BOTTOM LINE: The Portfolio is higher heading into the final hour on gains in my Medical longs, Networking longs, Semi longs and Internet longs. I covered some of my (EEM) shorts and exited my (IWM)/(QQQQ) shorts this morning, thus leaving the Portfolio 100% net long. The tone of the market is very positive as the advance/decline line is substantially higher, every sector is gaining and volume is about average. Uncertainty is high. Sentiment is depressed. I sense there is much complacency in the bear community regarding the recent bottom. It is assumed by most, even many bulls, that that lower lows are coming. We have heard for weeks, just like we have on every pullback since the bottom a few years ago, that a crushing bear market is imminent. I continue to believe most stocks have seen their lows for the year and that a meaningful bottom is in place. It is time for the bulls to step up. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less irrational pessimism and bargain hunting.
Wednesday, June 21, 2006
Stocks Sharply Higher into Final Hour as Irrational Pessimism Lifts Further
Today's Headlines
Bloomberg:
- Ford Motor(F) may fail to meet its goal of returning to profit in North America by 2008 because of declining sales of SUVs, according to officials.
- The euro advanced after European Central Bank President Jean-Claude Trichet signaled interest rates will rise further to contain inflation.
- FedEx(FDX) said fourth quarter profit rose 27% as global economic expansion fueled deliveries.
- Goldman Sachs Group(GS) became the world’s largest hedge-fund manager after assets surged more than 85% in each of the past two years to $21 billion, according to Institutional Investor’s Alpha magazine.
- Morgan Stanley(MS) said fiscal second quarter earnings more than doubled, led by higher trading revenue and fees from arranging stock and bond sales.
- Iran will wait another two months before replying to a European Union offer of incentives aimed at encouraging the Islamic Republic to halt its uranium enrichment program.
- The Miami Heat won their first NBA championship last night by beating the Dallas Mavericks 95-92 behind 36 points from Dwayne Wade, who was named MVP of the series.
Wall Street Journal:
- China Mobile Communications is close to buying Millicom Intl.(MICC) of Luxembourg for $5.3 billion.
- Huawei Technologies and other Chinese companies are finding it harder to invest in India because of that nation’s growing national security concerns.
- The US Agriculture Dept. plans to start a voluntary livestock identification program next year after failing to adopt a national system for most farm animals.
- The US beer company, Anheuser-Busch(BUD), is considering entering the liquor industry, as beer sales slow.
NY Times:
- A group lead by Grupo Televisa SA allowed a bidding deadline for Univision Communications(UVN) to expire yesterday because partner Carlyle Group dropped out over a disagreement on the price.
- Two senators are expected to introduce a bill that would alter how drugs are tested and approved in the US.
Washington Post:
- Target Corp.(TGT) has licensed its logo to consulting firm Brand Central LLC to use in a new luxury clothing line.
AP:
- Gambling revenue at American Indian casinos rose about 16% last year to almost $23 billion, as tribes added amenities and boosted marketing to attract more visitors, citing the Indian Gaming Industry Report.
Reuters:
- Royal Dutch Shell Plc’s Nigerian venture added 50,000 barrels a day of oil production after a pipeline leak from earlier this month was repaired.
- Ford Motor(F) may fail to meet its goal of returning to profit in North America by 2008 because of declining sales of SUVs, according to officials.
- The euro advanced after European Central Bank President Jean-Claude Trichet signaled interest rates will rise further to contain inflation.
- FedEx(FDX) said fourth quarter profit rose 27% as global economic expansion fueled deliveries.
- Goldman Sachs Group(GS) became the world’s largest hedge-fund manager after assets surged more than 85% in each of the past two years to $21 billion, according to Institutional Investor’s Alpha magazine.
- Morgan Stanley(MS) said fiscal second quarter earnings more than doubled, led by higher trading revenue and fees from arranging stock and bond sales.
- Iran will wait another two months before replying to a European Union offer of incentives aimed at encouraging the Islamic Republic to halt its uranium enrichment program.
- The Miami Heat won their first NBA championship last night by beating the Dallas Mavericks 95-92 behind 36 points from Dwayne Wade, who was named MVP of the series.
Wall Street Journal:
- China Mobile Communications is close to buying Millicom Intl.(MICC) of Luxembourg for $5.3 billion.
- Huawei Technologies and other Chinese companies are finding it harder to invest in India because of that nation’s growing national security concerns.
- The US Agriculture Dept. plans to start a voluntary livestock identification program next year after failing to adopt a national system for most farm animals.
- The US beer company, Anheuser-Busch(BUD), is considering entering the liquor industry, as beer sales slow.
NY Times:
- A group lead by Grupo Televisa SA allowed a bidding deadline for Univision Communications(UVN) to expire yesterday because partner Carlyle Group dropped out over a disagreement on the price.
- Two senators are expected to introduce a bill that would alter how drugs are tested and approved in the US.
Washington Post:
- Target Corp.(TGT) has licensed its logo to consulting firm Brand Central LLC to use in a new luxury clothing line.
AP:
- Gambling revenue at American Indian casinos rose about 16% last year to almost $23 billion, as tribes added amenities and boosted marketing to attract more visitors, citing the Indian Gaming Industry Report.
Reuters:
- Royal Dutch Shell Plc’s Nigerian venture added 50,000 barrels a day of oil production after a pipeline leak from earlier this month was repaired.
Tuesday, June 20, 2006
Wednesday Watch
Late-Night Headlines
Bloomberg:
- China joined the US, Japan, South Korea and Australia in telling North Korea to refrain from testing a long-range missile, saying it may damage six-nation talks on ending North Koreas nuclear program.
- Optimism among Japan’s largest manufacturers slipped in the second quarter as a rising yen and falling stock prices created uncertainty over the outlook for the world’s second-largest economy.
- Australia’s government will spend $87 million over three years to provide families with free software to block access to pornography Web sites.
Late Buy/Sell Recommendations
- Deutsche Bank
- Raised (PKX) to Buy.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated +.02%.
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
- (BBBY)/.35
- (FDX)/1.77
- (JBL)/.37
- (MS)/1.45
- (SRZ)/.26
Upcoming Splits
- (DAKT) 2-for-1
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a 500,000 barrel crude oil drawdown. Gasoline supplies are expected to rise 1,500,000 barrels. Distillate supplies are estimated to rise 1,500,000 barrels. Finally, refinery utilization is expected to rise .13%.
Bloomberg:
- China joined the US, Japan, South Korea and Australia in telling North Korea to refrain from testing a long-range missile, saying it may damage six-nation talks on ending North Koreas nuclear program.
- Optimism among Japan’s largest manufacturers slipped in the second quarter as a rising yen and falling stock prices created uncertainty over the outlook for the world’s second-largest economy.
- Australia’s government will spend $87 million over three years to provide families with free software to block access to pornography Web sites.
Late Buy/Sell Recommendations
- Deutsche Bank
- Raised (PKX) to Buy.
Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated +.02%.
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
- (BBBY)/.35
- (FDX)/1.77
- (JBL)/.37
- (MS)/1.45
- (SRZ)/.26
Upcoming Splits
- (DAKT) 2-for-1
Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a 500,000 barrel crude oil drawdown. Gasoline supplies are expected to rise 1,500,000 barrels. Distillate supplies are estimated to rise 1,500,000 barrels. Finally, refinery utilization is expected to rise .13%.
BOTTOM LINE: Asian indices are mixed, as gains by commodities stocks in the region are being offset by losses in exporting shares. I expect US equities to open modestly higher and to weaken into the afternoon, finishing mixed. The Portfolio is 50% net long heading into the day.
Stocks Finish Mostly Lower on Below-Average Volume
Indices
S&P 500 1,240.12 unch.
DJIA 10,974.84 +.30%
NASDAQ 2,107.06 -.16%
Russell 2000 677.50 -.48%
Wilshire 5000 12,425.64 -.09%
S&P Barra Growth 575.18 -.07%
S&P Barra Value 663.06 +.06%
Morgan Stanley Consumer 601.28 +.25%
Morgan Stanley Cyclical 790.73 -.18%
Morgan Stanley Technology 485.33 unch.
Transports 4,629.98 +.40%
Utilities 406.40 +.47%
Put/Call .95 -10.38%
NYSE Arms 1.0 -30.56%
Volatility(VIX) 16.69 -6.39%
ISE Sentiment 135.0 +6.30%
US Dollar 86.20 -.14%
CRB 333.10 -.14%
Futures Spot Prices
Crude Oil 69.22 -.17%
Unleaded Gasoline 200.85 +.14%
Natural Gas 6.54 +.52%
Heating Oil 191.10 +.19%
Gold 579.70 -.12%
Base Metals 201.09 -.45%
Copper 308.75 -.15%
10-year US Treasury Yield 5.14% +.28%
Leading Sectors
Gold & Silver +2.21%
Airlines +2.0%
I-Banks +.75%
Lagging Sectors
Homebuilders -1.02%
HMOs -1.46%
Oil Service -2.26%
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
SmithBarney:
- Reiterated Buy on (SRZ).
Afternoon/Evening Headlines
Bloomberg:
- Husky Energy, a Canadian oil company, said a hydrocarbon discovery in an oil field offshore Newfoundland and Labrador may boost reserves by about 38%. The discovery in the White Rose field could contain 40 million to 90 million barrels of oil.
- Natural-gas prices fell for the third straight session as temperatures eased in the northern US, trimming demand for the fuel used by power plants to meet air-cooling needs.
Reuters:
- Canadian officials said a gosling that was infected with bird flu in the province of Prince Edward Island didn’t carry the deadly H5N1 Asian strain.
S&P 500 1,240.12 unch.
DJIA 10,974.84 +.30%
NASDAQ 2,107.06 -.16%
Russell 2000 677.50 -.48%
Wilshire 5000 12,425.64 -.09%
S&P Barra Growth 575.18 -.07%
S&P Barra Value 663.06 +.06%
Morgan Stanley Consumer 601.28 +.25%
Morgan Stanley Cyclical 790.73 -.18%
Morgan Stanley Technology 485.33 unch.
Transports 4,629.98 +.40%
Utilities 406.40 +.47%
Put/Call .95 -10.38%
NYSE Arms 1.0 -30.56%
Volatility(VIX) 16.69 -6.39%
ISE Sentiment 135.0 +6.30%
US Dollar 86.20 -.14%
CRB 333.10 -.14%
Futures Spot Prices
Crude Oil 69.22 -.17%
Unleaded Gasoline 200.85 +.14%
Natural Gas 6.54 +.52%
Heating Oil 191.10 +.19%
Gold 579.70 -.12%
Base Metals 201.09 -.45%
Copper 308.75 -.15%
10-year US Treasury Yield 5.14% +.28%
Leading Sectors
Gold & Silver +2.21%
Airlines +2.0%
I-Banks +.75%
Lagging Sectors
Homebuilders -1.02%
HMOs -1.46%
Oil Service -2.26%
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
SmithBarney:
- Reiterated Buy on (SRZ).
Afternoon/Evening Headlines
Bloomberg:
- Husky Energy, a Canadian oil company, said a hydrocarbon discovery in an oil field offshore Newfoundland and Labrador may boost reserves by about 38%. The discovery in the White Rose field could contain 40 million to 90 million barrels of oil.
- Natural-gas prices fell for the third straight session as temperatures eased in the northern US, trimming demand for the fuel used by power plants to meet air-cooling needs.
Reuters:
- Canadian officials said a gosling that was infected with bird flu in the province of Prince Edward Island didn’t carry the deadly H5N1 Asian strain.
BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Networking longs and Energy-related shorts. I added to my (EEM), (IWM) and (QQQQ) shorts today, thus leaving the Portfolio 50% net long. The tone of the market was slightly negative today as the advance/decline line finished modestly lower, sector performance was mixed and volume was below average. Measures of investor anxiety were lower into the close. Overall, today's market performance was mildly bearish. The Johnson Redbook same-store sales index rose 3.2% year over year last week vs. a 3.1% rise the prior week. The long-term average is again of around 2.5%. I continue to see little evidence that a significant decline in consumer spending is on the horizon. I do, however, still expect to see retail sales decelerate back to average levels by next month.
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