Tuesday, January 09, 2007

Stocks Finish Mixed as Falling Commodity and Emerging Market Shares Offset Gains Elsewhere

Indices
S&P 500 1,412.11 -.05%
DJIA 12,416.60 -.06%
NASDAQ 2,443.83 +.23%
Russell 2000 778.33 +.17%
Wilshire 5000 14,153.46 +.02%
Russell 1000 Growth 557.37 +.22%
Russell 1000 Value 807.60 -.22%
Morgan Stanley Consumer 698.31 +.25%
Morgan Stanley Cyclical 891.07 +.24%
Morgan Stanley Technology 576.51 +.31%
Transports 4,632.66 +.18%
Utilities 448.28 +.26%
Put/Call .78 -10.34%
NYSE Arms 1.57 +56.21%
Volatility(VIX) 11.91 -.75%
ISE Sentiment 160.0 +11.11%
US Dollar 84.75 +.21%
CRB 289.51 -.42%

Futures Spot Prices
Crude Oil 55.82 -.48%
Reformulated Gasoline 147.50 +.44%
Natural Gas 6.69 +5.0%
Heating Oil 156.10 +.25%
Gold 614.50 +.84%
Base Metals 214.78 -1.73%
Copper 255.0 +.87%
10-year US Treasury Yield 4.65% +.04%

Leading Sectors
REITs +1.21%
Retail +1.15%
Computer Hardware +.78%

Lagging Sectors
Energy -1.11%
Oil Tankers -1.15%
Wireless -2.46%

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
Bank of America:
- Rated (BTU) Buy, target $53.

Afternoon/Evening Headlines
Bloomberg:
- Apple Computer’s Steve Jobs reiterated that Apple’s internal review found no wrongdoing by current members of the management board. He told CNBC that media coverage of the issue has been “a little frustrating” at times.
- Venezuelan stocks had their biggest drop on record, crashing 19%, and bonds tumbled after President Hugo Chavez pledged to nationalize the country’s largest phone company and utilities.
- Alcoa Inc.(AA) said profit jumped 60% in the fourth quarter. The stock surged 5% in after-hours trading.
- Sales at US retailers climbed 3.4% last week, the largest gain since mid-October, as shoppers redeemed holiday gift cards after Christmas.
- Apple Computer CEO Jobs introduced a mobile phone based on its best-selling iPod device and changed the company’s name to Apple Inc., highlighting its reliance on consumer electronics.
- General Motors(GM), which sold $17 billion in assets in the past 15 months, may sell more this year because the company still isn’t generating cash from operations, CFO Henderson said.
- William-Sonoma(WSM) reported holiday sales that exceeded analysts’ estimates as all but one of its chains recorded gains.
- David Kirsch, manager of the oil markets group at PFC Energy, said oil prices could drop to $50/bbl.
- Latin American stocks fell to their lowest levels in a month as Venezuela’s plan to nationalize of telephone and electric companies rekindled concerns that the region’s markets are prone to political risk.
- Crude oil fell to the lowest in 18 months as mild weather in the eastern US continues to curb record speculation by investment funds.
- Ben Dell, an analyst at Sanford C. Bernstein sees more “downward pressure” on crude oil prices.
- Corn prices in Chicago fell to a nine-week low and soybeans declined to the lowest in two weeks on speculation demand for alternative fuels made from crops will decline after a drop in crude oil prices.

BOTTOM LINE: The Portfolio finished higher today on gains in my Semi longs, Medical longs, Computer longs and Commodity shorts. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was modestly positive today as the advance/decline line finished about even, sector performance was mostly positive and volume was above average. Measures of investor anxiety were mostly higher into the close. Today's overall market action was neutral. The recent plunge in commodity prices will result in another round of excellent inflation data over the coming months. Inflation expectations, a key component of inflation, are diminishing rapidly. Investors are withdrawing money from Treasury bond mutual funds that protect against inflation for the first time since they began trading in 1997. The 10-year yield has been stable of late despite the fall in commodity prices. This is likely the result of economic data pointing to a modest acceleration in economic activity. I suspect the 10-year yield will head modestly lower from current levels through year-end as U.S. economic growth fails to exceed average rates and inflation continues to decelerate meaningfully.

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