Bull Radar

Style Outperformer:

Small-cap Value (+1.63%)

Sector Outperformers:

Retail (+4.22%), Airlines (+2.14%) and Banks (+1.88%)

Stocks Rising on Unusual Volume:

IAT, MBR, OI, IVC, ADS, SNA, CCK, WCC, ADBL, CNQR, ODFL, TSCO, AMAG, EXPO, MLNX, WBSN, WPPGY, GMCR, ALGT, EMKR, PCCC, ININ, HINT, UFPI, RDWR, INFA, RSTI, HURC, MA, CCRT, SHLD, MI, JCP, WSBC, TLK, RTP, FCX, BZP, SFG, HP, ESV, GOLD and BP

Links of Interest

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Thursday Watch

Late-Night Headlines
Bloomberg:
- The Senate Finance Committee adopted a one-year extension of tax credits for renewable electricity production as part of an economic stimulus measure approved today.
- An economic-stimulus plan approved by a US Senate committee would provide a windfall worth millions of dollars to the same banks, lenders and homebuilders that some say helped cause the subprime-mortgage crisis.
- S&P lowered or may cut ratings on $534 billion of residential mortgage securities and collateralized debt obligations.
- Amazon.com(AMZN), the world’s largest Internet retailer, said fourth-quarter profit more than doubled on higher holiday sales of electronics, video games and toys. The shares fell 12% in late US trading after it forecast operating income that trailed analysts’ estimates.
- Goldman Sachs(GS) and Fidelity Intl. will need to pare holdings in India’s commodity exchanges after the government dropped plans to allow overseas investors to own larger stakes.
- Crude oil fell for the first time in six days after a US government report showed that gasoline demand fell to its lowest in two years.
- Japan’s wages fell at the fastest pace in more than three years in December as bonuses plunged.
- Lenovo Group Ltd., Asia’s second-largest maker of personal computers, tripled profit after increasing sales to customers in the US, India and China.
- Barack Obama said his party needs to select a presidential nominee who will break with the past, in a veiled swipe today at his leading opponent for the Democratic Party’s nomination, Hillary Clinton.
- Romney Questions McCain’s Conservative Credentials in Debate.

CNBC:
- Latest Rate Cut Could Energize Housing Market.
- US Mortgage Applications Near 4-Year High: MBA

CNNMoney.com:
- More than half of the respondents in a recent survey said that prices for gasoline and home heating oil were their number one economic concern for 2008, topping recession, foreclosure, and unemployment.
- Survey: 49% of US tweens buy music on iTunes.

Forbes.com:
- America’s Fastest-Growing Metros.

USA Today.com:
- 58% of delinquent homeowners don’t know their lenders may offer ways to help them keep their homes, and 56% don’t know that free counseling exists to help them, a survey found.

Financial Times:
- John Thain, Merrill Lynch’s(MER) new CEO, said he expected individual credit insurers would receive capital infusions from investors, but that it would be difficult to craft an “industry-wide” bail-out for the beleaguered guarantors.

Late Buy/Sell Recommendations
Citigroup:
- Reiterated Buy on (OI), target $55.

Night Trading
Asian Indices are -.50% to +1.5% on average.
S&P 500 futures -.36%.
NASDAQ 100 futures -.87%.

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Earnings of Note
Company/EPS Estimate
- (MA)/.73
- (MAT)/.73
- (LEA)/.67
- (GR)/.92
- (BMY)/.34
- (LLL)/1.61
- (CVS)/.55
- (HOT)/.66
- (BKC)/.32
- (UA)/.31
- (RTN)/.91
- (ATK)/1.59
- (HOLX)/.49
- (MCK)/.80
- (VRSN)/.29
- (CA)/.26
- (DRIV)/.53
- (MNST)/.38
- (ISRG)/1.05
- (CERN)/.51
- (OMCL)/.27
- (DLB)/.34
- (GOOG)/4.45
- (ERTS)/.91
- (ICE)/.92
- (GMCR)/.11
- (ACS)/.83
- (SAF)/1.44
- (BTU)/.79
- (WYE)/.79
- (MBI)/-2.98
- (PG)/.97
- (ALTR)/.19
- (BUD)/.32
- (CELG)/.31
- (CL)/.89
- (IMCL)/.26

Upcoming Splits
- (PEG) 2-for-1

Economic Releases
8:30 am EST
- Personal Income for December is estimated to rise .4% versus a .4% gain in November.
- Personal Spending for December is estimated to rise .1% versus a 1.1% increase in November.
- The PCE Core for December is estimated to rise .2% versus .2% gain in November.
- Initial Jobless Claims for this week are estimated to rise to 320K versus 301K the prior week.
- Continuing Claims are estimated to rise to 2675K versus 2672K prior.
- The 4Q Employment Cost Index is estimated to rise .8% versus a .8% gain in 3Q.

9:45 am EST
- The Chicago Purchasing Manager report for January is estimated to fall to 52.0 versus 56.4 in December.

Other Potential Market Movers
- The weekly EIA natural gas inventory data, NAPM-Milwaukee, Help Wanted Index, (TEC) Analyst Meeting, Wachovia Healthcare Conference, Banc of America Gaming Conference and Raymond James Growth Airline Conference could also impacting trading today.

BOTTOM LINE: Asian indices are mostly 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 75% net long heading into the day.

Stocks Finish Slightly Lower on Profit-taking, Bond Insurer Worries

Evening Review
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In Play

Stocks Higher into Close on 50 Basis Point Fed Rate Cut

BOTTOM LINE: The Portfolio is higher into the final hour on gains in my Computer longs, Retail longs, Internet longs and Biotech longs. I added to my (GILD) long and took profits in a trading long today, thus leaving the Portfolio 75% net long. The overall tone of the market is positive as the advance/decline line is higher, most sectors are rising and volume is heavy. Investor anxiety is slightly above average. Today’s overall market action is very bullish. Technology and financial shares are especially strong. The financials ability to build on recent gains despite news that a bond insurer will be downgraded today is very impressive. I suspect this is mainly due to the fact that it is very likely the most heavily shorted sector in US history. I also suspect the many bears will begin to switch their arguments again to a focus on inflation and away from a recession over the coming months. We will also likely hear more stagflation talk even though data are no where near stagflation levels. There remain a very large number of investors still on the sidelines who believe a complete retest or new market lows are a certainty. I continue to believe this should keep pullbacks in the major averages relatively mild and short-term in nature. The VIX is falling 5.0% today, but remains high at 26.0. Nikkei futures indicate an +300 open in Japan and DAX futures indicate an +125 open in Germany. I expect US stocks to trade mixed-to-higher into the close from current levels on short-covering, less economic pessimism and bargain-hunting.

Today's Headlines

Bloomberg:
- The Fed lowered its benchmark interest rate by half a percentage point to 3%, the second cut in as many weeks.
- David Dreman Sees ‘Major Opportunity’ in Financials.
- Fed Cuts May Prevent Subprime Shock, Analysts Say.
- Mortgage applications in the US increased last week, led by a surge in refinancing as borrowing costs hovered near two-year lows.
- Qatar Energy Minister Abdullah bin Hamad al-Attiyah says OPEC may consider an output cut.
- Yahoo! Inc.(YHOO) may be a takeover target following a 40% drop in its stock price.
- Ten-year Treasury notes fell a third day as a private report indicated US job growth accelerated this month, demonstrating strength in the job market.

Wall Street Journal:
- Big Investors Intrigued by Retail Stocks.
- US legislators may raise the amount of cash states can borrow to finance housing projects, as a way of helping homeowners who need refinancing.
- US Government Awards $114M To 4 Companies For Cellulosic Ethanol Projects.

NY Times:
- Rule Change to Help Smaller Companies Raise Funds.

Wired:
- One company looks particularly well-positioned to weather a potential economic downturn. Google’s(GOOG) focus on highly targeted, measurable advertising makes it more recession-proof than many other businesses in tech.

Barron’s:
- Investors Use Options to Hedge Before Fed Move.

USA Today:
- Nearly five years after the US-led invasion of Iraq, allied countries have paid 16% of what they pledged to help rebuild the war-torn country.

ZDNet:
- iPhone to Provide Access to Corporate Emails.

Washingtonpost.com:
- Sprint(S) Tries to Connect With Other Firms. Talks on National Network Includes Intel(INTC), Google(GOOG), Clearwire(CLWR).