Monday, October 31, 2005

Stocks Finish Near Session Highs on Falling Energy Prices, Better Economic Data and More Optimism

Indices
S&P 500 1,207.01 +.72%
DJIA 10,440.07 +.36%
NASDAQ 2,120.30 +1.46%
Russell 2000 646.61 +1.78%
DJ Wilshire 5000 12,043.73 +.92%
S&P Barra Growth 577.40 +.68%
S&P Barra Value 625.43 +.75%
Morgan Stanley Consumer 587.19 +.43%
Morgan Stanley Cyclical 717.91 +1.19%
Morgan Stanley Technology 499.38 +1.52%
Transports 3,815.46 +1.97%
Utilities 401.11 +1.29%
Put/Call .88 +7.32%
NYSE Arms .92 +82.40%
Volatility(VIX) 15.32 +7.51%
ISE Sentiment 194.00 +55.20%
US Dollar 90.06 +.52%
CRB 316.29 -1.81%

Futures Spot Prices
Crude Oil 59.83 -2.27%
Unleaded Gasoline 152.61 -6.04%
Natural Gas 12.22 -6.37%
Heating Oil 176.98 -4.0%
Gold 467.40 -1.56%
Base Metals 135.03 +1.53%
Copper 181.10 -.49%
10-year US Treasury Yield 4.55% -1.41%

Leading Sectors
Airlines +3.91%
Retail +3.51%
Computer Hardware +2.39%

Lagging Sectors
Defense +.25%
Telecom +.19%
Foods -.16%

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
GuruFocus.com
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on DDR.
- Reiterated Underperform on LVLT.

Afternoon/Evening Headlines
Bloomberg:
- US stocks staged their biggest two-day rally in almost a year as oil prices fell and companies proposed more than $19 billion in acquisitions.
- Fidelity Investments said Robert Stansky will retire after nine years of managing its flagship Magellan Fund.
- Verizon and SBC Communications cleared the final federal hurdle to their multibillion-dollar acquisitions without having to sell assets.
- GM and Wal-Mart are helping convince some economists that the Federal Reserve can stop worrying about wage pressures driving inflation.
- Ralph Acampora, the former director of technical research at Prudential Equity Group whose department was shut down last month, was hired by Knight Capital Group.
- Dell said third-quarter sales missed forecasts because demand from US consumers and UK businesses fell short of its expectations.
- Crude oil and heating oil tumbled, and gasoline fell to the lowest in almost five months, as warmer-than-normal weather may cut consumption in the US Northeast.
BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Retail longs, Semi longs, Computer longs and Airline longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished substantially higher, almost every sector rose and volume was above average. Measures of investor anxiety were mostly higher into the close. Overall, a very good day for the bulls as the major indices and breadth finished near session highs. Stabilizing long-term rates even with the strong stock rally and better-than-expected economic data are a big positive. Moreover, I sense a shift in psychology with respect to the positive implications of the sharp fall in energy prices. Unleaded gas futures have now collapsed close to 50% even as refinery utilization remains substantially lower than pre-hurricane levels. Hedge funds had one of their worst months in a long time during October as energy stocks fell and emerging markets faltered. I expect follow-through on today's gains as those funds pile on long to try and recoup recent losses.

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