Stocks Finish Mildly Higher on Decline in Long-term Rates and Fall in Oil

Indices
S&P 500 1,531.85 +.09%
DJIA 13,649.97 +.28%
NASDAQ 2,670.02 +.13%
Russell 2000 853.24 +.11%
Wilshire 5000 15,471.17 +.10%
Russell 1000 Growth 609.55 +.06%
Russell 1000 Value 872.69 +.13%
Morgan Stanley Consumer 734.60 -.15%
Morgan Stanley Cyclical 1,104.40 +.35%
Morgan Stanley Technology 638.97 +.27%
Transports 5,279.32 +.92%
Utilities 506.46 +.26%
MSCI Emerging Markets 139.20 +1.16%

Sentiment/Internals
Total Put/Call .81 -5.81%
NYSE Arms 1.13 +82.11%
Volatility(VIX) 15.16 +2.99%
ISE Sentiment 171.0 +25.0%

Futures Spot Prices
Crude Oil 72.05 -1.04%
Reformulated Gasoline 234.50 +1.53%
Natural Gas 6.41 -.56%
Heating Oil 209.10 -.20%
Gold 662.30 +1.15%
Base Metals 260.37 +1.01%
Copper 362.40 +.82%

Economy
10-year US Treasury Yield 5.14% -4 basis points
US Dollar 81.45 -.01%
CRB Index 321.23 +.12%

Leading Sectors
Alternative Energy +3.86%
Engineering&Construction +1.47%
Biotech +.70%

Lagging Sectors
Restaurants -.72%
Computer Hardware -.81%
Homebuilders -1.23%

Evening Review
Market Performance Summary
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Sector Performance
ETF Performance
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In Play

Afternoon Recommendations
Bank of America:
- Rated (CVA) Buy, target $30.

Oppenheimer:
- Rated (SQNM) Buy, target $8.

BMO Capital:
- Rated (QLGC) Outperform, target $21.

Afternoon/Evening Headlines
Bloomberg:
- Alcoa Inc.(AA), bidding to require rival Alcan(AL) in a hostile takeover, said second-quarter profit fell 3.9% as costs for shutdowns at two US smelters eroded the benefit of rising prices. The shares fell .56 in after-hours trading to $41.79.
- Shares of Akamai Technologies(AKAM) will replace Biomet(BMET) in the S&P 500. The stock rose 4.6% in after-hours trading.
- The Cheesecake Factory(CAKE) reported total revenues increase approximately 15.7% in the second quarter. The stock rose 4.5% in after-hours trading.
- WD-40 Company(WDFC) reported net sales for the third quarter increased 6.2% over the third quarter of last year. The stock fell 10.3% in after-hours trading.

AP:
- The head of the US National Hurricane Center was reassigned after more than 20 of the center’s employees called for his ouster.

Reuters:
- Hedge fund Moore Capital Management LLC has taken a 5.08% stake in US home builder Beazer Home USA(BZH), according to a regulatory filing on Monday.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Biotech longs, Medical longs and Semi longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was mixed today as the advance/decline line finished about even, sector performance was mixed and volume was about average. Measures of investor anxiety were about average into the close. Today's overall market action was mildly bullish. Over the weekend, Barron's had a positive mention on one of my longs, Gilead Sciences (GILD). I think that the recent pullback is over and the stock can be purchased around current levels. It remains my favorite biotech long. I went to the Apple (AAPL) store again over the weekend. It was even more crowded this time. About the same number of people were around the iPhone stand, however, more were looking at the computers. I suspect the "halo effect" is intensifying more than most analysts had expected. Just like last year before oil plunged $28 per barrel in six months, numerous investment managers have come on CNBC of late saying oil service is their favorite sector and has the largest weighting in their portfolios. I still believe this will be one of the worst performing sectors during the second half of the year as oil begins another substantial decline later this quarter. Semis have traded especially well of late. One of my longs, Broadcom (BRCM), has pulled back and in my opinion is providing investors an excellent entry point in the shares for strong outperformance through year-end. As has been the case often of late, many stocks substantially outperformed the major averages today. The 10-year yield finished near session lows, falling 4 basis points ahead of Bernanke's speech on inflation. I suspect the yield will fall further before week's end. One of the interesting things about the current rally is the lack of insider selling. Insider selling remained very muted again last week even as stocks approached highs. This is a big positive.