Thursday, May 26, 2005

Stocks Finish Near Session Highs as Energy Prices Reverse

S&P 500 1,197.62 +.64%
DJIA 10,537.60 +.76%
NASDAQ 2,071.24 +1.03%
Russell 2000 614.70 +1.37%
DJ Wilshire 5000 11,813.30 +.72%
S&P Barra Growth 579.56 +.59%
S&P Barra Value 613.55 +.69%
Morgan Stanley Consumer 589.26 +.29%
Morgan Stanley Cyclical 724.86 +.81%
Morgan Stanley Technology 482.37 +1.10%
Transports 3,636.22 +1.02%
Utilities 363.33 +.23%
Put/Call .76 -25.49%
NYSE Arms .65 -22.24%
Volatility(VIX) 12.24 -2.70%
ISE Sentiment 167.00 +7.05%
US Dollar 86.85 +.58%
CRB 300.09 +.28%

Futures Spot Prices
Crude Oil 50.96 -.04%
Unleaded Gasoline 144.75 -.29%
Natural Gas 6.12 -3.02%
Heating Oil 144.22 +.97%
Gold 417.70 -.07%
Base Metals 122.18 +.28%
Copper 144.50 -.31%
10-year US Treasury Yield 4.07% -.24%

Leading Sectors
Airlines +4.76%
Steel +2.90%
Homebuilders +2.68%

Lagging Sectors
Retail -.08%
Broadcasting -.12%
Gold & Silver -1.03%

Evening Review
Detailed Market Summary
Market Gauges
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on MO, TMK and Underperform on RAI.
- Rated Auto Parts sector Cautious.
- Rated JCI, DCN, BWA Outperform.
- Rated ARM, LEA, GM and DPH Underperform.

Afternoon/Evening Headlines
- US President Bush pledged the US will provide $50 million in direct aid to the Palestinian Authority, saying Palestinian leader Mahmoud Abbas is moving forward with reforms he promised.
- GLG Partners LP, Europe’s largest hedge fund manager, posted a 6.7% decline in its $3 billion convertible bond arbitrage fund in May, extending the loss for the year to 14.2%.
- President Jacques Chirac pleaded with voters to endorse Europe’s constitution in a May 29 referendum, saying the treaty will allow France to meet the challenges of globalization without giving up its welfare system.
- A US Senate panel approved creation of a $140 billion fund for asbestos-exposure victims that would end litigation that has bankrupted 77 companies.
- Smoking among Americans fell in 2003 to a new low of 21.6%.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet, Homebuilding and Computer longs. I added to a few lagging longs in the afternoon and began adding some oil service shorts, thus leaving the Portfolio 100% net long. One of my new shorts is RIG and I am using a $51.75 stop-loss on this position. The tone of the market was positive today as the advance/decline finished higher, almost every sector was higher and volume was light. Measures of investor anxiety were lower into the close. Overall, today’s market action was positive considering the major averages and breadth finished near session highs. In my opinion, long-term investors should always consider tech stocks after substantial declines. Since Jan. 31, 1991, the Morgan Stanley tech index has returned 1,914.12% vs. a return of 349.62% for the S&P 500 during the same time period. This includes the bursting of the largest tech bubble in U.S. financial market history.

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