Stocks Finish Near Session Highs on Diminished Credit Fears, Bargain-Hunting, Short-Covering

Indices
S&P 500 1,473.91 +1.03%
DJIA 13,358.31 +.70%
NASDAQ 2,583.28 +.82%
Russell 2000 784.23 +.82%
Wilshire 5000 14,806.47 +.97%
Russell 1000 Growth 593.15 +1.08%
Russell 1000 Value 827.26 +.97%
Morgan Stanley Consumer 707.93 +.78%
Morgan Stanley Cyclical 1,046.76 +2.03%
Morgan Stanley Technology 639.23 +.89%
Transports 5,094.67 +1.10%
Utilities 478.42 +.76%
MSCI Emerging Markets 134.99 +1.49%

Sentiment/Internals
Total Put/Call 1.15 -11.54%
NYSE Arms .55 -60.02%
Volatility(VIX) 20.87 -13.65%
ISE Sentiment 133.0 +.76%

Futures Spot Prices
Crude Oil 76.69 -.43%
Reformulated Gasoline 208.56 -.77%
Natural Gas 6.54 +5.2%
Heating Oil 206.55 -.37%
Gold 676.80 +.67%
Base Metals 252.50 -.46%
Copper 358.90 +1.18%

Economy
10-year US Treasury Yield 4.80% +4 basis points
US Dollar 80.85 -.12%
CRB Index 320.99 +.43%

Leading Sectors
Alternative Energy +3.03%
Engineering & Construction +2.81%
Steel +2.08%

Lagging Sectors
Tobacco -.39%
Computer Services -.47%
Biotech -.81%

Evening Review
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In Play

Afternoon Recommendations
Piper Jaffray:
- Upgraded (VCLK) to Outperform.

Afternoon/Evening Headlines
Bloomberg:
- US stocks rebounded after the worst two-day skid since 2003 after Wall Street’s biggest securities firms, led by Citigroup(C), Goldman Sachs(GS) and Bank of America(BAC), said the sell-off made banks, homebuilders and retailers relative bargains.
- Sun Microsystems(SUNW), the world’s fourth largest maker of server computers, reported net income of $329 million, exceeding analysts’ estimates. The shares surged 9.8% in after-hours trading.
- Banks led by Bank of America(BAC) agreed to provide as much as $21 billion of debt financing to fund Blackstone Group’s(BX) leveraged buyout of Hilton Hotels(HLT), the second-largest US hotel chain.
- Treasuries declined the most in two weeks as US stocks rebounded, suggesting investors were becoming more comfortable with risk after last week’s global equity sell-off.
- CB Richard Ellis(CBG) today reported second quarter revenue increased 64.9% and raised 2007 guidance. The shares jumped 9.4% in after-hours trading.
- Ethanol in Chicago fell to a three-week low on concern there is an oversupply of the grain-based additive and as gasoline declined.
- The average US pump price for regular gasoline fell 8.2 cents to $2.88 a gallon in the week ended today, the government said.

BOTTOM LINE: The Portfolio finished higher today on gains in my Retail longs, I-Banking longs, Semi longs and Medical longs. I did not trade in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished mildly higher, most sectors rose and volume was heavy. Measures of investor anxiety were above average into the close. Today's overall market action was bullish. Many quality growth stocks posted gains substantially above those in the major averages once again. These stocks held up much better during the sell-off and are now leading to the upside. This is significant and continues to be ignored. Cyclicals were also outperformers today as extreme economic pessimism subsided slightly. The 10-year yield rose 4 basis points, finishing near session highs, as well. Recent worries over the advance/decline line seem overdone to me. The NYSE cumulative advance/decline line isn't even below its 50-week moving average yet, which is where it has found support a couple of times over the last five years since the 100% gain in the S&P 500 began. The CBOE total put/call finished at an above average 1.15. My intraday gauge of investor angst also finished at an above-average level, despite today's gains. I still suspect we will see some gains in Asia and Europe before the open tomorrow here that could further boost U.S. stocks. It is quite telling, in my opinion, that once again insider selling was very muted last week and remains near levels more associated with market bottoms than market tops. Why aren't I-banking execs selling if they know their firms' or clients' problems will lead to a systemic crisis that will result in a negative economic event? In fact, the banking, investment and savings/loan sectors saw the greatest insider buying last week. This is a key development that is also being ignored.