-term negative. I still think we are very close to a meaningful bottom, however. Current weakness is providing very attractive entry points for long-term growth stock investors, in my opinion. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering and bargain hunting.

Today's Headlines

Bloomberg:
- Copper is jumping 5% to a seven-week high, leading a commodity rally, on speculation global demand for raw materials won’t slacken.
- GM, the world’s largest automaker, is keeping pace with Toyota Motor in developing vehicles powered by alternative-energy sources, CEO Rick Wagoner said.
- Renaissance Technologies and JPMorgan Chase, the world’s biggest hedge fund managers, trailed rivals in 2007 as stock-pickers with few assets sidestepped losses caused by the collapse of subprime mortgages.
- Scientists have begun competing for the first US government grants to investigate a stem cell breakthrough that may lead to new treatments for diabetes, heart disease and brain disorders and avoids destroying human embryos.
- Qualcomm Inc.(QCOM) CEO Paul Jacobs said demand for mobile phones was strong over the year-end holiday shopping season.

Wall Street Journal:
- Chrysler Aims to Double Overseas Sales.
- Cisco Technology Focuses on Social Networking Trend.
- Sony to Emphasize Innovation, High-Def Devices.
- Is Even-Higher Definition Next Big Thing for TVs?

NY Times:
- Comcast Plans to Offer a Huge Menu of Films.

Barron’s:
- Seagate(STX) Not Seeing Slowing In Europe Or Asia, CEO Watkins Says.

Washingtonpost.com:
- Qualcomm(QCOM) Unveils UltraMobile PC.

Morningstar.com:
- GM(GM) to Unveil Hydrogen-Elec Cadillac Crossover Concept Vehicle.

Handelszeitung:
- UBS AG CEO Marcel Rohner expects the crisis in the US credit market to stabilize. UBS has valued its investments “adequately” and has “substantially” reduced its risk, Rohner said.

Bear Radar

Style Underperformer:

Small-cap Value (-1.12%)

Sector Underperformers:

Airlines (-4.26%), I-Banks (-2.53%) and Banks (-2.10%)

Stocks Falling on Unusual Volume:

GBX, SVU, AKNS, PANL, VSAT, FEIC, MEAS, CITP, ORLY, UNFI, MASI, UAUA, RYAAY, MATK and MTG

Nov. Pending Home Sales Decline, Oct. Revised Higher

- Pending Home Sales for November fell 2.6% versus estimates of a .7% decline and an upwardly revised 3.7% gain in October.

BOTTOM LINE: The number of Americans signing contracts to buy previously owned homes fell more than forecast in November, Bloomberg reported. Pending home sales fell 13% in the Northeast, 4.1% in the Midwest and 2.1% in the West. Sales rose 2.3% in the South. The larger rise in October than previously estimated suggests the market may be stabilizing, said Lawrence Yun, the group’s chief economist. “Although there could be some minor slippage in the first quarter, existing home sales should hold in a narrow range before trending up,” Yun said. I suspect home sales are finally stabilizing and will bounce back a bit this quarter on pent-up demand and diminishing credit market angst.

Bull Radar

Style Outperformer:

Small-cap Growth(+.95%)

Sector Outperformers:

Biotech (+2.55%), Drugs (+2.31%) and Steel (+2.06%)

Stocks Rising on Unusual Volume:

APL, HNT, PZE, RPM, GRR, NSH, SEH, KG, VRUS, ISIS, ITMN, QMAR, HWAY, SBUX, AMSG, WBSN, HELE, HRBN, INCY, SHPGY, AVCT, LEAP, ALXN, PERY, TISI, PPDI, SIGM, PGNX, KGC, SSRI, TNE, BRP, PBR, WYE, SGP, DIVX, ICE, SWS, UBS and ACGL

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
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Australia’s home-building approvals unexpectedly surged in November by the most in nine months as higher employment, wages and immigration spurred investment.
- Wheat output in Australia, the world’s fifth-largest exporter, may rebound to a record next harvest as higher prices and expectations of improved weather spur farmers to lift plantings, Emerald Group Australia Pty said.
- President Bush and Treasury Secretary Paulson said that US economic indicators are sending “mixed” signals and that they are considering whether a stimulus is needed.
- Democratic presidential candidate Hillary Rodham Clinton, her voice cracking, told voters in New Hampshire “it’s not easy” to keep going in a long political campaign “against some pretty difficult odds.”
- You’re more likely to survive cancer if you live in a sunny place and make the most of the weather, scientists say.
- Starbucks Corp.(SBUX) ousted CEO Jim Donald and replaced him with former CEO and Chairman Howard Schultz after posting its worst-ever annual performance in US trading. The shares surged 9% in after-hours trading.
- Genzyme Corp.(GENZ) will license Isis Pharmaceuticals’(ISIS) cholesterol-lowering drug for $175 million to start and will buy 5 million of its partner’s shares for $150 million. The shares soared 51% in extended trading.
- Matsushita Electric Industrial, the world’s biggest consumer electronics maker, will sell televisions in the US that can access Internet video clips on Google’s(GOOG) YouTube.

CNBC.com:
- CNBC has confirmed that James Cayne, the chairman and CEO of Bear Stearns(BSC), is stepping down.
- Top Manager Names Wireless, Web Stocks.

IBD:
- Q4 Profits Seen Off Nearly 10%, But Up 12% Ex Financials.

USA Today.com:
- After an unprecedented year of toy recalls, the Consumer Product Safety Commission is adding staff at the nation’s busiest ports and pledging to work more closely with US Customs to stop suspect imports and identify potential hazards before toys hit the market.

Reuters:
- Short interest on the NYSE rose .7% in late December, the exchange said on Monday, indicating an increase in bearish sentiment in the stock market.

Financial Times:
- TV screen makers vie for slimness.
- Paramount Pictures plans to abandon Toshiba Corp.’s HD-DVD format after Warner Bros. Entertainment dropped its support of the technology.

globeandmail.com:
- TD Bank repeats it has no US subprime exposure.

Late Buy/Sell Recommendations
- None of note

Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 futures +.19%.
NASDAQ 100 futures +.27%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (FDO)/.37
- (STZ)/.55
- (KBH)/-1.34
- (AYI)/.82
- (APOL)/.73
- (PPDI)/.34
- (SWY)/.69
- (SVU)/.63

Upcoming Splits
- None of note

Economic Releases
10:00 am EST
- Pending Home Sales for November are estimated to fall .7% versus a .6% increase in October.

3:00 pm EST
- Consumer Credit for November is estimated to rise to $8.0 billion from $4.7 billion in October.

Other Potential Market Movers
- The Fed’s Plosser speaking, weekly retail sales reports, IBD/TIPP Economic Optimism Index, Needham Growth Conference, JPMorgan Healthcare Conference, Citigroup Entertainment Conference, Consumer Electronics Show, JPMorgan Global Energy Day and Raymond James Govt. Services & Tech. Summit could also impact trading today.

BOTTOM LINE: Asian indices are mostly higher, boosted by real estate and financial stocks in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing modestly higher. The Portfolio is 75% net long heading into the day.

Stocks Finish Well Off Session Lows After Late Rebound

Evening Review
Market Summary
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 Stock Quote
In Play

Stocks Lower into Final Hour, Weighed Down by Tech and Commodity Shares

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Semi longs, Software longs and Medical longs. I have not traded today, thus leaving the Portfolio 75% net long. The overall tone of the market is mildly negative today as the advance/decline line is slightly lower, sector performance is mixed and volume is heavy. Investor anxiety is above average. Today’s overall market action is bearish. Many market leading tech and cyclical shares, with the largest gains last year, remain under pressure today, substantially underperforming the broad market. Many true growth stocks are rapidly approaching very attractive entry points on the long side for investors, in my opinion. Economic pessimism is extraordinarily high given recent data. Many pundits that have proclaimed for years that the US faced an imminent recession are now saying that the economy is already in one and that it will be a very bad one. I suspect that if the US economy were to head into recession in the future these same pundits would then start calling for a depression. In the current "US negativity bubble" it seems their dire forecasts are so easily believed. I continue to see little evidence of an outright recession in the data even as this is currently being priced into stocks at current levels. On the positive side, the TED spread is falling another 13 basis points today to 131 basis points. This is down 109 basis points from August highs and down 92 basis points from highs hit three weeks ago. I expect US stocks to trade mixed-to-lower into the close from current levels on more shorting and rising economic pessimism.

Today's Headlines

Bloomberg:
- The risk of companies defaulting on their debt fell amid speculation the Federal Reserve will cut interest rates further, trading in credit-default swaps show.
- Crude oil is falling more than $2 barrel, the most since November, on expectations demand will drop, a firmer US dollar and warmer weather.
- The fastest-growing bet in the oil market these days is that the price of crude will double to $200 a barrel by the end of the year.
- The US dollar rose for the first time this year versus the yen and gained against the euro on speculation global growth may withstand a slowing US economy.
- Three US Navy warships were briefly confronted by five Iranian “fast boats” yesterday in the Persian Gulf, a Defense Dept. spokesman said.

Wall Street Journal:
- McDonald’s(MCD) Takes On A Weakened Starbucks(SBUX).
- Could GM’s(GM) Salvation Be Stuff of Science Fiction.
- Comcast(CMCSA) Devices Aim to Simplify TV Watching.
- The level of crisis in the securities and investment banking industry is at its highest since records began, according to the Financial News annual Crisis Index.

NY Times:
- CNBC and the NY Times(NYT) will share material on their Web sites starting today to compete with the Wall Street Journal and the Fox Business Network.
- Peter Hopkins, a civic-minded and idealistic 2004 Harvard grad, is hoping that his new Web site, Big Think, will do for intellectuals what YouTube, the popular video-sharing site, did for bulldogs on skateboards.

AppleInsider:
- Apple(AAPL) is closing in on agreements with almost all the major motion picture studios for an iTunes movie rental service that will serve up 24-hour rentals for $3.99 a pop.

AP:
- Comcast Corp.(CMCSA) and Time Warner Inc.(TWX) will allow electronics manufacturers to standardize televisions and other devices so they will work with any cable provider, which may encourage the development of new services.

Financial Times:
- Plug-in cars are picking up speed and credibility.

Sentido Comun:
- Microsoft’s(MSFT) Bill Gates reclaimed the title of the world’s richest man from Mexican billionaire Carlos Slim.

Bear Radar

Style Underperformer:

Mid-cap Growth (-.72%)

Sector Underperformers:

Oil Tankers (-3.86%), Steel (-3.26%) and Computer Hardware (-2.79%)

Stocks Falling on Unusual Volume:

MTR, JEF, TXI, AVCT, WATG, EVVV, ININ, HRBN, OSIR, DDUP, LIFC, CNQR, HIBB, TSCM, OVTI, OPLK, OREX, ALXN, SIGM, EQIX, CNB, SIRF and DPTR

Bull Radar

Style Outperformer:

Large-cap Value(+.4%)

Sector Outperformers:

Drugs (+2.07%), Medical Equipment (+1.54%) and Telecom (+1.40%)

Stocks Rising on Unusual Volume:

ITMN, HWAY, DTSI, IRIS, ANGO, FFIN, AMMD, CLHB, CELG, FOSL, VIVO, SONC, PERY, SEPR, PHRM, HLEX, CRZO, NIHD, LSTR, FORR, IWA, MFW, LLY, GSK, FPL, AES, SPN, DLB, CELL, IVN, ME and SWSI

Economic Releases

- None of note

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
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes