Bull Radar

Style Outperformer:

Small-cap Value (-.11%)

Sector Outperformers:

Retail (+1.7%), Semis (+1.36%) and Computer Hardware (+1.29%)

Stocks Rising on Unusual Volume:

HPQ, XEC, TJX, PQ, IM, AKS, PGI, KALU, BCS, AXYS, TRMA, HURN, WINN, JAKK, KALU, CYBX, RCRC, LBTYK, IRBT, EXBD, SPLS, KLAC, CENX, DWSN, CEC, KOP, WLT, PMR and OIS

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Wednesday Watch

Late-Night Headlines
Bloomberg:
- Hewlett-Packard(HPQ), the world’s largest personal-computer maker, posted first-quarter profit and sales that beat estimates and raised its annual forecast on demand overseas, spurring a 6.5% gain in the stock.

Wall Street Journal:
- The next chapter of the increasingly combative Democratic primary race ended this evening with Sen. Barack Obama landing his ninth straight victory in his nomination battle against Sen. Hillary Clinton with a decisive win in Wisconsin’s Democratic primary. Sen. John McCain sailed to victory in Wisconsin’s Republican primary Tuesday night, beating former Arkansas Gov. Mike Huckabee and edging closer to the 1,191 delegates he needs to clinch the nomination.
- Musharraf Insists He’ll Stay in Job After Defeat.
- Crude-oil prices finished just above $100 a barrel for the first time yesterday despite signs the world’s petroleum thirst may be subsiding.

BusinessWeek.com:
- Health Care Equipment’s Quickening Pulse. S&P says the group’s strong stock-price performance and positive fundamentals point to the potential for further gains.
- Priceline.com(PCLN) Flies High.

CNNMoney.com:
- How to profit from Castro’s resignation.

SmartMoney.com:
- Good Near-Term Visibility Favors Two Small Caps.

Forbes.com:
- Democratic presidential hopeful Barack Obamaq accused rival Hillary Clinton Tuesday of rewarding the rich and hurting future mortgage seekers with her plan to end the US housing crisis.
- The Next VMware.

Chicagotribune.com:
- Lufthansa is mulling investing in a United-Continental merger.

USA Today.com:
- A railroad based smack in the center of the country isn’t the most obvious play on globalization. But tiny Kansas City Southern(KSU) is emerging as a major beneficiary of surging trade between the USA and an increasingly prosperous Mexico.

Financial Times:
- Barack Obama’s campaign on Tuesday accused Hillary Clinton of planning to “subvert the will of the voters” following reports that she would be prepared to lobby elected delegates to change their vote if the battle for the nomination went to the Democratic convention in August.
- Investors in two Bear Stearns(BSC) hedge funds began legal action in the Cayman Islands yesterday in an attempt to seize control of the funds, which they hope to use as a platform to demand compensation from the bank.

TimesOnline:
- London’s position as an international financial center is threatened, citing the Global Financial Centres Index. Two developments are cited in the index, due out next month, as affecting the city’s popularity as a business hub: the government’s handling of the Northern Rock Plc crisis and the proposal to levy the offshore income of wealthy foreigners living in the UK.
- Wal-Mart(WMT), the world’s biggest retailer, achieved another milestone yesterday by reporting sales of more than $100 billion for a three-month period for the first time.
- Forget biofuel, forget hydrogen cells, how about a car that runs on air?

Handelsblatt:
- The US economy is expected to grow 1.7% this year, citing a report from the European Economic Advisory Group. Germany’s GDP is forecast to increase by 1.6% this year, citing the report.

China Daily:
- China Diabetes Suffers Rise to 40 Million. Diabetes is fast becoming a major health problem in the country with close to 40 million currently suffering from the disease, a health expert said.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (JCP), target $53.
- Maintained Buy on (AMAT), target $26.
- Reiterated Buy on (WMB), target raised to $45.

Night Trading
Asian Indices are -1.50% to -.50% on average.
S&P 500 futures -.47%.
NASDAQ 100 futures -.21%.

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Earnings of Note
Company/EPS Estimate
- (GRMN)/1.12
- (STP)/.37
- (XEC)/1.20
- (JBX)/.56
- (TJX)/.62
- (ADI)/.40
- (OII)/.81
- (CECO)/.31
- (TEX)/1.39
- (HTZ)/.26
- (SINA)/.32
- (SNPS)/.38
- (HMA)/.08
- (NTES)/.32
- (WCG)/1.62
- (RIG)/2.52

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- The Consumer Price Index for January is estimated to rise .3% versus a .4% gain in December.
- The CPI Ex Food & Energy for January is estimated to rise .2% versus a .2% gain in December.
- Housing Starts for January are estimated to rise to 1010K versus 1006K in December.
- Building Permits for January are estimated to fall to 1050K versus 1068K in December.

2:00 pm EST
- Minutes of Jan. 29-30 FOMC Meeting

Other Potential Market Movers
- The Fed’s Poole speaking, weekly MBA Mortgage Applications report, (KMT) analyst meeting, (FFIN) analyst meeting, (TKR) analyst day, (SFY) analyst meeting, (NSR) analyst meeting, Morgan Stanley Basic Materials Conference, Piper Jaffray Clean Tech & Renewables Conference and Roth Capital Growth Conference could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by automaker and utility stocks in the region. I expect US equities to open mixed and to weaken into the afternoon, finishing modestly lower. The Portfolio is 75% net long heading into the day.

Stocks Finish Mostly Lower, Weighed Down by Tech, Retail, Airline and Financial Shares

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In Play

Stocks Mostly Lower into Final Hour on Rise in Commodities, Long-term Rates

BOTTOM LINE: The Portfolio is lower into the final hour on losses in my Medical longs, Internet longs, Semi longs and Commodity shorts. I added (IWM)/(QQQQ) hedges and took a loss on my (OMCL) long today, thus leaving the Portfolio 75% net long. The overall tone of the market is mildly negative as the advance/decline line is slightly lower, most sectors are declining and volume is below average. Investor anxiety is above average. Today’s overall market action is bearish. The VIX is rising 4.2% today to a high 26.1. The ISE Sentiment Index is a below average 110.0 and the total put/call is an above-average .99 today. Tech, retail, financials and airlines are under pressure today from the rise in commodities and long-term rates. The rise in commodities is boosting inflation worries, at a time of significant economic concern, which is a large negative. Investors are worried that this may prevent an otherwise more aggressive response to the ongoing housing/credit problems from the Fed. The odds of a 75 basis point cut at the March 18^th meeting are down to 2% today from 32% on Friday. If the commodity rise continues, I would expect to begin to hear slightly more hawkish Fed commentary. The decline in my (SIGM) long looks like a severe overreaction to today’s Robert Baird downgrade of the stock to Neutral and $50 target, however I have not added to the position yet. Nikkei futures indicate a -100 open in Japan and DAX futures indicate a -7 open in Germany. I expect US stocks to trade mixed-to-higher into the close from current levels on bargain-hunting and short-covering.

Today's Headlines

Bloomberg:
- Confidence among US homebuilders rose for a second straight month, the first back-to-back increase in almost a year, as signs emerged that lower house prices attracted more buyers.
- The Herzfeld Caribbean Basin Fund, which aims to profit from the resumption of US trade with Cuba, surged the most in its 13-year history after Fidel Castro resigned as the country’s president and commander-in-chief.
- Verizon Wireless(VZ) is offering a flat-rate subscription for unlimited calls, intensifying price competition with rivals Sprint Nextel(S) and AT&T(T).
- If Exxon, (XOM), Corning(GLW) Earn So Much, How Can S&P Be Cheap?
- Lansdowne Partners Ltd. and LNG Capital LLP were among investors that profited from an “easy” bet over the past year on the 93% decline in Northern Rock Plc, the bank being nationalized by the British government.
- Mortgage companies including Fannie Mae(FNM) and HSBC Finance jointed a US Treasury Dept.-led effort to offer 30-day foreclosure freezes to give delinquent borrowers more time to arrange payment plans. Remaining members of the Hope Now alliance adopted the initiative announced last week by Treasury Secretary Henry Paulson and six banks, including JPMorgan Chase(JPM) and Citigroup(C), the group said.
- Crude oil is surging above $99/bbl. in NY on record investment fund speculation after the dollar weakened, Iran said OPEC would likely cut production and a refinery fire in Texas curbed gasoline production.

Wall Street Journal:
- As Oil Prices Soar, Prospectors Return To Pennsylvania.
- Disney(DIS), Viacom(VIA) and Others Take Videogames In-House, Seeking Cut of Hot Market.
- Sweet Home, Santiago: Cuba’s Ethanol Future.

AppleInsider:
- Apple(AAPL) taps Linkin Park to perform at "secret" NYC event.

Finansavisen:
- Saudi Aramco CEO Abdallah Jum’ah said the so-called “peak oil” theory is a myth. Saudi Aramco plans to boost oil production capacity to 12 million barrels a day in 2009 from about 10 million barrels a day in 2004 by developing new fields and increasing output at existing fields.

Seoul Economic Daily:
- South Korean companies may win oil-exploration rights in Iraq, citing a South Korean official. Companies including Korea National Oil Corp. may be able to develop oil fields with combined reserves of about 3 billion barrels in the Kurdish-controlled region of Iraq, under an initial agreement with Iraqi Kurdish Prime Minister Nechirvan Barzani.