Tuesday, August 30, 2005

Stocks Continue to Display Resilence as Gas Prices Soar

Indices
S&P 500 1,208.41 -.32%
DJIA 10,412.82 -.48%
NASDAQ 2,129.76 -.37%
Russell 2000 653.76 -.24%
DJ Wilshire 5000 12,062.75 -.28%
S&P Barra Growth 578.90 -.44%
S&P Barra Value 625.24 -.20%
Morgan Stanley Consumer 577.92 -.70%
Morgan Stanley Cyclical 730.06 -.33%
Morgan Stanley Technology 492.32 -.34%
Transports 3,648.30 -1.0%
Utilities 403.18 +.07%
Put/Call 1.03 +3.0%
NYSE Arms 1.11 +45.03%
Volatility(VIX) 13.65 +.96%
ISE Sentiment 144.00 +5.11%
US Dollar 88.35 +.11%
CRB 331.19 +2.46%

Futures Spot Prices
Crude Oil 70.50 +.99%
Unleaded Gasoline 249.10 +.65%
Natural Gas 12.08 +3.61%
Heating Oil 208.55 +.46%
Gold 435.90 +.09%
Base Metals 130.35 +.28%
Copper 164.25 -.27%
10-year US Treasury Yield 4.09 -1.80%

Leading Sectors
Oil Service +1.98%
Energy +1.81%
HMOs +.58%

Lagging Sectors
Restaurants -2.17%
Disk Drives -2.77%
Airlines -2.97%

Evening Review
Detailed Market Summary
Market Gauges
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Economic Calendar
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GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- None of note

Afternoon/Evening Headlines
Bloomberg:
- Hurricane Katrina devastated parts of Louisiana, Mississippi and Alabama, killing dozens of people, cutting off power to 2 million and leaving most of New Orleans flooded by water as deep as 20 feet. US and state officials say it may be the nation’s worst natural disaster.
- Billionaire financier Carl Icahn may make a tender offer for as much as 10% of Time Warner, adding pressure on the media company to buy back shares and spin off its cable-tv unit.
- President Bush is cutting short a scheduled vacation to return to Washington tomorrow to supervise the federal response to Hurricane Katrina.
- Surging fuel prices will probably filter into the cost of other US consumer goods at least temporarily, possibly curbing spending and economic growth, Federal Reserve policy makers said at their Aug. 9 meeting.
- The hurricane that struck the US Gulf Coast this week may prompt S&P to lower its ratings on $7.86 billion of municipal bonds sold by Louisiana, Mississippi and other borrowers along the storm’s path.
- Cardinal Health said it is restating earnings for changes including inventory valuation and is discussing a settlement to resolve a US regulatory investigation.
- Crude oil and gas rose to a record for a second straight day after Hurricane Katrina shut 95% of production in the Gulf of Mexico.
- US Treasuries surged, led by the biggest rally in two-year notes this year, on speculation record energy costs will temper economic growth.
BOTTOM LINE: The Portfolio finished unchanged today as gains in my Oil Tanker shorts and Telecom Equipment longs offset losses in my Retail and Internet longs. I did not trade in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished lower, most sectors fell and volume was light. Measures of investor anxiety were mostly higher into the close. Overall, today’s market action was slightly negative. While the market’s relatively muted reaction to $70 oil is impressive, I am worried that measures of anxiety are too low given the risks that are forming. The possibility of a fear-induced blow-off spike in oil have increased considerably over the last 24 hours.

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