Tuesday Watch

Late-Night Headlines
Bloomberg:
- The US housing slump won’t spill over into the broader economy, which will continue to grow at a “moderate” pace, Cleveland Feederal Reserve Bank President Pianalto said.
- Microsoft(MSFT), trying to wring a profit from its Xbox video-game console, will use the player to rent and sell high-definition movies and television shows from CBS, MTV Networks and Warner Bros.
- Global oil demand is “far from robust,” said OPEC’s president Edmund Daukoru.
- Asia’s oil imports from Russia, Africa and Latin America may increase 11% in four years as the region cuts its reliance on oil from the Middle East, said an official from Petroliam Nasional Bhd., or Petronas.
- The Saudi Tadawul All Share Index has plunged 57.3% since February 25.

AP:
- Starwood Hotels & Resorts(HOT) are among hotel companies offering vacation packages designed for couples attempting to get pregnant.

China Securities Journal:
- China should raise its benchmark interest rates further to curb bank lending and investment, citing Yi Xianrong, a researcher at the government-backed Chinese Academy of Social Science.

Yonhap News:
- The Iranian military commander acknowledged his country obtained missiles from North Korea during Iran’s war with Iran.

Late Buy/Sell Recommendations
CSFB:
- Reiterated Buy on (XMSR), target $17.

Night Trading
Asian Indices are +.75% to +1.0% on average.
S&P 500 indicated -.07%.
NASDAQ 100 indicated -.07%.

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
- (ADRX)/.16
- (BZH)/1.64
- (CECO)/.29
- (CHD)/.49
- (DF)/.56
- (DRC)/.27
- (DISH)/.38
- (EMR)/1.20
- (EXPD)/.29
- (FCL)/.24
- (FTO)/1.09
- (GBE)/-.05
- (IGT)/.34
- (NFI)/1.07
- (RRD)/.66
- (SLE)/.25
- (STE)/.21
- (SRZ)/.30
- (TRLG)/.44
- (OATS)/.06
- (WYNN)/.06

Upcoming Splits
- None of note

Economic Releases
3:00 pm EST
- Consumer Credit for September is estimated at $6.0 billion versus $5.0 billion in August.

BOTTOM LINE: Asian indices are higher, boosted by technology, automaker and commodity shares in the region. I expect US equities to open modestly lower and to rally into the afternoon, finishing mixed. The Portfolio is 100% net long heading into the day.

Stocks Finish Sharply Higher on Buyouts and Short-covering Ahead of Election

Indices
S&P 500 1,379.78 +1.13%
DJIA 12,105.55 +1.0%
NASDAQ 2,365.95 +1.51%
Russell 2000 763.08 +1.37%
Wilshire 5000 13,807.14 +1.16%
S&P Barra Growth 641.01 +1.16%
S&P Barra Value 736.55 +1.11%
Morgan Stanley Consumer 671.68 +.90%
Morgan Stanley Cyclical 855.07 +1.22%
Morgan Stanley Technology 554.91 +1.61%
Transports 4,694.96 +1.78%
Utilities 443.36 -.54%
Put/Call .75 -16.67%
NYSE Arms .63 -40.78%
Volatility(VIX) 11.16 unch.
ISE Sentiment 162.00 +38.46%
US Dollar 85.75 +.05%
CRB 311.72 +.58%

Futures Spot Prices
Crude Oil 60.07 +1.57%
Unleaded Gasoline 152.90 +1.47%
Natural Gas 7.44 -5.58%
Heating Oil 171.95 +2.50%
Gold 624.60 -.53%
Base Metals 244.73 -.29%
Copper 334.00 +.09%
10-year US Treasury Yield 4.69% -.47%

Leading Sectors
HMOs +2.86%
Airlines +2.77%
I-Banks +2.58%

Lagging Sectors
Utilities -.54%
Oil Tankers -.85%
Gold & Silver -1.23%

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
Oppenheimer:
- Rated (ALO) Buy, target $30.

Afternoon/Evening Headlines
Bloomberg:
- US gasoline at the pump fell 1.8 cents to $2.20 a gallon, the lowest in 10-months.
- Natural gas fell 5% on forecasts for mild weather amid record inventories for the commodity.
- US Secretary of State Condoleezza Rice said the US role in Cuba must be to “insist” that Cubans “have a real opportunity for a true democracy.”
- NTP Inc., the patent-licensing firm that collected $612.5 million from Research In Motion in a patent dispute, said it’s turning its sights on Palm Inc.(PALM).
- The use of muscle-building anabolic steroids, often thought to cause impulsive and aggressive behavior, is also linked to more planned crimes involving fraud and weapons, a study has found.

Wall Street Journal:
- Nigeria is working toward boosting oil production, provided it can bring an end to attacks by militants on installations in the Niger Delta that are curbing output by about 500,000 barrels a day, citing Oil Minister Edmund Daukoru. Daily output would be 3 million barrels if not for the attacks, and may rise to 4 million in two years, Daukoru said.

BOTTOM LINE: The Portfolio finished higher today on gains in my Internet longs, Semi longs, Medical longs, Computer longs and Biotech 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, almost every sector rose and volume was above average. Measures of investor anxiety were mostly lower into the close. Today's overall market action was very bullish. Natural Gas fell 5% today, notwithstanding the bounce higher in crude. I still suspect natural gas made another meaningful top a couple of weeks ago. Natural gas speculative longs are back near record levels. The number of natural gas speculative long contracts on the Nymex has risen 272% since March. In my opinion, the current level of natural gas is mostly related to another bout of record speculation by investment funds, as inventories remain near record highs for this time of the year. Natural gas futures are now in their seasonally weak period.

Stocks Sharply Higher into Final Hour on Buyouts and Short-Covering

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Internet longs, Semi longs, Medical longs, Biotech longs and Computer longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, almost every sector is rising and volume is above average. Friday's healthy jobs and ISM Non-manufacturing reports were significant positives and make the imminent recession calls seem even more implausible. The Fed's Moskow said this morning that the U.S. economy will grow at a solid pace. The 10-year yield is stable after Friday's jump. Growth stocks are particularly strong today. I continue to believe that recent market action is indicative of a healthy consolidation after sharp gains and that the many bears remain stunningly complacent. Another substantial push higher in the major averages is likely over the coming weeks. The growth rate of the ECRI future inflation gauge is still falling. It declined 3.1% in the week ended Oct. 20. It had been rising at a 9% rate in October 2005. The 10-year yield is at session lows today at 4.7%. I continue to believe the Fed will not raise rates with the 10-year yield anywhere near current levels and that a cut is more likely in the first half of next year. I also still see a return to the secular trend of disinflation over the intermediate-term. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, performance anxiety, buyout speculation and diminishing economic growth concerns.

Today's Headlines

Bloomberg:
- Circuit City(CC) began selling high-definition radios that pick up digital signals from more than 1,030 US radio stations.
- Growth in European service industries from banking to telecom, the biggest part of the economy, unexpectedly slowed in October.
- Pakistan President Musharraf said Mulism countries need to do more to battle terrorism and the poverty that’s making Islamic nations breeding grounds for extremists.
- Microsoft(MSFT) chairman Gates and Prince Alwaleed bin Talal plan to buy Four Seasons Hotels(FS) in an offer that values the hotelier at $3.7 billion.
- Abbott Labs(ABT) said it will buy Kos Pharmaceuticals(KOSP) for $78 a share, or 56% more than the last closing price, to add the cholesterol drugs Niaspan and Advicor.
- OSI Restaurant Partners(OSI), the owner of restaurant chain Outback Steakhouse, agreed to be acquired for $2.98 billion in cash by Bain Capital Partners LLC, Catterton Partners and three other company founders.
- Swift Transportation, the second-largest US trucking company, said founder and former CEO Moyes offered to buy the company for $29 a share.
- Natural gas prices in the US East are falling 4% as milder weather forecast throughout the Northeast is expected to damp heating demand.
- Saudi Aramco, the world’s largest state-owned oil company, cut its prices in Asia for lighter varieties of crude oil for a second month in December, while raising prices for the US.

Wall Street Journal:
- Rick Wagoner, the CEO of GM(GM), said an agreement on GM’s contribution to labor costs at components maker Delphi Corp. might be reached “reasonably soon.”
- US homeowners’ insurance premiums are falling in many parts of the country while car insurance costs are rising at less than the inflation rate, suggesting that risks for both are declining.
- US retail forecasters remain divided over what coming holiday-season sales will be like with estimates for gains from a year earlier of between 2.5% and 7.5%.
- Morgan Stanley(MS) is reorganizing its brokers’ pay packages, to improve rewards for those who have better customers and generate more money, and to cut compensation for those whose performances are sub-standard.

NY Times:
- Hollywood studios, feeling the pinch of rising budgets and rampant piracy as well as worries over the future of new media, want concessions from actors, directors and writers. Both sides are ready to fight as the studios prepare to start contract negotiations in January. The average movie budget last year increased to $96.2 million, up from $54.1 million in 1995.

LA Times:
- Wachovia Corp.(WB) plans to re-brand 120 World Savings bank branches, open another 30 to 50 outlets a year and buy smaller banks as it seeks to expand in California.

CNBC:
- Former Fed Chairman Greenspan said an economic slowdown is likely temporary and that the worst of the housing slowdown is over.

Washington Post:
- A US pullout from Iraq now would have devastating consequences, dozens of enlisted US soldiers and officers said. Such a withdrawal would invigorate the insurgency, put Iraq on a course toward civil war and create the possibility that four years of fighting for democracy has been for naught, the soldiers told the Post.

Le Monde:
- The European Union should do more to help NATO forces in Afghanistan, Jaap de Hoop Scheffer, secretary-general of the North Atlantic Treaty Organization.

Financial Times Deutschland:
- China wants to add US dollar-denominated assets to its foreign exchange reserves that offer higher yields than US government bonds.

Les Echos:
- Union for a French Democracy party leader and presidential candidate Francois Bayrou said he would cut labor taxes and on overtime hours and curb levies on wealthy people.

Khaleej Times:
- Middle Eastern young people are frustrated by high unemployment as population growth outstrips job creation.

Haaretz:
- Israeli military commanders are planning for the possibility that Syria or Hezbollah will start a war against Israel next summer.

Boerson:
- Denmark targets doubling its use of renewable energy to 30% in 12 years, lifting investment in wind energy.

Economic Releases

- None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
Today in IBD
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