Monday, July 24, 2006

Stocks Finish Sharply Higher on Strong Earnings, Merger Activity, Short-Covering and Bargain Hunting

Indices
S&P 500 1,260.91 +1.66%
DJIA 11,051.05 +1.68%
NASDAQ 2,061.84 +2.05%
Russell 2000 690.75 +2.80%
Wilshire 5000 12,610.85 +1.78%
S&P Barra Growth 581.93 +1.70%
S&P Barra Value 677.46 +1.62%
Morgan Stanley Consumer 616.66 +1.29%
Morgan Stanley Cyclical 772.74 +1.62%
Morgan Stanley Technology 461.01 +2.18%
Transports 4,568.70 +2.52%
Utilities 432.05 +.94%
Put/Call .67 -46.40%
NYSE Arms .52 -71.15%
Volatility(VIX) 14.98 -13.91%
ISE Sentiment 137.00 +9.60%
US Dollar 86.31 +.44%
CRB 342.71 +.91%

Futures Spot Prices
Crude Oil 75.06 +.01%
Unleaded Gasoline 231.50 +.03%
Natural Gas 6.59 -.18%
Heating Oil 197.34 +.18%
Gold 615.50 +.38%
Base Metals 215.80 +1.59%
Copper 337.50 -.21%
10-year US Treasury Yield 5.04% +.04%

Leading Sectors
Disk Drives +3.22%
Computer Hardware +3.07%
Oil Service +3.01%

Lagging Sectors
Utilities +.94%
Banks +.90%
Foods +.36%

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
Citigroup:
- Rated (BEAS) and (TIBX) Buy, targets $15 and $9 respectively.
- Rated (WIND) Sell, target $8.

Afternoon/Evening Headlines
Bloomberg:
- The US pledged $30 million in aid to help war-ravaged Lebanon avert a humanitarian crisis as Secretary of State Condoleezza Rice conferred with Israeli leaders after a surprise visit to Beirut.
- Texas Insturments(TXN) said second-quarter profit rose almost fourfold.
- American Express(AXP) said profit climbed 13% in the second quarter as it signed up new clients and existing customers used their cards for more purchases.
- SanDisk(SNDK) said second-quarter net income climbed 36% as the company attracted customers with cards can hold more data.
- Altera(ALTR) reported a 17% gain in second-quarter revenue because of strong sales of new products.

BOTTOM LINE: The Portfolio finished higher today on gains in my Computer longs, Biotech longs, Semi longs, Retail longs and Medical longs. I took profits in my (NBR) short and an existing trading long in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was very positive today as the advance/decline line finished substantially higher, every sector rose and volume was above average. Measures of investor anxiety were lower into the close. Overall, today's market performance was bullish. I think bears have overreached to such a large extent that this rally will have legs. This week's housing data will probably dictate the likelihood of this. The fact that the 10-year is holding recent gains despite the large rally in stocks and a somewhat better situation in the Middle East, leads me to believe that investors' inflation expectations are still going down.

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