Wednesday, April 11, 2007

Stocks Finish Lower After FOMC Minutes and Rise in Gas Prices

Indices
S&P 500 1,438.87 -.66%
DJIA 12,484.62 -.71%
NASDAQ 2,459.31 -.74%
Russell 2000 808.24 -.77%
Wilshire 5000 14,538.44 -.64%
Russell 1000 Growth 567.24 -.67%
Russell 1000 Value 831.59 -.63%
Morgan Stanley Consumer 708.38 -.69%
Morgan Stanley Cyclical 970.02 -.42%
Morgan Stanley Technology 568.99 -.86%
Transports 4,970.02 -.49%
Utilities 513.17 -.42%
MSCI Emerging Markets 120.99 +.09%

Sentiment/Internals
Total Put/Call .99 -9.17%
NYSE Arms 1.03 +5.05%
Volatility(VIX) 13.49 +6.39%
ISE Sentiment 136.0 +10.57%

Futures Spot Prices
Crude Oil 62.04 +.24%
Reformulated Gasoline 215.50 +1.53%
Natural Gas 7.81 -.80%
Heating Oil 187.28 +.90%
Gold 682.0 +.07%
Base Metals 273.57 -.02%
Copper 357.50 +1.39%

Economy
10-year US Treasury Yield 4.73% +1 basis point
US Dollar 82.64 -.07%
CRB Index 316.58 +.04%

Leading Sectors
Airlines +.53%
Hospitals +.50%
Engineering & Construction +.33%

Lagging Sectors
Oil Tankers -1.41%
Homebuilders -1.61%
REITs -1.65%

Evening Review
Detailed Market Summary
Market Gauges
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Style Performance
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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
Deutsche Bank:
- Rated (GS), (IFIN), (C), (LEH), (BK), (MEL), (STT), (NT), (ET), (SCHW) and (MER) Buy.
- Rated (PNC), (NCC), (USB), (KEY), (FITB) and (TCB).

Afternoon/Evening Headlines
Bloomberg:
- NovaStar Financial(NFI), a subprime home lender, announced it’s formally exploring “a range of strategic alternatives,” including a possible sale. The shares are soaring 17% after-hours.
- Three former Duke Univ. lacrosse players were cleared of sexually assaulting a stripper, ending a racially charged case that North Carolina’s top lawman said was pushed along by an “unchecked” prosecutor.
- Comcast Corp.(CMCSA) agreed to buy online movie-ticket seller fandango.
- Genentech Inc.(DNA) said first-quarter profit rose 68%, driven by sales of its cancer drugs Avastin and Rituxin. The stock is slightly higher after-hours.
- Research In Motion’s(RIMM) fourth-quarter profit soared after the company introduced new BlackBerry e-mail devices and took customers from rivals. The company also said a SEC informal probe had been converted to formal. The shares fell 6.8% after-hours.
- General Motors(GM) has pulled its ads from radio host Don Imus’s morning show after his remarks about the Rutgers University women’s basketball team.
- US Democratic Senator Charles Schumer and other members of a key banking committee said the federal government should spend “hundreds of millions of dollars” to bail out subprime mortgage borrowers facing foreclosure.
- Kraft Foods(KFT) may generate as much as $2 billion in free cash flow a year that could be used to acquire companies, a Davenport analyst said.
- American Eagle Outfitters(AEO) said March same-store-sales soared 20.0% versus estimates of a 10.9% gain. The shares rose 4% after-hours.
- Advanced Magnetics(AMAG) reported positive results from two additional human studies of its intravenous iron replacement therapy. The shares surged 13% after-hours.

Nikkei English News:
- Sony Corp.(SNE) will become the first company to mass-produce organic electroluminescent televisions when it begins making them later this year. Sony will start making about 1,000 of the 11-inch panels a month as soon as this year. The televisions emit light when an electrical charge is passed through them, and are thinner, lighter and have a better picture quality than existing liquid-crystal displays.

AFP:
- The European Union will consider the creation of a “strategic reserve” of border guards to prevent the flow of illegal immigrants, citing EU parliament lawmaker Gerard Deprez.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Telecom longs and Computer longs. I added (IWM)/(QQQQ) hedges in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was negative today as the advance/decline line finished lower, almost every sector declined and volume was above average. Measures of investor anxiety were slightly above average into the close. Today's overall market action was bearish. I suspect today's weakness was more related to the continuing rise in gas prices rather than the FOMC comments, which were not unexpected. The 10-year yield and U.S. dollar had just slight reactions to the minutes. It looks like more near-term market choppiness is likely before what I suspect will be another push higher in the major averages.

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