Today's Headlines

Bloomberg:
- Alcatel SA, the world’s biggest broadband Internet equipment supplier, said second-quarter earnings were higher than expected amid increased demand for networks used for mobile communications and by businesses.
- Infosys Technologies, India’s second-largest software company, posted a smaller-than-expected 37% gain in its first-quarter profit after raising wages to retain employees.
- Toronto-Dominion Bank, Canada’s second-biggest lender, agreed to buy Hudson United Bancorp for $1.9 billion in cash and stock to expand its TD Banknorth unit in the NY City area.
- Intel was raided by European Union antitrust regulators today in a probe spurred by competitor Advanced Micro Devices.
- Crude oil prices are rising for the first session in four on concerns over hurricane disruptions.
- The US dollar is falling, heading for its biggest two-day decline against the euro since August, on speculation a government report tomorrow will show no shrinkage in the US trade deficit.

Wall Street Journal:
- AnnTaylor Stores is trying to restore luster to its dressier namesake collections without cutting sales of its hipper Loft line.
- Bear Stearns signaled that it might pay $200 million or more to settle charges by US regulators that it helped hedge funds to trade improperly in mutual-fund shares.
- California’s choice real estate neighborhoods such as Atherton, one of Silicon Valley’s most elite residential locations, are getting a boost from investors who made money on Google’s stock offering.
- Concern among investors that Wachovia CEO Thompson is preparing to make another big acquisition have pushed the shares to their lowest level relative to peers since 2001.
- Citigroup, Morgan Stanley, CSFB and UBS Securities are among companies considering buying a stake in the Philadelphia Stock Exchange.
- Walt Disney may be seeking a buyer for its $3 billion radio station and network group, and it is considering a process that would take out cash and make the move a tax-free spin-off to shareholders.
- Drugs sold by Bristol-Myers Squibb, GlaxoSmithKline and Eli Lilly may help keep people with early symptoms of diabetes from developing the full-blown disease.

NY Times:
- US Senate Minority Leader Harry Reid of Nevada said that Democrats were unlikely to use a filibuster against President Bush’s Supreme Court justice nominee to replace the retiring Sandra Day O-Connor.

LA Times:
- IHOP is changing its menu to lure more diners to lunch and dinner.

AP:
- Comcast plans to offer residential customers the chance to double the speed of their Internet service at a cost of $10 more per month if they already have cable television service.

Financial Times Deutschland:
- Microsoft plans to replace products by Siebel Systems with its own version of software to help manage customer contacts.

Economic Releases

None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- Shares of LG.Philips LCD, the world's largest liquid-crystal-display maker, rose in Seoul as an easing screen glut helped the company report higher-than-expected profit and forecast panel prices to rise this quarter.

Wall Street Journal:
- Saudi Aramco, the state-owned Saudi Arabian oil company which is China's biggest foreign oil supplier, is negotiating to take a 25% stake in a second refinery in China's Shandong province.

Financial Times:
- The Internet Corporation for Assigned Names and Numbers, which governs the Internet addressing system, has approved a domain address for Web pages designed to be viewed on mobile phones. The mobile-phone industry can use ".mobi" as a designated domain name.

China Securities Journal:
- China's economy may slow to 8.6% in the third quarter and 8.2% in the last three months of this year, citing a report by a think tank affiliated with the National Development and Reform Commission.

Xinhua News Agency:
- The China Council for the Promotion of International Trade and the US Commerce Department signed an agreement aimed at helping small US businesses break into the China market.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Underperform on DRI.

Night Trading
Asian Indices are unch. to +.50% 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 CNBC Video(bottom right)
Global Commentary
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
AMTD/.17
RECN/.28
AMB/.25
MI/.74

Upcoming Splits
EAC 3-for-2

Economic Releases
None of note

BOTTOM LINE: Asian indices are mostly higher, led by technology stocks in the region. I expect US equities to open mixed and consolidate recent gains throughout the day. The Portfolio is 100% net long heading into the day.

Stocks Finish at Session Highs on Earnings Optimism

Indices
S&P 500 1,219.44 +.63%
DJIA 10,519.72 +.68%
NASDAQ 2,135.43 +1.07%
Russell 2000 671.74 +1.45%
DJ Wilshire 5000 12,177.66 +.71%
S&P Barra Growth 582.84 +.73%
S&P Barra Value 632.36 +.53%
Morgan Stanley Consumer 578.08 +.68%
Morgan Stanley Cyclical 738.46 +1.14%
Morgan Stanley Technology 491.34 +1.38%
Transports 3,622.23 +.93%
Utilities 394.38 +1.02%
Put/Call .79 unch.
NYSE Arms .71 -8.19%
Volatility(VIX) 11.28 -1.48%
ISE Sentiment 179.00 -7.25%
US Dollar 89.46 -.88%
CRB 308.90 -.32%

Futures Spot Prices
Crude Oil 59.33 -.50%
Unleaded Gasoline 173.50 -1.61%
Natural Gas 7.59 +1.58%
Heating Oil 169.10 -1.58%
Gold 426.60 +.66%
Base Metals 124.38 +.89%
Copper 156.10 +.32%
10-year US Treasury Yield 4.09 +.05%

Leading Sectors
Steel +2.84%
Semis +2.0%
Homebuilders +2.0%

Lagging Sectors
Biotech +.18%
Oil Tankers -.36%
HMOs -.46%

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

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on DNA, MCK and TAP.

Afternoon/Evening Headlines
Bloomberg:
- The rating on California’s $45 billion of general obligation bonds and related debt was raised one level to A2 by Moody’s Investors Service, which cited in part improvement in the state’s economy.
- An index of US stock-market volatility sank as much as 8% to the lowest in nine and a half years as gains in the S&P 500 cut demand for insurance against stock-market declines.
- Genentech said quarterly profit rose as more doctors prescribed the company’s Avastin cancer drug.
- China agreed to increase criminal prosecutions of pirates of copyrighted movies and music and to delay imposing rules that would make it harder for US software companies to sell to the Chinese government.
- Almost all branches of the US military achieved their recruiting goals for June, according to the Pentagon.

Financial Times:
- Comcast has considered and ruled out buying a mobile telephone operator, citing CEO Brian Roberts.

London-based Times:
- Google, Goldman Sachs and media company Hearst have jointly invested about $100 million in Current Communications Group, a provider of high-speed broadband access through power cables.

BOTTOM LINE: The Portfolio finished higher today on gains in my Retail, Semiconductor and Homebuilding longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished higher, almost every sector advanced and volume was slightly above average. Measures of investor anxiety were mostly lower into the close. Overall, today’s market action was positive. The dollar has declined over the last three days vs. the euro. Sentiment toward the dollar had become too optimistic. As well, speculation has increased that the ECB will not cut interest rates. Over the coming weeks I expect the dollar to resume its rally against the euro.

Stocks Higher Mid-day, Led Again by Small-Caps

Indices
S&P 500 1,216.04 +.34%
DJIA 10,493.87 +.43%
NASDAQ 2,128.16 +.72%
Russell 2000 670.36 +1.24%
DJ Wilshire 5000 12,146.53 +.46%
S&P Barra Growth 581.50 +.50%
S&P Barra Value 630.59 +.25%
Morgan Stanley Consumer 576.88 +.47%
Morgan Stanley Cyclical 735.73 +.76%
Morgan Stanley Technology 489.25 +.95%
Transports 3,622.11 +.90%
Utilities 393.00 +.66%
Put/Call .78 -1.27%
NYSE Arms .90 +16.16%
Volatility(VIX) 11.28 -1.48%
ISE Sentiment 177.00 -8.29%
US Dollar 89.52 -.83%
CRB 307.80 -.68%

Futures Spot Prices
Crude Oil 58.40 -2.06%
Unleaded Gasoline 171.80 -2.57%
Natural Gas 7.43 -.50%
Heating Oil 166.80 -2.92%
Gold 427.10 +.76%
Base Metals 124.38 +.89%
Copper 156.10 +.32%
10-year US Treasury Yield 4.11% +.66%

Leading Sectors
Gold & Silver +2.20%
Disk Drives +2.12%
Steel +1.88%

Lagging Sectors
HMOs -.20%
Biotech -.31%
Oil Tankers -.48%

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my Retail, Semiconductor and Homebuilding longs. I exited a base metal short this morning and used the proceeds to add to existing shorts in various sectors, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is higher, almost every sector is higher and volume is above average. Measures of investor anxiety are mixed. Today’s overall market action is positive. Since the October 11, 2002 lows, the Russell 2000 has returned 98.9% vs. a 52.3% gain for the S&P 500. Just over the last 2 and 1/2 months, the Russell has gained 16.7% vs. a 6.9% return for the S&P. The Russell 2000 is at an all-time high. The S&P 500 is still 21.6% off its all-time high. The Russell 2000 will likely continue to outperform through year-end. I expect US stocks to trade mixed-to-higher into the close on short-covering, bargain hunting and lower energy prices.