Tuesday Watch

Late-Night Headlines
Bloomberg:
- Crude oil is falling a second day in NY on speculation rising US oil inventories will be sufficient to meet demand should shipments from Iran be disrupted.

USA Today:
- Iran is ready to talk directly with the US regarding the resumption of its nuclear plan, citing an interview with Ali Larijani, Iran’s national security adviser.

Commercial Times:
- Acer Inc. forecasts its notebook computer sales will increase as much as 90% in the first quarter from a year earlier to 1.9 million units.

Automotive News:
- GM’s(GM) board agreed to cut the automaker’s $1.1 billion annual dividend by half, citing unnamed people close to the directors.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on (AET), (EBAY), (TIN) and (UHCO).
- Reiterated Underperform on (PPS).

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated +.09%.

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
(ALKS)/-.08
(BRL)/.78
(BMC)/.27
(BSX)/.42
(CELL)/.22
(CD)/.23
(CAKE)/.29
(CSCO)/.25
(KO)/.45
(CSC)/.85
(EMR)/.83
(FEIC)/.02
(FSH)/.93
(FO)/1.20
(LVLT)/-.29
(LNCR)/.53
(MANH)/.22
(MGAM)/.08
(OXY)/.76
(OSTK)/-.05
(RL)/.75
(VSH)/.16
(WWY)/.54

Upcoming Splits
- None of note

Economic Releases
3:00 pm EST
- Consumer Credit for December is estimated to rise to $5.0 billion versus -$.6 billion in November.

BOTTOM LINE: Asian indices are mixed as strength in basic materials stocks is offsetting weakness in pharma companies in the region. I expect US equities to open modestly lower and to rally later in the afternoon, fishing mixed. The Portfolio is 75% net long heading into the day.

Stocks Close Mixed on Average Volume

Indices
S&P 500 1,265.02 +.08%
DJIA 10,798.27 +.04%
NASDAQ 2,258.80 -.17%
Russell 2000 727.89 +.51%
S&P Barra Growth 601.45 -.13%
S&P Barra Value 659.69 +.29%
Morgan Stanley Consumer 588.50 -.13%
Morgan Stanley Cyclical 783.44 +.46%
Morgan Stanley Technology 526.77 +.06%
Transports 4,290.49 +.63%
Utilities 407.58 +.55%
Put/Call .84 -20.75%
NYSE Arms .96 -20.30%
Volatility(VIX) 13.04 +.62%
ISE Sentiment 163.00 +2.52%
US Dollar 90.31 +.47%
CRB 343.25 -.77%

Futures Spot Prices
Crude Oil 64.94 -.31%
Unleaded Gasoline 163.90 -.32%
Natural Gas 7.88 -1.50%
Heating Oil 176.08 -.11%
Gold 573.80 -.09%
Base Metals 176.72 +.51%
Copper 232.85 -.06%
10-year US Treasury Yield 4.54% +.44%

Leading Sectors
Steel +3.21%
Oil Service +2.85%
Gold & Silver +2.74%

Lagging Sectors
Airlines -1.13%
HMOs -1.46%
Broadcasting -1.68%

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 (GNW).
- Reiterated Underperform on (HEW).

Afternoon/Evening Headlines
Bloomberg:
- Occidental Petroleum(OXY) is getting better results than predicted from its return to Libya, where is the first US company to pump oil in almost two decades.
- Royal Caribbean Cruises(RCL) commissioned the world’s largest cruise ship, agreeing to pay a record $1.1 billion for a vessel that will carry 5,400 passengers.
- General Motors(GM) will appoint an aide to Kirk Kerkorian, the automaker’s fourth-largest investor, to its board of directors as the company tries to recover from recent losses.

CNBC:
- Electricity producer Dynegy Inc.(DYN) is in talks with potential buyers after three years of paring assets, consulting editor for Mergermarket said.

Frankfurter Allgemeine Zeitung:
- Arcelor SA is considering a takeover of US Steel Corp.(X) to counter a $22.3 billion hostile bid by larger Mittal Steel, citing unidentified bankers.

AP:
- Iran told the UN’s nuclear watchdog its has until mid-February to remove surveillance cameras and nuclear equipment seals meant to ensure that the country complies with treaty commitments.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my Medical longs, Computer longs and Biotech longs. I took profits is some of my (IWM) and (QQQQ) shorts in the final hour, thus leaving the Portfolio 75% net long. The tone of the market was mixed today as the advance/decline line finished slightly higher, sector performance was mixed and volume was average. Measures of investor anxiety were lower into the close. Overall, today's market action was mixed. The bears' inability to capitalize on losses in some market leaders, semiconductor gains and energy price reversals were positives.

Stocks Mixed into Final Hour as Reversal in Energy Prices Offsets Fed Worries

BOTTOM LINE: The Portfolio is slightly lower into the final hour on losses in my Computer longs, Medical longs and Biotech longs. I added to my (IWM)/(QQQQ) shorts this morning and to my (ISRG) long and (COP) short, thus leaving the Portfolio 50% net long. The tone of the market is mildly negative as the advance/decline line is slightly lower, sector performance is mixed and volume is average. Morgan Stanley rated U.S. stocks 'overweight' on its global focus list. It cut Japanese stocks to 'neutral' and cut the weighting of emerging markets in the list. I expect US stocks to trade mixed into the close from current levels as a reversal in energy prices and stable long-term rates offsets worries over Iran and the Fed.

Today's Headlines

Bloomberg:
- US telephone stocks’ decade of decline may be over as acquisitions spur earnings growth at companies including AT&T(T) and Verizon Communications(VZ).
- Morgan Stanley(MWD), Wall Street’s top money-maker in asset management until last year, lost the gift that keeps on giving to Goldman Sachs Group(GS).
- Samsung Electronics and Hynix Semiconductor, the world’s two largest makers of computer memory chips, raised prices for their biggest customers because of a shortage of microchips.
- The US Treasury may pay the lowest yield ever to borrow for 30 years in the first sale of the government’s longest-maturity bonds since August 2001.
- Crude oil rose for a second day after Iran said it would pursue nuclear research, defying the UN.

Wall Street Journal:
- The US nuclear-power industry will start an ad campaign, run by WPP Group Plc’s Hill & Knowlton American unit, that will seek to build support for new power plants.
- Singapore is challenging Switzerland as a provider of “discreet” banking services for the world’s super-rich.
- Sweden’s Hennes & Mauritz AB, Europe’s biggest clothing retailer, will speed up its expansion in the US market, as it seeks annual sales growth of at least 10% in the country.
- Talbots Inc.(TLB) is close to a deal to buy another Massachusetts-based women’s clothing retailer, J. Jill Group, for a price that might top $450 million.
- Mazda Motor, partly owned by Ford Motor(F), will lead a project to develop the basic architecture for the US carmaker’s next generation subcompact vehicle for the American market.
- A US administration effort to improve the process for developing new treatments may help the US pharmaceutical industry bring out new drugs.
- The SEC is making it easier for investors to find information about specific mutual funds on its database, known as Edgar.
- FedEx’s(FDX) depiction of a caveman getting crushed by a dinosaur after he failed to use the company was the most popular television ad during yesterday’s Super Bowl, according to an online Wall Street Journal survey.

USA Today:
- New voting machines will be used in at least 647 of the US’s 3,114 counties this year, the highest number since records began in 1980 and probably the most ever.

NY Post:
- NY’s video slot machine revenue rose 53.1% in 2005, making the Las Vegas-style machines the fastest-growing lottery game in the state.
- Elevation Partners LP, a private equity firm whose partners include rock star Bono, may bid on Take-Two Interactive(TTWO) in a deal that may be worth more than $1 billion including debt.

Boston Globe:
- More than half of Harvard University’s top deans and administrators have departed or said they plan to leave since Lawrence Summers became president in 2001.

LA Times:
- Pacific Gas & Electric and San Diego Gas & Electric plan to spend about $2 billion to install millions of real-time electricity meters in homes and small businesses to help customers save power.

Financial Times Deutschland:
- Carl Zeiss AG is mulling the purchase of US semiconductor-supplier FEI Co.(FEIC) for $1 billion.

Gulf News:
- Abu Dhabi National Oil Co. plans to build a refinery with capacity to produce up to 400,000 barrels a day.

Middle East Economic Survey:
- Qatar plans to boost its oil output capacity by a third to 1.1 million barrels a day within four years, citing Qatari oil minister.

Construction Week:
-.A four-year construction boom in Dubai, United Arab Emirates, may end after the emirate’s ruler ordered a slowdown in building work because supply of real estate, shopping malls and hotels is outpacing demand.

Economic Releases

- None of note

Links of Interest

Market Snapshot
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Economic Commentary
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Today in IBD
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I-Watch Sector Overview
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