Thursday Watch

Late-Night Headlines
Bloomberg:
- Michael Woolfolk, senior currency strategist at Bank of New York Mellon says the Fed is ready to cut rates at “anytime.”
- Malon Wilkus, CEO of American Capital Strategies, see opportunities in the buyout market.
- Australian business investment climbed three times as much as economists expected. Capital spending on equipment, buildings and plants rose 6.3% in the second quarter from the previous three months, the Bureau of Statistics said in Sydney. Businesses plan to spend 11.5% more in the year ending June 30, 2008, than they predicted three months ago.
- South Korean manufacturers’ confidence rose to a 17-month high, suggesting companies may ramp up production and spur growth in Asia’s third-largest economy.
- Corn fell for the fifth consecutive session on speculation that August rains will boost US production and dry weather in September will aid harvesting of record supplies.

Wall Street Journal:
- Yahoo! Inc.’s(YHOO) head of sales, Gregory Coleman, is resigning as part of a staff reorganization.

MarketWatch.com:
- Those who work at home or remotely report higher levels of satisfaction.
- Shares of US financial stocks rebounded modestly on Wednesday, after taking a pounding in the previous session, with Goldman Sachs(GS) leading gainers in the brokerage sector.

CNNMoney.com:
- Carlyle see credit storm calming. The fund, which invests in mortgage-backed securities, predicts “strong probability” for a dividend in the fourth quarter.

Reuters:
- Apple Inc.(AAPL) shares rose more than 5% on Wednesday on growing expectations that the company will announce a revamped line of iPods next week.

Financial Times:
- Google’s YouTube agreed to a deal with the British societies that collect royalties for 50,000 songwriters, composers and publishers to legitimize the use of their recorded music on the video-sharing Web site.
- Dry bulk freight costs at record high.

Late Buy/Sell Recommendations
Citigroup:
- JC Penney’s(JCP) Back-to-School season is off to a strong start, supported by a fully integrated advertising campaign, improved merchandise flow driving newness, trend-right merchandise, and a multi-channel approach. We believe the company is optimistic on Holiday 2007 based on back-to-school trends thus far.
- Reiterated Buy on (SPSN), target $15.
- Reiterated Buy on (TEX), target $94.
- Reiterated Buy on (ADBE), target $50.

Night Trading
Asian Indices are +1.0% to +1.5% on average.
S&P 500 futures -.13%.
NASDAQ 100 futures -.10%.

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
- (BTH)/.12
- (CIEN)/.31
- (CPWM)/-.64
- (DLM)/.02
- (DELL)/.31
- (ESL)/.55
- (FRE)/.99
- (FCEL)/-.34
- (GCO/.30
- (HRB)/-.35
- (OVTI)/.19
- (SHLD)/1.13
- (TIF)/.35
- (WIND)/.04
- (ZLC)/-.08

Upcoming Splits
- (FTI) 2-for-1

Economic Releases
8:30 am EST
-Preliminary 2Q GDP is estimated to rise 4.1% versus a 3.4% prior estimate.
- Preliminary 2Q Personal Consumption is estimated to rise 1.5% versus a 1.3% prior estimate.
- Preliminary 2Q GDP Price Index is estimated to rise 2.7% versus a 2.7% prior estimate.
- Preliminary 2Q Core PCE is estimated to rise 1.4% versus a 1.4% prior estimate.
- Initial Jobless Claims for last week are estimated to fall to 320K versus 322K the prior week.
- Continuing Claims are estimated to rise to 2575K versus 2572K prior.

10:00 am EST
- The 2Q House Price Index is estimated to rise .3% versus a .4% gain in 1Q.

Other Potential Market Movers
- The weekly EIA natural gas inventory report, (NVLS) mid-quarter update and Moody’s Perspective on the State of the Credit Markets could also impact trading today.

BOTTOM LINE: Asian indices are higher, boosted by technology and commodity 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 Sharply Higher on Positive Earnings Reports, More Economic Optimism

Indices
S&P 500 1,463.76 +2.19%
DJIA 13,289.29 +1.90%
NASDAQ 2,563.16 +2.50%
Russell 2000 787.32 +2.54%
Wilshire 5000 14,693.51 +2.16%
Russell 1000 Growth 587.65 +2.29%
Russell 1000 Value 820.63 +2.05%
Morgan Stanley Consumer 713.12 +1.64%
Morgan Stanley Cyclical 1,017.31 +2.57%
Morgan Stanley Technology 626.77 +2.64%
Transports 4837.42 +2.21%
Utilities 487.87 +2.28%
MSCI Emerging Markets 130.18 +1.65%

Sentiment/Internals
Total Put/Call .93 -27.91%
NYSE Arms .28 -92.78%
Volatility(VIX) 23.81 -9.47%
ISE Sentiment 100.00 +8.70%

Futures Spot Prices
Crude Oil 73.57 +2.57%
Reformulated Gasoline 210.15 +4.27%
Natural Gas 5.43 -2.91%
Heating Oil 204.33 +2.35%
Gold 676.20 +.40%
Base Metals 234.85 -.72%
Copper 335.35 +1.24%

Economy
10-year US Treasury Yield 4.56% +5 basis points
US Dollar 80.67 -.10%
CRB Index 306.83 +.78%

Leading Sectors
Oil Service +3.75%
Computer Hardware +3.5%
Retail +3.5%

Lagging Sectors
Hospitals +1.16%
Restaurants +1.11%
HMOs +1.05%

Evening Review
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

Afternoon Recommendations
Piper Jaffray:
- Reiterated Outperform on (GOOG), target $660.

Afternoon/Evening Headlines
Bloomberg:
- Technology shares rallied, helping the US stock market recover from the steepest decline in three weeks and sending the Nasdaq Composite Index to its biggest advance in a year.
- US property and casualty insurers such as Chubb Corp. and Travelers face “minimal” risk of investment losses and no prospect of ratings downgrades this year from the subprime mortgage crisis, Fitch Ratings said.
- Most insurers and reinsurers face ‘negligible’ risk from the US subprime crisis, S&P said.
- Federal Reserve Chairman Ben S. Bernanke said relaxing portfolio limits on Fannie Mae(FNM) and Freddie Mac(FRE) isn’t necessary for the two largest US mortgage finance companies to help stem a surge in foreclosures.
- Global Hyatt Corp. said a group of investors including Goldman Sachs Holdings will buy a minority stake in the hotel operator for $1 billion.
- Google Inc.(GOOG) may introduce software to run mobile phones within the next eight weeks to promote its e-mail and mapping services, an analyst said.
- Ford Motor(F) is “in good shape financially” and has enough liquidity for its restructuring plan, CEO Mulally said.

MacRumors.com:
- German magazine Capital is reporting that talks between Apple(AAPL) and Volkswagen are in an early stage for a so-called “iCar.”

BOTTOM LINE: The Portfolio finished higher today on gains in my Retail longs, Computer longs, Medical longs and Semi longs. I covered some more of my (EEM) short and my remaining (IWM)/(QQQQ) hedges in the final hour, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished substantially higher, every sector rose and volume was below average. Measures of investor anxiety were slightly above average into the close. Today's overall market action was bullish. There were notable reversals higher in the financials and homebuilders today. Technology, energy and retail shares were especially strong. With so many shorts and underinvested bulls, it doesn't take much to send the market soaring. I don't think Bernanke's letter to Schumer that was released this afternoon said much that investors didn't already know, but it may have been the last straw for many that had hoped for a late-day swoon. I think the key to today's gains was mainly a result of data that showed consumer spending isn't collapsing. Positive comments from analysts on back-to-school PC sales were significant. As well, (WSM), (BIG) and (DLTR) had positive earnings reports. That doesn't mean consumer spending is at strong levels, but investors had been pricing in a dire back-to-school and holiday selling season. With PC sales healthy, that appears much more unlikely, in my opinion. Also important today, many market-leading stocks posted outsized gains, rising 3%-5%. I was too underexposed to the market when the day began. My style is geared around substantially outperforming the market on the upside and keeping downside risks in check. My hedges are not an attempt to make money on the downside, they are used to cut volatility. Those hedges serve their purpose over the long run. I am having one of my best years relative to the market, and I will continue to quickly cut market risk when my analysis and models dictate such a change is warranted to protect gains into year-end. My top three long positions, which I have frequently disclosed for two years, are Google (GOOG), Apple (AAPL) and Intuitive Surgical (ISRG). Those stocks are up +35.3%, +101.7% and +133.5%, respectively, over the last year. Today's gains here will likely lead to further gains in Asia tonight. The Nikkei futures are indicating an up 360 open in Japan tonight.

***Alert***

- I am having technical difficulties. I will try to post after the close.

Economic Releases

- None of note

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

Wednesday Watch

Late-Night Headlines
Bloomberg:
- The world price of raw sugar, among the worst performing commodities this year, may fall further as oversupply will probably persist until 2009, Peter Baron, executive director of the International Sugar Organization, said.
- Brazil’s state-owned oil and gas company Petrobras announced Tuesday that it expects to start large-scale production of ethanol from cellulose between 2015 and 2020.
- The share of US residents classified as poor fell .3% to 12.3%, the Census Bureau said today. Median household income adjusted for inflation rose to $48,200.

NY Times:
- Politicians, regulators and financial specialists outside the US are seeking a role in the oversight of American markets, banks and rating agencies after recent problems related to subprime mortgages.

CNNMoney.com:
- Google: A safe haven stock?

Reuters:
- Problems in the US subprime mortgage market are unlikely to push the US economy into a recession over the next 12 months, the top economist for a leading US business group said on Tuesday.

Nikkei:
- Toshiba Corp. plans to speed up production of sensors used in mobile-phone cameras by a year to meet demand as handsets use higher resolution optics.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (MRVL), target $22.

Morgan Stanley:
- Reiterated Overweight on (STX), target $33.

Night Trading
Asian Indices are -2.25% to -1.25% on average.
S&P 500 futures -.19%.
NASDAQ 100 futures +.03%.

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
- (BIG)/.12
- (BWS)/.29
- (CHS)/.26
- (CTRN)/.05
- (CWTR)/.12
- (PSS)/.44
- (DLTR)/.33
- (ENER)/-.12
- (FRED)/.09
- (JAS)/-.66
- (JOYG)/.70
- (NOVL)/.02
- (SIGM)/.35
- (TIVO)/-.05
- (WSM)/.16

Upcoming Splits
- (FTI) 2-for-1

Economic Releases
10:30 am EST
- Bloomberg consensus estimates call for a weekly crude oil drawdown of -600,000 barrels versus a 1,890,000 barrel increase the prior week. Gasoline supplies are expected to fall by -2,500,000 barrels versus a -5,709,000 barrel decline the prior week. Distillate inventories are estimated to rise by 800,000 barrels versus a 1,356,000 barrel increase the prior week. Finally, refinery utilization is estimated to remain unch. versus a -.2% decline the prior week.

Other Potential Market Movers
- The weekly MBA Mortgage Applications report could also impact trading today.

BOTTOM LINE: Asian indices are lower, weighed down by financial 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 50% net long heading into the day.