Bear Radar

Style Underperformer:

Large-cap Growth (+.72%)

Sector Underperformers:

Coal (-3.13%), Oil Service (-1.26%) and Internet (-1.24%)

Stocks Falling on Unusual Volume:

ALB, SII, CCU, EMC, ICUI, NHWK, ZRAN, JDAS, EWBC, AMLN, OXPS, CBST and PBG

Durable Goods Orders Very Strong, Overall Consumer Sentiment Slightly Better-Than-Expected, Present Situation Component Rises

- Durable Goods Orders for December rose 5.2% versus estimates of a 1.6% increase and an upwardly revised .5% gain in November.

- Durables Ex Transports for December rose 2.6% versus estimates of a .1% increase and an upwardly revised .4% decline in November.

- Consumer Confidence for January fell to 87.9 versus estimates of 87.0 and an upwardly revised 90.6 in December.

BOTTOM LINE: Orders for US durable goods rose substantially more than forecast in December, indicating business investment remains healthy. Bloomberg reported. The 5.2% surge in demand for computers, aircraft and other items made to last several years was the largest since July 2007. Bookings for non-defense capital goods excluding aircraft, a gauge of future business investment, jumped 4.4%, the most since March of last year. Shipments of those items, used in determining GDP, rose 2%, the most since March of 2006. The rise in total orders was led by the largest gain in machinery bookings since December 2006, a jump in commercial aircraft and a 12% surge in communications gear. Shipments to international buyers set a ninth consecutive monthly record. To put today’s 5.2% jump in Durable Goods Orders in perspective, March 1993-February 1996, Sept. 1998-November 1999 and August 2002-February 2004 were periods in which Durable Goods Orders never rose above 5%. We were told by the many bears that the US economy was plunging into recession in 3Q when the credit turmoil began to intensify, but in actuality US GDP was rising at a very powerful 4.9% rate. The bears were even more certain that 4Q growth would be negative, however that now appears unlikely. Growth should come in around 1.5%. Now there doesn’t even seem to be a debate in many quarters, it is just assumed that we are now in a recession, which is defined as two consecutive quarters of GDP contraction. I continue to see little data to indicate we are now in a recession even as this is priced into stocks at current levels. I still expect US growth to average around 2% for the year.

Consumer confidence fell in January less than economists expected, Bloomberg reported. The Present Situation component rose to 115.3 from 112.9 the prior month. The Expectations component fell to 69.6 from 75.8 in December. The share of consumers who said jobs are plentiful rose to 23.9% versus 23.6% the prior month. The percentage of people that said jobs are hard to get fell to 20.1% from 22.7% in December. The percentage of consumers planning to buy an automobile rose to 6.7% from 6.3% the prior month. Those planning to buy an appliance rose to 30.5% from 28.1% prior. There remains a historically wide gap between consumers’ perceptions of their current financial situation and their views of the future. This is a direct result of the current “US negativity bubble,” in my opinion. Consumers have been told by so many high profile market participants, with negative political and/or financial agendas, for so many years that an imminent economic collapse is just around the corner that when we get a slowdown it is just assumed by most that the collapse in finally occurring, even though they don’t see it in their own finances. I suspect we have now seen the lows for the year in consumer sentiment gauges as economic pessimism begins to wane, home sales bounce unexpectedly, interest rates remain low, inflation decelerates, stocks rise and the job market remains healthy.

Bull Radar

Style Outperformer:

Large-cap Value (+1.11%)

Sector Outperformers:

Telecom (+1.96%), Airlines (+1.75%) and Computer Hardware (+1.32%)

Stocks Rising on Unusual Volume:

CXG, TAR, ZMH, KFN, AXE, FTO, SMG, CR, CNW, LXK, CHTT, QMAR, NNDS, ENDP, SMTS, GASS, MATR, SONC, ALGN, CENX, RATE, TECH, NICE, IBKR, ALDN, DBTK, ABK, THG, TNE, GEOY, EE, KFN and JOE

Links of Interest

Market Snapshot Commentary
Market Performance Summary
Style Performance
Sector Performance
WSJ Data Center
Top 20 Biz Stories
IBD Breaking News
Movers & Shakers
Upgrades/Downgrades
In Play
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
Option Dragon
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Intraday Chart/Quote
Dow Jones Hedge Fund Indexes

Tuesday Watch

Late-Night Headlines
Bloomberg:
- VMware Inc.(VMW) said fourth-quarter profit more than doubled. Sales missed analysts’ estimates, sending the shares down 24% in late trading.
- California Governor Arnold Schwarzenegger’s $15 billion plan to provide health insurance for everyone in the most populous US state was rejected by a Senate committee on concerns it would cost too much.

Wall Street Journal:
- Bush’s Aim Is to Reassure a Worried Country.
- Liberty Media Corp., the media company controlled by billionaire John Malone, is trying to force Barry Diller out of IAC/InteractiveCorp.

NY Times:
- The credibility of Societe Generale’s management came under fresh scrutiny Monday after Jerome Kerviel told French prosecutors that his fictitious trading started as far back as 2005 – a year earlier than the bank had acknowledged.
- Edward S. Lampert has a new strategy for Sears(SHLD): less Edward S. Lampert.
- Good News in the 1 Million Missing iPhones.

BusinessWeek.com:
- Cisco Systems(CSCO) revealed a major offensive today in its ongoing assault on the data center market.
- Top Tech Trends in ’08.
- Broadband’s Growing ‘Need for Speed’

CNNMoney.com:
- Bush hammers home on economy. Bush lobbies for enactment of $150 billion stimulus plan ‘as soon as possible’ and calls for permanent extension of tax cuts.

Forbes.com:
- America’s Richest Counties.
- iPhone Apps In The Works.

Reuters:
- US Treasury Assistant Secretary Anthony Ryan said on Monday there were signs that market liquidity was starting to return but it won’t happen overnight and requires greater investor caution in future.
- JPMorgan(JPM) disclosed on Monday that it has raised its stake in bond insurer AMBAC Financial Group(ABK) to 7.7% from 5.4%.

Financial Times:
- Efforts to shore up US bond insurers gathered pace yesterday as NY state regulators appointed investment bankers to advise on a rescue plan that could include back-up credit lines for the troubled guarantors.

TimesOnline:
- Hedge funds worldwide are heading for their worst monthly performance in almost ten years amid signs that the credit crunch is claiming fresh victims across the investment markets.
- India’s love affair with gold is waning as high prices deter casual buyers in the world’s largest gold importer and savvy housewives try to sell their spare jewelry to capitalize on rocketing prices.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (CBG), target lowered to $31.
- Downgraded (DIS) to Sell, target $26.
- Reiterated Buy on (ACV), target raised to $30.
- Reiterated Buy on (MCD), target lowered to $64.
- Raised (GASS) to Buy, target $20.
- Reiterated Buy on (VZ), target $45.

Night Trading
Asian Indices are +.25% to +2.0% on average.
S&P 500 futures -.04%.
NASDAQ 100 futures -.44%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Pre-market Stock Quote/Chart
Before the Bell CNBC Video(bottom right)
Global Commentary
WSJ Intl Markets Performance
Commodity Movers
Top 25 Stories
Top 20 Business Stories
Today in IBD
In Play
Bond Ticker
Economic Preview/Calendar
Daily Stock Events
Macro Calls
Upgrades/Downgrades
Rasmussen Business/Economy Polling
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
- (NNDS)/.61
- (X)/2.22
- (CAH)/.88
- (LLY)/.89
- (COCO)/.10
- (DOW)/.80
- (ENR)/2.21
- (OXY)/1.69
- (TRV)/1.61
- (UIS)/.14
- (CNX)/.34
- (LXK)/.56
- (VLO)/.59
- (SII)/.88
- (MMM)/1.17
- (PII)/1.04
- (CFC)/-.28
- (BNI)/1.39
- (SHW)/.85
- (ALL)/1.34
- (YHOO)/.11
- (CB)/1.47
- (ZMH)/1.04
- (CTX)/-1.06
- (JBHT)/.40
- (EMC)/.22
- (FLEX)/.26
- (PPC)/.38
- (RHI)/.47
- (HTCH)/.35

Upcoming Splits
- (BTJ) 3-for-2
- (KWK) 2-for-1

Economic Releases
8:30 am EST
- Durable Goods Orders for December are estimated to rise 1.6% versus a -.1% decline in November.
- Durables Ex Transports for December are estimated to rise .1% versus a -.8% decline in November.

8:30 am EST
- Consumer Confidence for January is estimated to fall to 87.0 versus a reading of 88.6 in December.

Other Potential Market Movers
- The S&P/CS Home Price Index, weekly retail sales reports, Wachovia Healthcare Conference, Banc of America Gaming Conference and Citigroup Financial Services Conference could also impacting trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and automaker stocks 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 at Session Highs, Despite Overseas Weakness

Evening Review
Market Summary
Today’s Movers
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