Wednesday, May 18, 2005

Stocks Sharply Higher Mid-day on Declining Inflation Worries

Indices
S&P 500 1,184.20 +.89%
DJIA 10,443.38 +1.08%
NASDAQ 2,027.82 +1.18%
Russell 2000 605.58 +1.73%
DJ Wilshire 5000 11,676.40 +1.05%
S&P Barra Growth 573.56 +.90%
S&P Barra Value 606.95 +1.01%
Morgan Stanley Consumer 588.17 +.76%
Morgan Stanley Cyclical 719.39 +2.35%
Morgan Stanley Technology 472.09 +1.49%
Transports 3,591.45 +2.11%
Utilities 362.10 +.34%
Put/Call .80 -19.19%
NYSE Arms .61 +3.99%
Volatility(VIX) 13.67 -6.18%
ISE Sentiment 118.00 -10.61%
US Dollar 85.89 -.37%
CRB 295.37 +.44%

Futures Spot Prices
Crude Oil 47.90 -2.08%
Unleaded Gasoline 143.25 -.36%
Natural Gas 6.44 -.56%
Heating Oil 138.00 +.44%
Gold 421.90 +.50%
Base Metals 120.09 +.39%
Copper 137.60 +2.04%
10-year US Treasury Yield 4.07% -.98%

Leading Sectors
Steel +8.98%
Airlines +4.56%
Homebuilders +3.21%

Lagging Sectors
Energy +.09%
Insurance -.04%
Oil Service -.37%
BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my Internet, Homebuilding and Networking 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 very strong, almost every sector is higher and volume is above-average. Measures of investor anxiety are mostly lower. Today’s overall market action is positive. The strong rally I have been anticipating for the second half of the year has likely begun. I am very confident the lows for the year are in place. All my intermediate-term trading indicators are now giving bullish signals. While the major averages are getting extended short-term, I expect any pullback over the coming months to be relatively mild. I expect US stocks to trade modestly higher into the close on short-covering, bargain hunting, subsiding inflation worries and lower energy prices.

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