Monday Close

Indices
S&P 500 1,206.83 +.56%
Dow 10,804.51 +.28%
NASDAQ 2,501.04 +.46%
Russell 2000 630.30 +.55%
DJ Wilshire 5000 11,893.56 +.62%
S&P Barra Growth 579.84 +.37%
S&P Barra Value 622.65 +.75%
Morgan Stanley Consumer 586.73 +.60%
Morgan Stanley Cyclical 779.74 +.37%
Morgan Stanley Technology 470.34 +.26%
Transports 3,854.60 +.59%
Utilities 360.82 +1.88%
Put/Call 1.01 +3.06%
NYSE Arms .48 -53.40%
Volatility(VIX) 12.39 -3.20%
ISE Sentiment 142.00 +9.23%
US Dollar 81.97 +.68%
CRB 317.24 -.43%

Futures Spot Prices
Crude Oil 54.85 -.18%
Unleaded Gasoline 150.60 -.03%
Natural Gas 7.16 +.31%
Heating Oil 153.40 -.13%
Gold 441.50 -.02%
Base Metals 129.73 -.96%
Copper 147.00 -.03%
10-year US Treasury Yield 4.51% -.75%

Leading Sectors
Biotech +2.80%
Airlines +2.0%
Utilities +1.88%

Lagging Sectors
Disk Drives -.41%
Homebuilders -.48%
Iron/Steel -1.95%

After-hours Movers
None of note

Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
- Goldman Sachs: Reiterated Outperform on MO, NUE and DNA.
- Piper Jaffray: Raised DNA to Outperform, target $66.

After-hours News
US stocks finished modestly higher, spurred by late-day gains in the Biotech sector after news from Genentech that its Avastin drug prolonged survival in lung-cancer patients. After the close, Nippon Steel and other big steelmakers are close to getting prices increases of as much as 20% for steel plate and sheet sold to automobile companies, Nikkei English News reported. China Telecom gained approval to open a chain of Internet cafes, allowing it to boost customers for its broadband network, the Wall Street Journal reported. Walt Disney President Robert Iger, who was named today as successor to CEO Michael Eisner, told CNBC he would consider reestablishing a partnership with Pixar, Bloomberg reported. Microsoft plans to start a service where clients will pay to be listed alongside in its MSN search results, Bloomberg reported. A California judge struck down the state’s laws banning gay weddings, saying that measures defining marriage as between a man and a woman are unconstitutional, Bloomberg reported. The FCC would have to consider regulating indecent material aired on cable and satellite tv under a bill introduced today by Democratic Senator Jay Rockefeller and Republican Senator Kay Bailey Hutchinson, Bloomberg reported. Walt Disney President Iger said he wants to talk to Pixar animation studio CEO Steven Jobs about renewing their film-distribution partnership, Bloomberg said.

BOTTOM LINE: The Portfolio finished higher today on gains in my Energy-related longs and Networking shorts. I took profits in a few shorts in the afternoon, thus leaving the Portfolio Market Neutral. The tone of the market improved into the afternoon as the advance/decline line finished modestly higher, most sectors rose and volume remained light. The Biotech sector outperformed substantially, spurred by gains in Genentech, while the Steel sector remained under pressure throughout the afternoon on continuing worries over the possibility of future price declines in the commodity. Overall, today’s market action was decent, considering another rise in energy prices. I continue to expect US stocks to trade mixed-too-weaker until energy prices and long-term interest rates stabilize.

Mid-day Report

Indices
S&P 500 1,200.46 +.03%
Dow 10,766.60 -.14%
NASDAQ 2,038.75 -.14%
Russell 2000 626.59 -.04%
DJ Wilshire 5000 11,826.21 +.05%
S&P Barra Growth 577.14 -.09%
S&P Barra Value 618.84 +.13%
Morgan Stanley Consumer 583.70 +.09%
Morgan Stanley Cyclical 776.27 -.08%
Morgan Stanley Technology 467.93 -.25%
Transports 3,828.69 -.09%
Utilities 358.73 +1.30%
Put/Call 1.13 +15.31%
NYSE Arms .86 -16.50%
Volatility(VIX) 12.92 +.94%
ISE Sentiment 142.00 +9.23%
US Dollar 82.10 +.84%
CRB 316.70 -.59%

Futures Spot Prices
Crude Oil 54.95 +.86%
Unleaded Gasoline 152.00 +.03%
Natural Gas 7.19 +6.25%
Heating Oil 154.50 +.08%
Gold 441.60 -1.16%
Base Metals 129.73 -.96%
Copper 147.05 -.57%
10-year US Treasury Yield 4.52% -.49%

Leading Sectors
Airlines +1.45%
Utilities +1.34%
Hospitals +.79%

Lagging Sectors
Homebuilders -.93%
Internet -1.21%
Iron/Steel -2.72%

Market Movers
ASCL +16.62% after IBM agreed to buy it for about $1.1 billion.
AZO -10.4% after Office Depot hired away its CEO.
HANS +25.24% after beating 4Q estimates.
CTT +12.1% after beating 2Q estimates and giving positive 05 guidance.
MSTR +7.57% on Jeffries upgrade to Buy.
ONXX +7.68% on technical rebound.
AVCT -31.6% after cutting 1Q estimates substantially.
FFIV -6.89% on Pacific Crest downgrade to Sector Perform.
NX -5.1% on continuing worries over the possibility of future price weakness in base metals.
ELBO -7.01% after beating 4Q estimates, lowering 1Q outlook and raising 05 guidance.
CMC -7.54% on continuing worries over the possibility of future price weakness in base metals.

Mid-day Overview
Market Internals
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Data
None of note

Recommendations
- Goldman Sachs: Reiterated Outperform on AIG, LVS, IBM and MO. Reiterated Underperform on PSA.
- Smith Barney: Said to Buy BCII on pullback, target $37. Reiterated Sell on EAT, target $36. Reiterated Buy on ALL, target $59. Reiterated Buy on WMT, target $65.
- Banc of America: Raised BBBB to Buy, target $20. Downgraded AGCC to Sell, target $2.
- JP Morgan: Raised WMB to Overweight, target $23. Downgraded MANH to Underweight. Rated FL Overweight. Raised LIN to Overweight.
- Bear Stearns: Raised SYNA to Outperform, target $32.
- Deutsche Bank: Raised PBG to Buy, target $34.
- Thomas Weisel: Raised PBY to Outperform.
- Barron’s: Said shares of Decorator Industries(DII) may double in the next few years, especially if demand revives for factory-built homes.

Mid-day News
US stocks are slightly lower mid-day on worries over stubbornly high energy prices. US media coverage of last year’s election was three times more likely to be negative toward President Bush than Democratic challenger John Kerry, according to a study by the Project for Excellence in Journalism that is affiliated with the Columbia University Graduate School of Journalism, Reuters reported. The 11 member-countries of OPEC, replete with cash from high oil prices, have been importing heavily from Europe, the US and Asia, thus cushioning the impact of the high energy prices on the world economy, the Wall Street Journal reported. Affiliated Computer Services, the largest processor of student-loan payments, is in talks to acquire Mellon Financial’s outsourcing unit, the Wall Street Journal said. Investments in liquefied natural gas projects may climb to about $67 billion in the next five years, with shipping accounting for a third of that, Lloyd’s List reported. Yahoo! plans to challenge Google in the online-ad market for small to mid-sized Web publishers, the Wall Street Journal reported. Maurice “Hank” Greenberg plans to step down as CEO of AIG as early as this week, the Wall Street Journal reported. Time Warner shares have fallen 10% since December because of doubts about the company’s joint $17.6 billion bid with Comcast for Adelphia’s cable systems, and many investors think the shares now represent an opportunity, the Wall Street Journal said. NY Times Co. is considering charging readers to access news on its Internet site, as online readership over the last decade has surpassed paid print subscribers, the Times reported. OPEC may increase output to meet rising demand for oil and ease prices that remain above $50/bbl., AFP reported. A group of Bloggers with liberal views are hosting telephone conference calls to share reporting with mainstream news organizations and compete with conservative Web commentators, the NY Times reported. Air pollution from other countries contaminates the air, lakes and streams in the US, USA Today reported. Toyota Motor today is expected to announce that it will become the auto sponsor for the NBA and the Women’s NBA, the Wall Street Journal reported. OAO Yukos Oil may next month resume shipping crude abroad through pipelines, Interfax reported. Streets in the Lebanese capital, Beirut, today filled with more than 300,000 people gathering for a rally by opposition supporters demanding an end to Syrian control over the nation, AFP reported. Speculation of further increases in US Treasury note yields is at an all-time high, as judged by the number of short positions taken in the past two weeks, though the sentiment behind the move is likely wrong, Merrill Lynch’s chief North American economist said. Two Johnson & Johnson patents for coronary stents were infringed by competitor Medtronic, a US jury decided, paving the way for a second trial on damages, Bloomberg reported. The US dollar is rising the most against the euro since Feb.7 as some traders said a decline last week to the lowest since the beginning of the year was excessive, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my Energy-related longs and Networking shorts. I added a few new shorts this morning, thus leaving the Portfolio’s market exposure 25% net short. One of my new shorts is NTE and I am using a $28.75 stop-loss on this position. The tone of the market is mildly negative as the advance/decline line is lower, sector performance is mixed and volume is light. Measures of investor anxiety are mixed. Today’s overall market action is slightly negative, considering the lack of leadership and last week’s losses. It is a positive to see the US dollar rising and the CRB Index falling. Long-term interest rates may head a little higher in the short-run, however I continue to expect rates to head back down later in the year. I expect US stocks to trade mixed-to-lower from current levels into the close on worries over rising energy prices and technical deterioration.

Monday Watch

Weekend News
China's steel production capacity will rise to 350 million metric tons this year as new mills start operating, 21st Century Business Herald said. Clear Channel Communications, the biggest US radio broadcaster, is planning a bid for Mean Fiddler Music Group Plc, the Independent reported. Hamas, a radical Islamic movement, will take part in Palestinian legislative elections in July, ending the group's boycott of mainstream politics, AFP reported. Italian intelligence officers in Iraq didn't tell US forces about the release of kidnapped anti-war journalist Giuliana Sgrena before a US patrol fired on the car carrying her, La Repubblica reported. Syrian President al-Assad has agreed to withdraw all military and intelligence personnel from Lebanon, AFP reported. EBay CEO Whitman has withdrawn as a candidate to replace Michael Eisner as Walt Disney's CEO, the Wall Street Journal reported. Charles Schwab is cutting prices and adding services as the company's founder, Charles R. Schwab, seeks to reclaim customers who have defected, the NY Times reported. Howard Stringer, who was named Sony Corp.'s first non-Japanese CEO this week, expects change to come slowly at the consumer-electronics maker, Barron's reported. The number and value of leveraged buyouts among US businesses are increasing to their highest levels in more than a decade as companies sell off lagging divisions, Barron's reported. Commercial airline travelers in the US are finding it much more difficult to easily redeem frequent-flier miles granted by major airlines on flights and times of their choosing, the NY Times reported. Republican Senator Ted Stevens, chairman of the US Senate Commerce Committee, said that cable providers should also offer groups of channels free of indecent material, Reuters reported. Israel has made plans for air and ground attacks on targets in Iran should diplomatic efforts fail to halt an Iranian nuclear program, the London-based Times reported. OPEC this week may informally allow members to pump oil above official output limits, Reuters reported. Walt Disney's board is close to announcing that President Robert Iger will succeed Michael Eisner as CEO, Dow Jones Newswires said. China's President Hu Jintao called for an end to breakneck economic expansion and urged more focus on the quality of growth to ease pressure on the country's environment and energy supplies, the Xinhua news agency reported. Motorola and Chinese phone-equipment make Huawei Technologies are open to looking at Siemens AG's mobile-phone unit, weekly magazine Focus said. Two-thirds of Massachusetts residents support stem-cell research using human embryos, a Boston Globe poll showed today. Iraq-based terrorist Abu Musab al-Zarqawi may be plotting ways to attack schools, movie theatres, restaurants and other so-called soft targets in the US, Time magazine reported. Brazil's economy may expand 4% to 5% in 2005 as exports rise and the currency strengthens, O Globo reported. Federal lawmakers are considering restrictions to prevent the spread of tribal casinos into urban areas in California and other states, away from reservations, the San Francisco Chronicle reported. JC Penney or Nordstrom may purchase stores closed by Federated Department Stores, Barron's said. Taiwan President Chen Shui-bian has asked for a million of the island's people to join a protest march this week against China's planned anti-secession law, the Financial Times reported. Qingdao Haier, a unit of China's biggest home-appliance maker, has orders an undisclosed number of flat panel television screens from AU Optronics to start selling TVs in Europe, the Commercial Times reported. Las Vegas Sands is close to signing up Marriott International, Starwood Hotels & Resorts Worldwide and several other hotel groups to its $1.8 billion casino project in Macau, the Asian Wall Street Journal reported. Och-Ziff Capital Management and Cerberus Capital Management are among hedge funds recruiting executives from private equity companies to help them expand in leveraged buy-outs, the Financial Times reported. Macquarie Bank Ltd., AES Corp., Genting International Plc, Keppel Corp. and Meiya Power Co. may bid for El Paso Corp's Asian power plants, Project Finance International reported. Iran played down the significance of trade incentives offered by the European Union and the US, saying they won't deprive the country of its "right" to build up nuclear power, Bloomberg reported. Wal-Mart Stores said March sales are rising within its forecast as shoppers spend more on food, Bloomberg said. US Secretary of State Condoleezza Rice today opposes a plan by China's legislature to pass a law authorizing an attack on Taiwan should the island declare independence, Bloomberg reported. Philip Morris agreed to buy 40% of PT HM Sampoerna Tbk, Indonesia's third-largest tobacco company, for $2 billion, Bloomberg said. Italy's ENI SpA, ChevronTexaco Corp. and China National Offshore Oil Corp. are all considering bids for Unocal Corp., the Wall Street Journal reported.

Weekend Recommendations
- Bulls and Bears: Had guests that were positive on VLO, XOM, DIS, BRK/B, HON, SBUX, MSFT, MANH, mixed on IPXL, BRO, ELY and negative on TOL, EBAY.
- Cavuto on Business: Had guests that were mixed on NKE, PMMAY, PEP and SWC.
- Barron's: Had positive comments on JPM, WM, BAC, MRK, PFE, KMG, OXY, DOW and FCX. Had negative comments on WMT and ERICY.
- Forbes: Had a negative column on RIMM.
- Goldman Sachs: Reiterated Outperform on BBG, EBAY, ACS and HOT.

Night Trading
Asian indices are mostly lower, -.50% to +.25% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.16%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note
Company/Estimate
CMVT/.09
ELBO/1.62
LBTYA/-.03
OMX/.18
PDLI/-.15
SSI/.23
URI/.26
WPSC/.35

Splits
AET 2-for-1

Economic Data
None of note

BOTTOM LINE: I expect US stocks to open modestly higher in the morning on a bounce from last week's declines. However, shares may weaken later in the day on continuing worries over the recent rise in energy prices/interest rates and rising geopolitical tensions. The Portfolio is Market Neutral heading into the week.

Weekly Outlook

There are a number of important economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports for the week include:

Mon. - None of note
Tues. - Empire Manufacturing, Advance Retail Sales, Business Inventories, Net Foreign Security Purchases, NAHB Housing Market Index
Wed. - Current Account Balance, Housing Starts, Industrial Production
Thur. - Initial Jobless Claims, Leading Indicators, Philadelphia Fed.
Fri. - Import Price Index, Preliminary Univ. of Mich. Consumer Confidence

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. - Comverse Technology(CMVT), Electronics Boutique(ELBO), OfficeMax(OMX)
Tues. - Albertson's(ABS), Lehman Brothers(LEH), Wynn Resorts(WYNN), Liberty Media(L)
Wed. - Bear Stearns(BSC), General Mills(GIS)
Thur. - Adobe Systems(ADBE), AnnTaylor Stores(ANN), Barnes & Noble(BKS), Cintas Corp.(CTAS), EchoStar Communications(DISH), FedEx Corp.(FDX), Goldman Sachs(GS), Morgan Stanley(MWD), Nike Inc.(NKE), Jabil Circuit(JBL)
Fri. - None of note

Other events that have market-moving potential this week include:

Mon. - CSFB Global Services Conference, SG Cowen Health Care Conference, Fed's Yellen speaks
Tue. - SG Cowen Health Care Conference, CSFB Global Services Conference, Merrill Lunch Chemicals Conference, Banc of America Consumer Conference, AG Edwards Energy Conference
Wed. - Banc of America Consumer Conference, SG Cowen Health Care Conference, CSFB Global Services Conference, AG Edwards Energy Conference, Merrill Lynch Chemicals Conference
Thur. - Banc of America Consumer Conference, Semi Book-to-Bill, AG Edwards Energy Conference, SG Cowen Health Care Conference
Fri. - None of note

BOTTOM LINE: I expect US stocks to finish the week modestly lower on continuing worries over higher interest rates and technical deterioration. Investors will likely pay closer attention than usual to the report on Net Foreign Security Purchases due to recent worries over talk of foreign Central Bank "diversification." The Import Price Index on Fri. will also garner attention and is likely to exceed expectations of a .7% increase due to the recent rise in commodities prices. Homebuilding stocks may continue to underperform on worries over rising long-term interest rates and disappointing fundamentals due to one of the wettest winters in US history. I will look to accumulate shares in this group on any substantial pullback from current levels as I view these problems as short-term in nature. Overall, I expect US stocks to trade mixed-to-weaker over the next few weeks until commodity prices and long-term interest rates begin to stabilize. My trading indicators are mostly bearish and the Portfolio is Market Neutral(% Long - % Short=0) heading into the week.

Economic Week in Review

ECRI Weekly Leading Index 135.20 +.22%

Consumer Credit for January rose $11.5B versus estimates of a $5.2B gain and an upwardly revised $8.7B increase in December. Consumer spending, which accounts for two-thirds of the US economy, picked up even after the Fed raised rates to 2.25% in December from 1% in June to stem inflation, Bloomberg said. "The outlook for consumer spending continues to brighten, and the big jobs report last Friday can only help to make consumers more confident in the future," said Chris Rupkey, an economist at Bank of Tokyo-Mitsubishi. "Consumers tend to delay paying off their credit card bills in the first month after year-end holidays. Consumer debt levels are probably not rising as fast as the January figures indicate," he said. Moreover, US bankruptcy filings actually dropped in 2004 for the first time in 4 years, led by a decline in applications from consumers as the economy improved, according to a report from the Administration Office of the US Courts.

Manufacturers in parts of the US found it easier to pass on rising material and labor costs to customers in January and February, the Federal Reserve said in its Beige Book report. Even so, "retail prices were generally flat or up modestly," said the survey. Moreover, prices paid by US consumers rose only .1% in January, Bloomberg said. Wage increases were "moderate" in all regions, the Beige Book said. Industries with the best wage gains were legal services, accounting, securities and trucking. "The big picture for inflation is still benign, but the rumblings get a little louder with each succeeding beige book," said Stephen Stanley, chief economist for RBS Greenwich Capital. Fed officials including Governor Ben Bernanke and St. Louis Fed Bank President William Pool said this week that inflation is well controlled, Bloomberg reported. "With the economy strengthening, with inflation stable, at this point my expectation is that the committee will continue to remove policy accommodation in a measured way," Bernanke said in a speech in Chicago.

Initial Jobless Claims for last week rose to 327K versus estimates of 310K and 310K the prior week. Continuing Claims rose to 2703K versus estimates of 2662K and 2664K prior. The four-week average of claims, a less volatile measure, increased to 312,500 from 306,750, which was the lowest in more than four years, Bloomberg reported. Part of the larger-than-forecast level of claims may have been a rebound from the prior week, when the President's Day holiday limited the number of days people could file, Bloomberg said. "The labor market's not tight but it's tightening," said Roger Kubarych, a former Federal Reserve economist who is now a senior adviser at HVB America. "We're doing right now annually about 7,000 searches or so and that's kind of doubled from where it was two to three years ago," said Gary Burnison, COO of Korn/Ferry International, the world's largest executive search firm.

Wholesale Inventories for January rose 1.1% versus estimates of a .6% increase and a .4% gain in December. Wholesaler sales in January rose for a record 20th consecutive month, and the ratio of stocks to sales was near historic lows, Bloomberg said. The increase was led by a gain of 2.2% for automobiles and parts and 2.2% as well for metals, Bloomberg reported. The buildup in stockpiles is likely to reinforce expectations that the economy will grow faster this quarter than at the end of 2004, Bloomberg reported. "I view the solid growth in inventories and sales in January and the low ratio of inventories to sales as a sign that this is an intentional buildup," said Mick Englund, chief economist at Action Economics. "It says firms know that their sales are increasing," he said.

The Monthly Budget Statement for February was -$113.9B versus estimates of -$100.0B and -$96.7B in January. An early rush of tax refunds helped magnify the shortfall in February, said David Resler, chief economist at Nomura Securities. "We still expect the fiscal year 2005 deficit to narrow to about $372.0B," he said. For the first five months of the year, the deficit totaled $223.4B, down 2.2% from the first five months of the previous year, Bloomberg reported. "The key period is really the March-to-May period as the bulk of refunds go out then and the April 15 payments start to come in," said Stephen Stanley, chief economist at RBS Greenwich Capital.

The Trade Balance for January widened to -$58.3B versus estimates of -$56.8B and -$55.7B in December. China, whose textile exports surged after quotas ended this year, accounted for more than a quarter of the shortfall, Bloomberg said. Americans' appetite for new cars, clothes, furniture and televisions caused imports to swell to a record $159.1B, Bloomberg reported. An increase in the price of oil since January may further widen the gap. "Import growth is definitely stronger than anticipated, and that's just another indication of strong demand in the US," said Stephen Stanley. Economists at Morgan Stanley lowered their 1Q GDP forecast after the report to 4% from 4.5%, Bloomberg said. Also, the US dollar fell to near a two-month low against the euro, leaving it little changed so far this year. Countries that use the euro as their currency are forecast to grow 1.6% this year, according to economists surveyed this month by Blue Chip Economic Indicators. "Should globalization continue unfettered and thereby create an ever-more flexible international financial system, history suggests that current account imbalances will be defused with modest risk of disruption," Fed Chairman Greenspan said in a recent speech.

BOTTOM LINE: Overall, last week's economic data were mixed. The US consumer continues to defy the bears as an improving labor market, relatively low interest rates and investment gains are spurring strong consumption. Spending should remain healthy over the course of the year. In my opinion, many factors are contributing to the increasing trade deficit, but the main reason is the exceptional strength of the US economy compared to other industrialized nations whose economy's are mired in stagnation as a result of high taxation and overregulation. The trade deficit will likely worsen in the near-term before improving in the second half of the year. The market appears to have overreacted to the Beige Book report, considering the recent decline in many other gauges of inflation. I continue to expect inflation to rise around the 40-year long-term average of 3.0% this year. Historically, modest inflation has been a positive for stock prices. The rise in Initial Jobless Claims is a positive as a deceleration in employment gains from last month's strong pace would calm fears over the possibility of rising unit labor costs. Inventory rebuilding, as a result of strong sales, will likely offset the negative effects of the trade deficit, leading to around 4% GDP growth for the first quarter. The increase in the Budget Deficit was likely an anomaly and should reverse over the next few months and begin improving again. Finally, the ECRI Weekly Leading Index rose .22% to 135.20 and is at cycle highs set in April 2004.

Market Week in Review

S&P 500 1,200.08 -1.80%


Click here for the Weekly Wrap by Briefing.com.

Bottom Line: Overall, last week's market performance was negative. The advance/decline line fell, almost every sector declined and volume was light. Measures of investor anxiety were mixed on the week, which is a negative considering the steep losses in many market-leading stocks. The CRB Index has gone parabolic over the last 3 weeks and is now up 13.7% for the year. I suspect we have entered the blow-off phase in commodity prices before declines begin sometime during the next 2 quarters. The sharp losses in commodity-related stocks, even with the rise in the CRB, may be a result of investors anticipating the declines I foresee in the underlying commodity prices. Small-caps and interest rate sensitive sectors also underperformed for the week as worries over inflation increased. On the positive side, technology shares outperformed even with Friday's sell-off in the Semis. As well, the economically sensitive Transports hit an all-time high earlier in the week and finished roughly unchanged. Finally, volume was pretty light, which is also a positive.