Friday, December 16, 2005

Stocks Slightly Lower Mid-day on Expiration and Rebalancing

Indices
S&P 500 1,269.17 -.14%
DJIA 10,885.11 +.04%
NASDAQ 2,254.86 -.26%
Russell 2000 682.71 -.30%
DJ Wilshire 5000 12,682.16 -.17%
S&P Barra Growth 607.43 -.16%
S&P Barra Value 657.27 -.13%
Morgan Stanley Consumer 599.59 +.41%
Morgan Stanley Cyclical 787.83 +.07%
Morgan Stanley Technology 535.17 -.09%
Transports 4,147.04 +.03%
Utilities 418.90 +.24%
Put/Call .83 +38.33%
NYSE Arms .96 +15.83%
Volatility(VIX) 10.54 -1.77%
ISE Sentiment 195.00 -10.55%
US Dollar 89.79 -.26%
CRB 326.20 -.73%

Futures Spot Prices
Crude Oil 58.30 -2.82%
Unleaded Gasoline 156.25 -3.36%
Natural Gas 13.68 -.73%
Heating Oil 173.50 -3.15%
Gold 505.90 -.14%
Base Metals 153.29 +1.97%
Copper 202.90 +1.40%
10-year US Treasury Yield 4.44% -.40%

Leading Sectors
Airlines +3.27%
Drugs +.78%
Software +.55%

Lagging Sectors
Coal -1.30%
Oil Service -1.49%
Energy -1.87%
BOTTOM LINE: The Portfolio is higher mid-day on gains in my Internet longs, Airline longs and Energy shorts. I covered some of my IWM and QQQQ shorts this morning, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is lower, most sectors are lower and volume is heavy. Measures of investor anxiety are mostly higher. Overall, today’s market action is negative considering the decline in long-term rates and energy prices. A partnership with Google (GOOG) would be ideal for AOL, in my opinion. Google would provide the "out-of-the-box" type of thinking that AOL is lacking. I don't believe Microsoft (MSFT) could do that. I am convinced that there is tremendous value that can be unlocked in AOL under the right circumstances. This deal would be very big for both parties. I expect US stocks to trade mixed into the close from current levels as rebalancing offsets lower energy prices.

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