Tuesday, September 11, 2007

Stocks Finish Near Session Highs on Less Economic Pessimism, Short-Covering, Bargain-Hunting

Indices
S&P 500 1,471.49 +1.36%
DJIA 13,308.39 +1.38%
NASDAQ 2,597.47 +1.50%
Russell 2000 782.27 +1.62%
Wilshire 5000 14,771.15 +1.35%
Russell 1000 Growth 594.60 +1.36%
Russell 1000 Value 821.25 +1.33%
Morgan Stanley Consumer 712.80 +1.14%
Morgan Stanley Cyclical 1,001.74 +.94%
Morgan Stanley Technology 643.38 +1.67%
Transports 4,774.07 +1.70%
Utilities 492.12 +1.14%
MSCI Emerging Markets 134.72 +1.33%

Sentiment/Internals
Total Put/Call 1.02 -12.82%
NYSE Arms .49 -63.25%
Volatility(VIX) 25.27 -7.71%
ISE Sentiment 108.0 +24.14%

Futures Spot Prices
Crude Oil 78.28 +1.02%
Reformulated Gasoline 198.20 +.17%
Natural Gas 5.94 +.81%
Heating Oil 218.15 +.46%
Gold 721.30 +1.28%
Base Metals 229.57 +1.70%
Copper 338.05 +3.82%

Economy
10-year US Treasury Yield 4.36% +4 basis points
US Dollar 79.68 -.16%
CRB Index 316.97 +.70%

Leading Sectors
Airlines +2.39%
Gaming +2.13%
Retail +2.08%

Lagging Sectors
Oil Service +1.0%
Defense +.83%
Homebuilders +.45%

Evening Review
Market Performance Summary
WSJ Data Center
Sector Performance
ETF Performance
Style Performance
Commodity Movers
Market Wrap CNBC Video(bottom right)
S&P 500 Gallery View
Timely Economic Charts
GuruFocus.com
PM Market Call
After-hours Commentary
After-hours Movers

After-hours Stock Quote
In Play


Afternoon Recommendations
Oppenheimer:

- Rated (NPSP) Buy, target $12.

CSFB:
- Rated (BBT), (CNB) and (ZION) Outperform.
- Rated (UB) and (WAL) Underperform.

Afternoon/Evening Headlines
Bloomberg:
- US stocks rallied the most this month on growing evidence consumers are weathering an economic slowdown and bolstering profit growth.
- GMAC LLC, the auto and home lender formerly wholly owned by GM Corp.(GM), said it will receive as much as $21.4 billion in asset-backed funding facilities from Citigroup Inc.(C).
- Texas Instruments(TXN) lowered the high end of its sales forecast amid fresh competition for orders in the wireless market. The stock fell 2.3% in after-hours trading.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Biotech 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 very positive today as the advance/decline line finished substantially higher, every sector gained and volume was below average. Measures of investor anxiety were above-average into the close. Today's overall market action was bullish. Volume will likely remain relatively light through week's end ahead of many potential market-moving catalysts next week. Every sector I follow rose today, with the biotech, airline, gaming, retail, disk drive, computer hardware, alternative energy and steel sectors all posting 2%+ gains. The yen is at session lows vs. the dollar, and the 10-year yield is rising 4 basis points to session highs, which are positives. Oil is at session highs despite the EIA cutting third-quarter global demand growth by 100,000 barrels per day, MasterCard saying that U.S. filling station receipts were weakening and OPEC's announced production increase. The gasoline crack spread has plunged to $5.01 per barrel from $37.85 per barrel in May, which bodes poorly for the refiners. Johnson Redbook reported today that weekly retail sales rose 2.8% vs. a 2.4% increase the prior week. This is the best showing since a 2.9% gain the week of Aug. 7, right before the credit turmoil reached crisis proportions. This week's 2.8% gain is back near long-term average rates and is up from a 1.4% increase in early July. While 2.8% isn't great, the improvement is significant considering what has been priced into retail stocks and the market. The demise of the consumer has been predicted for years, and the latest credit turmoil, mortgage resets and housing price declines were certain to result in an imminent implosion in consumer spending, according to many. I still see no signs that this is happening. As unthinkable as it appears right now, oil will likely decline meaningfully from current levels over the intermediate term, just as it did last year. This could further help consumer spending to continue to defy the many bears.

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