Wednesday, June 13, 2007

Stocks Finish at Session Highs on Large Reversal Lower in Lont-term Rates and Positive Economic Data

S&P 500 1,515.67 +1.52%
DJIA 13,482.35 +1.41%
NASDAQ 2,582.31 +1.28%
Russell 2000 832.54 +1.32%
Wilshire 5000 15,259.05 +1.43%
Russell 1000 Growth 598.03 +1.36%
Russell 1000 Value 869.99 +1.51%
Morgan Stanley Consumer 737.42 +1.11%
Morgan Stanley Cyclical 1,076.04 +2.06%
Morgan Stanley Technology 612.05 +1.36%
Transports 5,080.45 +1.71%
Utilities 498.13 +2.04%
MSCI Emerging Markets 127.03 +1.18%

Total Put/Call .95 -13.64%
NYSE Arms .46 -61.29%
Volatility(VIX) 14.73 -11.64%
ISE Sentiment 137.0 +26.85%

Futures Spot Prices
Crude Oil 66.08 +1.12%
Reformulated Gasoline 215.08 +.74%
Natural Gas 7.61 -.90%
Heating Oil 196.05 +2.43%
Gold 655.20 +.32%
Base Metals 250.37 -.73%
Copper 330.70 +.61%

10-year US Treasury Yield 5.20% -9 basis points
US Dollar 83.04 +.18%
CRB Index 311.68 +.64%

Leading Sectors
Oil Service +2.94%
REITs +2.20%
Utilities +2.04%

Lagging Sectors
Gaming +.18%
Airlines -.06%
HMOs -.72%

Evening Review
Market Performance Summary
Market Gauges
ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Economic Calendar
Timely Economic Charts
PM Market Call
After-hours Movers
After-hours Stock Quote
In Play

Afternoon Recommendations
- None of note

Afternoon/Evening Headlines
- Steel Dynamics(STLD) agreed to buy closely held galvanizing company The Techs for $360 million.
- US Energy Secretary Bodman said he has “concerns” about lower refinery output. Refinery Utilization fell .4% to 89.2% of US capacity last week. It was the lowest since May 4 and the lowest utilization rate in 15 years for the second week in June. This decline in utilization comes on top of a recent report that said refiners cut expansion plans by 500,000 barrels per day earlier this year partly due to worries over “demand.”
- Orange-juice futures fell to the lowest in almost 15 months on forecasts for rain in the biggest orange-growing county in Florida.
- A US Army Humvee explodes into a swirl of brown smoke. A tank catches fire in an anonymous urban neighborhood. Masked men yell “God is most great” as they fire mortars form a field at unseen targets.
- Sanofi-Aventis SA’s diet drug Acomplia shouldn’t be approved for sale in the US because the company hasn’t proved its benefits outweigh its risk, an advisory panel said.
- Hoku Materials, a wholly-owned subsidiary of Hoku Scientific(HOKU) established to manufacture polysilicon for the solar market, and Suntech Power(STP) today announced the signing of a definitive contract for Hoku’s sale and delivery of polysilicon to Suntech over a ten-year period. The stock soared 81% in after-hours trading.
- US 10-year Treasuries surged the most since February after yields at a five-year high convinced speculators that rising borrowing costs will curb the economy and inflation.
- The US SEC increased restrictions on naked short selling after companies accused traders of using the tactic to manipulate share prices.

BOTTOM LINE: The Portfolio finished higher today on gains in my Software longs, I-Banking longs, Medical longs, Biotech longs and Retail longs. I did not trade 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, almost every sector gained and volume was heavy. Measures of investor anxiety were slightly above average into the close. Today's overall market action was very bullish. Cyclicals were especially strong as investors cheered the Beige Book report, which painted a moderate growth/moderate inflation picture. Despite today's sharp jump in stocks and better-than-expected economic data, the 10-year yield finished near session lows, reversing 12 basis points from session highs. Google (GOOG) did not participate today, however, I suspect the stock made a bottom this morning. As for Apple (AAPL), the stock is 101% higher over the last 12 months. I suspect it will consolidate this gain for a bit longer, however, I still expect it to trade substantially higher than current levels before year-end. These two remain my two largest long positions. The S&P 500 successfully held its 50-day moving-average. I suspect that the recent garden-variety pullback we have had is over. The Nikkei futures are indicating an up 200 open in Japan. I expect U.S. stocks and bonds to build on today's gains tomorrow.

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