Stocks Finish Near Session Lows on Rate Worries and Profit Taking

Indices
S&P 500 1,249.48 -.64%
DJIA 10,805.87 -.76%
NASDAQ 2,232.82 unch.
Russell 2000 677.29 +.53%
DJ Wilshire 5000 12,496.61 -.45%
S&P Barra Growth 598.34 -.42%
S&P Barra Value 646.80 -.84%
Morgan Stanley Consumer 588.09 -.75%
Morgan Stanley Cyclical 774.21 -.36%
Morgan Stanley Technology 528.95 +.07%
Transports 4,113.80 -.39%
Utilities 400.15 -.85%
Put/Call .84 -22.22%
NYSE Arms 1.64 +26.04%
Volatility(VIX) 12.06 +1.43%
ISE Sentiment 165.00 +29.92%
US Dollar 91.57 -.05%
CRB 314.27 +.98%

Futures Spot Prices
Crude Oil 57.51 +.33%
Unleaded Gasoline 150.00 +.19%
Natural Gas 12.67 +.66%
Heating Oil 170.10 +.67%
Gold 496.90 -.36%
Base Metals 145.42 +.48%
Copper 192.10 -.26%
10-year US Treasury Yield 4.48% +.22%

Leading Sectors
Oil Service +1.89%
Oil Tankers +1.64%
Semis +1.23%

Lagging Sectors
Foods -1.10%
Banks -1.61%
Gold & Silver -2.43%

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
Goldman Sachs:
- Reiterated Outperform on RDEN.
- Reiterated Underperform on RAI.

Afternoon/Evening Headlines
Bloomberg:
- US short-term Treasury yields may plunge next year as the economy slows and central bank including the Federal Reserve lower interest rates, said Bill Gross, manager of the world’s largest bond fund.
- Atlantic Ocean current changes may reduce temperatures in Europe within a few decades, the BBC said on its Web site, citing research by the UK’s National Oceanography Centre.
- Ford Motor, whose Explorer has outsold all other sport-utility vehicles in the US for 15 years, is falling short of sales targets with its latest redesigned version.
- The US economy bounced back in October and November from the hurricanes as more workers found jobs and retailers took an “optimistic” view of the holiday shopping season, the Federal Reserve said.
- South Korea’s consumer prices posted the biggest decline in 19 years in November as food costs and oil prices fell, giving the central bank more room to keep interest rates near a record low.
- The deaths of four US women who used Danco’s RU-486 abortion pill were caused by toxic shock from severe bacterial infections, the Centers for Disease Control and Prevention found in a study.
- Research In Motion’s BlackBerry e-mail pager service came closer to being blocked in the US after a federal judge ruled that a $450 million patent settlement isn’t enforceable and rejected a request for a delay in the case.
- Crude oil and gas rose today on speculation that US economic growth will spur fuel consumption.

Financial Times:
- Fidelity Investments will expand into institutional business to increase its funds by up to fourfold under new management.

BOTTOM LINE: The Portfolio finished slightly higher today on gains in my Internet longs, Semi longs and Medical longs. I did not trade in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was neutral today as the advance/decline line finished higher, sector performance was mixed and volume was above average. Measures of investor anxiety were mixed into the close. Overall, today's market action was slightly negative given the decline in the DJIA and Bank stocks. I am still of the opinion that the action over the past few days is just a healthy consolidation after a strong run higher.

Stocks Mixed Mid-day as Positive Economic Data Offsets Higher Rates and Energy Prices

Indices
S&P 500 1,253.38 -.32%
DJIA 10,851.34 -.33%
NASDAQ 2,234.33 +.08%
Russell 2000 677.45 +.58%
DJ Wilshire 5000 12,536.44 -.13%
S&P Barra Growth 600.72 -.02%
S&P Barra Value 649.31 -.46%
Morgan Stanley Consumer 591.44 -.18%
Morgan Stanley Cyclical 777.75 +.10%
Morgan Stanley Technology 530.12 +.29%
Transports 4,120.31 -.25%
Utilities 401.12 -.61%
Put/Call .82 -24.07%
NYSE Arms 1.19 -8.68%
Volatility(VIX) 11.93 +.34%
ISE Sentiment 160.00 +25.98%
US Dollar 91.58 -.04%
CRB 313.22 +.64%

Futures Spot Prices
Crude Oil 57.05 +.97%
Unleaded Gasoline 141.50 +1.43%
Natural Gas 12.43 +5.91%
Heating Oil 161.40 +.33%
Gold 498.40 -1.01%
Base Metals 145.42 +.48%
Copper 192.50 +.71%
10-year US Treasury Yield 4.49% +.48%

Leading Sectors
Oil Service +2.10%
Semis +1.46%
Steel +1.28%

Lagging Sectors
Utilities -.73%
Banks -1.30%
Gold -1.68%

BOTTOM LINE: The Portfolio is higher mid-day on gains in my Internet longs, Semi longs and Medical longs. I covered some of my IWM and QQQQ shorts this morning, thus leaving the Portfolio 50% net long. The tone of the market is slightly positive as the advance/decline line is higher, sector performance is mixed and volume is about average. Measures of investor anxiety are mostly lower. Overall, today’s market action is positive considering the bounce in oil and long-term rates. I am seeing an abnormal amount of crosscurrents today. However, the action overall looks slightly positive given recent gains. Small caps and tech are outperforming, leading to modestly positive breadth. The positive action in Yahoo! (YHOO) is telling given its recent downgrade. Stocks seem to be tracking bond yields very closely today. I expect US stocks to trade mixed from current levels into the close as strong economic data offsets the bounce in rates and oil.

Today's Headlines

Bloomberg:
- The US dollar is headed for its first three-month gain against the euro and yen in almost four years on signs the US economy will expand faster than Europe and Japan and the Fed will keep raising interest rates.
- Wal-Mart may report higher sales growth than Target for the first time in 18 months, a sign efforts to revamp merchandise may be paying off.
- GE, which is exiting the insurance business, will sell 38 million shares of life- and mortgage-insurer Genworth Financial.
- President Bush said Iraqi security forces were achieving growing success in taking over the fight against violent insurgents.
- A judge refused to enforce a settlement that would have ended a lawsuit over patents for Research In Motion’s Blackberry e-mail pager, instead ordering a hearing on whether he should block US service of the device.
- Google has built up cash reserves and plans to hire more workers to fend off competition from companies such as Microsoft, a top executive said.

Wall Street Journal:
- Intel Corp. said more than 40 companies plan entertainment products for its “Viiv” technology, which is designed for home media computers.
- US retailers may get a final boost in sales from this year’s late Hanukkah shopping season.
- ASML US Inc. and other insurers are showing gory surgical operations on their Web sites, in an attempt to educate patients about medical procedures and persuade people to adopt healthier habits.
- Microsoft will begin offering a free trial of its Windows OneCare Live computer-security service today.
- Anheuser-Busch said yesterday that it plans to boost advertising spending for cable television and the Internet and cut back on network television ads to reflect consumer viewing patterns.
- Tiffany, Kay Jewelers and other jewelry sellers are cautiously expanding their collections to cater to a trend among men under 40 for titanium pendants, three-diamond rings, bracelets and other accoutrements.
- DR Horton, Pulte Homes and other US builders say they can boost sales, get better pricing from suppliers, and grab market share by consolidating even if the housing market weakens.
- The average vacancy rate of commercial-office real estate in the US fell to 15% in the third quarter, the sixth-consecutive drop.

FT.com:
- Walt Disney has narrowed the filed of candidates to buy its ABC radio stations to three, which should mean the unit can be sold by the end of the year.

Globes:
- Amdocs Ltd., a maker of telephone-billing software, is in talks with Sprint Nextel for a contract that may be worth tens of millions of dollars.

NY Times:
- Senator Hillary Clinton is now calling for the withdrawal of troops from Iraq next year.

Washington Post:
- US officials plan to stockpile as many as 8 million doses of an experimental vaccine by February to guard against a potential outbreak of avian influenza in humans.
- Mental health drugs are exempted from a US House proposal to push Medicaid recipients to seek cheaper treatments.

San Francisco Chronicle:
- A California judge threw out most legal arguments against the state’s stem cell program that have prevented research grants from being issued.

US Growth Streak Best Since 1986, Manufacturing Strong

- Preliminary 3Q GDP rose 4.3% versus estimates of a 4.0% gain and a prior estimate of a 3.8% increase.
- Preliminary 3Q GDP Price Index rose 3.0% versus estimates of a 3.1% increase and a prior estimate of a 3.1% gain.
- Preliminary 3Q Personal Consumption rose 4.2% versus estimates of a 3.9% gain and a prior estimate of a 3.9% increase.
- Chicago Purchasing Manager for November rose to 61.7 versus estimates of 60.0 and a reading of 62.9 in September.

BOTTOM LINE: The US economy grew at a 4.3% annual rate from July through September, the quickest since the first quarter of last year and evidence of resilience in the face of soaring energy costs related to the hurricanes, Bloomberg reported. As companies gain confidence, inventory rebuilding will continue to spur growth, providing stimulus for an economy that has growth in excess of 3% for 10 straight quarters, the best streak in almost 20 years. The core personal consumption expenditures index, the Fed’s favorite inflation gauge, rose just 1.2% after a 1.7% gain in the second quarter. The economy’s strong performance in spite of the hurricanes is stunning. There is still no evidence of any consumer weakness despite the attempts of many to suggest otherwise. This should help alleviate some of the irrational pessimism that has enveloped many circles.

Manufacturing in the Chicago area expanded more than expected in November, adding to evidence of strength in the economy, Bloomberg reported. The prices paid index jumped to 94.1 from 79.6 in October. The employment component of the index slipped to 50.3 from 51.3 in October. The order backlogs component rose to 62.0, the highest since July 1994. Manufacturing will continue to boost US growth over the intermediate-term as companies rebuild depleted inventories. The jump in the prices paid component is likely an end of hurricane aberration as the CRB Index recently fell through its 200-day moving-average for the first time in almost a year.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Japanese stocks are rising, lifting the Nikkei 225 Stock Average above 15,000 for the first time in five years.
- Rio Tinto Group, the world’s third largest mining company, agreed to sell its stake in Papua New Guinea’s Lihir Gold Ltd. for $294 million to tap bullion prices near their highest in 22 years.

Commercial Times:
- China Steel, Taiwan’s largest steelmaker, may struggle in 2006 to reach half of this year’s expected pretax profit of $1.94 billion, citing Chairman Yao-chung.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on LUV and GNW.

Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.09%.

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
JBX/.59
MCDTA/.00
MERQE/.32
SFD/.55
SNPS/.10
TIF/.16

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Preliminary 3Q GDP is estimated to rise 4.0% versus a prior estimate of a 3.8% increase.
- Preliminary 3Q GDP Price Index is estimated to rise 3.1% versus a prior estimate of a 3.1% increase.
- Preliminary 3Q Personal Consumption is estimated to rise 3.9% versus a prior estimate of a 3.9% rise.

10:00 am EST
- The Chicago Purchasing Manager for November is estimated to fall to 60.0 versus a reading of 62.9 in October.

10:30 am EST
- Bloomberg consensus estimates call for a weekly crude drawdown of 500,000 barrels. Gasoline inventories are estimated to rise 1.2 million barrels and distillate supplies are expected to rise 1.0 million barrels. Finally, refinery utilization is expected to rise 1.0%.

2:00 pm EST
- Fed’s Beige Book

BOTTOM LINE: Asian indices are mostly higher on strength in exporters in the region after strong US economic reports. I expect US equities to trade modestly higher on the open and to fall slightly later in the day, finishing mixed. The Portfolio is 25% net long heading into the day.

Stocks Finish Mixed as Investors Anticipate More Hawkish Fed

Indices
S&P 500 1,257.48 unch.
DJIA 10,888.16 -.02%
NASDAQ 2,232.71 -.30%
Russell 2000 673.69 +.33%
DJ Wilshire 5000 12,552.71 +.04%
S&P Barra Growth 600.86 -.12%
S&P Barra Value 652.29 +.12%
Morgan Stanley Consumer 592.52 +.04%
Morgan Stanley Cyclical 776.99 +.68%
Morgan Stanley Technology 528.57 -.62%
Transports 4,129.89 +.20%
Utilities 403.57 +.40%
Put/Call 1.08 +6.93%
NYSE Arms 1.30 -2.96%
Volatility(VIX) 11.89 +.42%
ISE Sentiment 127.00 -16.99%
US Dollar 91.65 +.74%
CRB 311.23 -.48%

Futures Spot Prices
Crude Oil 56.24 -.46%
Unleaded Gasoline 139.50 -.01%
Natural Gas 11.81 +.63%
Heating Oil 160.60 -.23%
Gold 503.50 unch.
Base Metals 144.73 +.37%
Copper 191.10 -.03%
10-year US Treasury Yield 4.47% +1.60%

Leading Sectors
Steel +2.30%
HMOs +1.31%
Papers +1.19%

Lagging Sectors
Internet -.77%
Alternative Energy -.86%
Airlines -1.36%

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
Goldman Sachs:
- Reiterated Outperform on USB and ADP.

Afternoon/Evening Headlines
Bloomberg:
- The government must show probable cause to obtain information from Cingular Wireless LLC, Verizon Wireless and other providers of cell phone services in the US on the physical location of a user, a federal court ruled.
- Billionaire investor Carl Icahn hired investment bank Lazard Ltd. to conduct an “in-depth strategic analysis” of Time Warner and develop a plan to boost the company’s share prices.
- Crude oil fell and heating oil slipped to a four-month low on speculation that US inventories are sufficient to meet demand. Gasoline plunged to a nine-month low.
- The US dollar rose against the euro and the yen and Treasuries fell after a bigger-than-expected jump in US consumer confidence damped speculation the Fed may be nearing the end of its interest-rate increases.

Financial Times:
- Huawei Technologies, China’s biggest telecom-equipment company, said overseas sales will be about $4 billion this year, exceeding domestic revenue for the first time.

AP:
- New Orleans, devastated by Hurricane Katrina, has started free wireless Internet service in an effort to help its economy.

BOTTOM LINE: The Portfolio finished lower today on losses in my Internet longs, Retail longs and Computer longs. I did not trade in the afternoon, thus leaving the Portfolio 25% net long. The tone of the market was slightly negative today as the advance/decline line finished mixed, sector performance was mixed and volume was about average. Measures of investor anxiety were mostly higher into the close. Overall, today's market action was negative given the sell-off in many market leaders. The Oil Service Index has risen 14.2% since Oct. 20 as investors anticipated a bottom in oil prices in the upper $50s. I suspect a drop in oil below $55 per barrel will spur another round of selling in the stocks, which could temporarily pressure the overall market. However, I continue to view the drop in energy prices as a huge positive for equities over the intermediate-term.

Stocks Mixed Mid-day as Rising Long-term Rates and Profit-taking Offsets Lower Energy Prices and Strong Economic Data

Indices
S&P 500 1,259.60 +.16%
DJIA 10,900.79 +.09%
NASDAQ 2,236.90 -.11%
Russell 2000 674.03 +.38%
DJ Wilshire 5000 12,567.47 +.16%
S&P Barra Growth 601.71 +.02%
S&P Barra Value 653.13 +.25%
Morgan Stanley Consumer 593.29 +.17%
Morgan Stanley Cyclical 777.58 +.76%
Morgan Stanley Technology 529.48 -.44%
Transports 4,136.93 +.36%
Utilities 403.18 +.30%
Put/Call 1.13 +11.88%
NYSE Arms 1.11 -18.76%
Volatility(VIX) 11.88 +.34%
ISE Sentiment 120.00 -21.57%
US Dollar 91.66 +.74%
CRB 312.14 -.19%

Futures Spot Prices
Crude Oil 56.80 -.98%
Unleaded Gasoline 141.50 -.23%
Natural Gas 11.82 +1.60%
Heating Oil 163.70 +.09%
Gold 504.10 +.34%
Base Metals 144.73 +.37%
Copper 191.15 +.03%
10-year US Treasury Yield 4.48% +1.77%

Leading Sectors
Steel +2.46%
HMOs +1.53%
Papers +1.40%

Lagging Sectors
Alternative Energy -.83%
Gold & Silver -.88%
Airlines -1.10%

BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet longs, Computer longs and Retail longs. I added to my IWM and QQQQ shorts and added SNDK short this morning, thus leaving the Portfolio 25% net long. The tone of the market is negative as the advance/decline line is lower, sector performance is mixed and volume is above average. Measures of investor anxiety are mostly higher. Overall, today’s market action is negative considering the better-than-expected economic data and losses in market-leading stocks. The Johnson Redbook same-store sales index rose 3.9% year-over-year last week vs. a 3.8% rise the prior week. This week's gain is up from a 1.5% increase in late April and the 30th week in a row the index has risen 3% or more. Since Oct. 4, when many at the time were calling for a horrible holiday shopping season and a collapse in retail stocks, the Morgan Stanley Retail Index(MVRX) has returned 6.6%, twice the gain of the S&P 500. I continue to expect retailers to outperform through year-end. I expect US stocks to trade mixed-to-lower from current levels into the close on profit-taking and worries over rising long-term rates.

Today's Headlines

Bloomberg:
- Las Vegas Sands is seeking $2.5 billion of loans to expand in the Chinese city of Macau, which may become the world’s largest gambling cent by revenue this year.
- Harrah’s Entertainment is entering Europe with a Caesars hotel in Spain and a $700 million resort project in Slovenia.
- US Treasuries are falling and the US dollar is rising after consumer confidence rose more than forecast and sales of new homes unexpectedly increased to a record, dashing speculation the Fed is about finished raising interest rates.
- Crude oil is falling for a third session on speculation that US inventories are sufficient to meet demand and as OPEC ministers said they don’t expect the group to cut production quotas at a meeting next month.
- BP Plc’s CEO said oil prices today are “unsustainably high” and that natural gas demand is being cut by high prices.

Wall Street Journal:
- Harrah’s Entertainment is likely to announce this week that it’s starting two casino-resort projects in Spain and Slovenia valued together at $1.37 billion.
- The FCC may today suggest that consumers could be helped by letting them buy cable channels individually rather than forcing them to buy packages.
- Exxon Mobil, BP and Royal Dutch Shell are joining the hunt for natural gas in the US as high prices attract drilling in locations once considered uneconomic.
- Worldwide demand for business jets is causing waiting lists, yet manufacturers such as Bombardier, General Dynamics and Textron’s Cessna Aircraft unit are reluctant to boost production.
- The arrival of Airbus SAS’s jumbo A380 jet may create bottlenecks at airports around the world and especially at Los Angeles International Airport.
- Timberland and Overstock.com reported record sales yesterday on their Web sites as US consumers flocked to the Internet on the Monday after Thanksgiving.
- Premiere Radio Networks, a syndication arm of Clear Channel Communications, will offer video “podcasts” of its radio shows next month.
- The NYSE’s share of trading in stocks listed on the exchange fell to its lowest level in 29 years last month, as investors such as hedge funds made electronic trades instead.
- Additional progress in stabilizing Iraq may depend on the continued presence of US forces, Democratic Senator Joe Lieberman wrote.
- Samsung Electronics admitted to conspiring with companies to fix the price of computer chips that use Rambus technology, which may help Rambus’ antitrust case against the chipmaker.

NY Post:
- TiVo Inc. will announce plans today to sell digital-video recorders in Taiwan as part of its strategy to expand overseas.

LA Times:
- Walt Disney this month began selling Mobile ESPN, a cell-phone service that also offers sports news, scores and video clips.
- The California film and tv industries, which employ about 250,000 people in Los Angeles County, are being hurt by the movement of production out of the state.

Fortune:
- Janus Capital Group is considering a management takeover offer of about $17 a share, and hired Morgan Stanley for advice.

NY Times:
- A New Orleans flood protection system designed to bear Category 5 hurricanes may cost $32 billion and take years to complete.

AFP:
- One of Jordan’s most important tribes said in a statement today that it disowned Abu Musab al-Zarqawi, the Jordanian-born leader of the al-Qaeda in Iraq organization.

Durable Goods Orders Bounce Back, Consumer Confidence Jumps, New Home Sales Hit Another Record

- Durable Goods Orders for October rose 3.4% versus estimates of a 1.5% increase and a 2.0% decline in September.
- Durables Ex Transportation for October rose .3% versus estimates of a 1.0% increase and an upwardly revised .2% decline in September.
- Consumer Confidence for November rose to 98.9 versus estimates of 90.2 and a reading of 85.2 in October.
- New Home Sales for October rose to 1424K versus estimates of 1200K and 1260K in September.

BOTTOM LINE: US durable goods orders rose more than forecast in October as the Gulf Coast region recovered from two hurricanes, suggesting demand will encourage more production and help power the economy, Bloomberg said. Unfilled orders rose for a fifth straight month, which likely indicates pent-up demand and production increases into early next year. Bookings for commercial aircraft soared 50.4%. Bookings for non-defense capital goods excluding aircraft, a gauge of future business spending, rose 1.3%. Durable Goods Orders will remain healthy over the intermediate-term on hurricane-rebuilding and orders related to the highway bill.

Consumer confidence rose in November by the most in more than two years as falling gasoline prices encouraged shoppers before the start of the holiday season, Bloomberg reported. The component of the index that tracks consumers’ expectations for the next six months soared to 88.8 from 70.1, the biggest gain since April 2003. As well, the component of the index that measures consumers’ present situation jumped to 114 from 107.8, the largest gain since December 2004. The percentage of consumers that said jobs were hard to get fell to 23.2 from 25.3% the prior month. The percentage of consumers expecting to buy a home increased to 3.1% from 2.8% and the percentage that plan to purchase a major appliance rose to 29.1% from 25%. Retail spending on Visa credit and debit cards surged 11% the two days after Thanksgiving. As I predicted a couple of months ago, consumer sentiment is rebounding sharply. This trend should continue into at least early next year.

US new home sales unexpectedly rose to a record last month, surging the most since 1993, suggesting people bought houses in anticipation of higher mortgage rates, Bloomberg reported. The median price of a new home rose .9% to $231,300. The supply of new homes at the current sales pace fell to 4.3 months from 4.7 months in September. Sales rose 47% in the West, 43% in the Northeast and 1.9% in the South. Sales fell 9.5% in the Midwest. This is just more evidence that the housing market is just slowing not collapsing.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Tuesday Watch

Late-Night Headlines
Bloomberg:
- DaimlerChrysler AG may spend as much as $1 billion to improve flexibility at two St. Louis-area assembly plants that build minivans and pickup trucks.
- Oil may fall below $55 a barrel, extending a 22% decline from August’s record, as warmer weather cuts fuel demand and inventories rise, said Mitsubishi Corp., Japan’s largest trading company.
- Delphi Corp. CEO Miller backed away from his threat to cancel union contracts by mid-December, averting a potential strike that could cripple production at its former parent, GM.
- A premature US troop withdrawal from Iraq might trigger a regional conflict in the Middle East that could draw in predominately Shiite Iran and Sunni Arab states, US Ambassador to Iraq Zalmay Khalilzad warns in a television interview.
- The yen declined in Asia after Japanese government reports showed industrial production last month was less than half what economists forecast.
- Merck, with one victory and one loss in Vioxx lawsuits tried in state courts, may win the first federal trial over the painkiller, lawyers said.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on EBAY, RE and GE

Night Trading
Asian Indices are -1.0% to -.50% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated unch.

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
GME/.14
REY/.35
SMTC/.14
UNFI/.24

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Durable Goods Orders for October are estimated to rise 1.5% versus a 2.4% decline in September.
- Durables Ex Transportation for October are estimated to rise 1.0% versus a 1.1% decline in September.

10:00 am EST
- Consumer Confidence for November is estimated to rise to 90.1 versus a reading of 85.0 in October.

BOTTOM LINE: Asian indices are lower on weakness in exporters in the region. I expect US equities to trade modestly lower on the open and to rally slightly later in the day, finishing mixed. The Portfolio is 50% net long heading into the day.

Stocks Finish Near Session Lows on Profit-taking

Indices
S&P 500 1,257.46 -.85%
DJIA 10,890.72 -.37%
NASDAQ 2,239.37 -1.04%
Russell 2000 671.50 -1.77%
DJ Wilshire 5000 12,548.01 -1.0%
S&P Barra Growth 601.59 -.80%
S&P Barra Value 651.52 -.90%
Morgan Stanley Consumer 592.31 -.56%
Morgan Stanley Cyclical 771.74 -.60%
Morgan Stanley Technology 531.88 -.78%
Transports 4,121.80 -1.37%
Utilities 401.97 -.50%
Put/Call 1.01 +13.48%
NYSE Arms 1.34 +50.57%
Volatility(VIX) 11.84 +8.82%
ISE Sentiment 153.00 -52.34%
US Dollar 91.17 -.95%
CRB 312.72 -.62%

Futures Spot Prices
Crude Oil 57.30 -.10%
Unleaded Gasoline 141.85 +.02%
Natural Gas 11.71 +.65%
Heating Oil 163.65 +.06%
Gold 503.30 +.14%
Base Metals 144.20 +.03%
Copper 190.75 -.18%
10-year US Treasury Yield 4.40% -.57%

Leading Sectors
Disk Drives +1.36%
Telecom +.47%
Restaurants +.09%

Lagging Sectors
Coal -3.03%
Energy -3.44%
Oil Service -3.90%

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
Goldman Sachs:
- Reiterated Underperform on GM.

Afternoon/Evening Headlines
Bloomberg:
- Analysts have improved over the past six quarters as the US stocks most favored by Wall Street have outperformed those that are least favored, according to Citigroup Investment Research’s Tobias Levkovich.
- The US dollar fell the most in more than seven weeks against the euro and dropped versus the yen after an industry report showed US home sales in October declined more than analysts forecast.
- Crude oil fell and heating oil plunged to a four-month low as warm weather in the eastern US and rising inventories spurred selling in the commodities.

Barron’s:
- Palatin Technologies’ treatment for sexual dysfunction in both men and women will soon enter Phase III trials.

Australian:
- BlueScope Steel, Australia’s biggest steelmaker, may cut its domestic prices to stay competitive with cheaper Asian product.

BOTTOM LINE: The Portfolio finished lower today on losses in my Internet longs, Retail longs, Medical longs and Semi longs. I did not trade in the afternoon, thus leaving the Portfolio 50% net long. The tone of the market was negative today as the advance/decline line finished substantially lower, almost every sector fell and volume was below average. Measures of investor anxiety were higher into the close. Overall, today's market action was slightly negative. I view today’s pullback as orderly and healthy, given recent gains. Most losses were confined to the energy sector and stocks that were short-term overextended.

Indices
S&P 500 1,260.11 -.64%
DJIA 10,902.23 -.27%
NASDAQ 2,244.07 -.83%
Russell 2000 672.88 -1.56%
DJ Wilshire 5000 12,576.95 -.78%
S&P Barra Growth 602.62 -.63%
S&P Barra Value 653.18 -.65%
Morgan Stanley Consumer 592.98 -.45%
Morgan Stanley Cyclical 773.22 -.41%
Morgan Stanley Technology 533.37 -.50%
Transports 4,130.18 -1.17%
Utilities 403.12 -.22%
Put/Call 1.02 +14.61%
NYSE Arms 1.20 +34.25%
Volatility(VIX) 11.87 +9.10%
ISE Sentiment 169.00 -47.35%
US Dollar 90.96 -1.17%
CRB 312.74 -.61%

Futures Spot Prices
Crude Oil 57.35 -2.32%
Unleaded Gasoline 141.90 -2.65%
Natural Gas 11.40 -1.89%
Heating Oil 163.50 -3.21%
Gold 498.50 +1.14%
Base Metals 144.20 +.03%
Copper 190.30 +2.67%
10-year US Treasury Yield 4.40% -.57%

Leading Sectors
Disk Drives +1.53%
Telecom +.80%
Gold & Silver +.57%

Lagging Sectors
Coal -2.71%
Energy -2.95%
Oil Service -3.25%

BOTTOM LINE: The Portfolio is lower mid-day on losses in my Internet longs, Medical longs, Semi longs and Retail longs. I added IWM and QQQQ shorts and took profits in a few longs this morning, thus leaving the Portfolio 50% net long. The tone of the market is negative as the advance/decline line is substantially lower, most sectors are falling and volume is about average. Measures of investor anxiety are higher. Overall, today’s market action is slightly negative considering recent gains and the fall in oil and long-term rates. Over the weekend, Newmont Mining's (NEM) president said he sees gold rising to more than $1,000 an ounce in 5-7 years. This reminds me of Valero's (VLO) prediction a few months ago that a "new era for energy pricing" was at hand. Of course, most still believe this prediction. I suspect a sustained move in oil below $50 will break this mentality. Gold will follow oil lower over the intermediate term, in my opinion. I expect US stocks to trade mixed from current levels into the close as short-covering, lower energy prices and declining long-term rates offset profit-taking and housing worries.

Today's Headlines

Bloomberg:
- French Interior Minister Nicolas Sarkozy said 10,000 cars, more than 200 administration buildings and thousands of square meters of commercial property were torched in violence that rocked the country earlier this month.
- Mexico probably will surpass the US in obesity rates for the first time next year.
- US retailers recorded sales of $27.8 billion over the holiday weekend, putting the industry on track for its second-biggest selling season since 1999, said the National Retail Federation.
- Saddam Hussein argued with the judge in his murder and torture case minutes after proceedings resumed in Baghdad today.
- Merck & Co. will eliminate 7,000 jobs and close five plants and said it still has “work to do.”
- Online sales for US retailers rose 24% to $6.96 billion this month as shoppers got an early start on their holiday purchases.
- Crude oil is falling and heating oil touched a four-month low as warm weather in the eastern US reduces fuel consumption, pushing inventories even higher.

Wall Street Journal:
- Tivo Inc. is joining with media-buying groups, including Interpublic Group’s Interpublic Media, to offer customers a way to search for commercials on topics in which they are interested.
- Alvaro de Molina took over as chief financial officer at Bank of America on Sept. 8, and the bank’s shares have risen 9.2% since then, as some investors and analysts bet on de Molina as the “Mr. Fix-It” who’s been needed.
- American Pharmaceutical Partners, a Schaumberg, Illinois-based maker of generic hospital drugs, may acquire its largest shareholder, closely held American BioScience of Santa Monica, California.
- Dallas has distributed about $160 million in grants and tax abatements to convert most of the city’s downtown business district into an upscale neighborhood with 10,000 residences.

NY Post:
- J. Crew Group Inc. will sell men’s accessories out of a custom-outfitted sport-utility vehicle that will make stops throughout Manhattan this week.

Washington Post:
- Democrats are split over legislation aimed at controlling Medicaid growth, with federal lawmakers opposed to the provisions and Democratic governors supporting them.

NY Times:
- Classified advertising on Internet sites rose more than 80% this year, with traffic at Craigslist.org climbing 165% from a year ago.

AP:
- President Bush will travel to Arizona today to speak about border enforcement and call for immigration reform.

Sudan Tribune:
- Sudan will boost oil production to 600,000 barrels a day by the middle of 2006 and may reach 1 million barrels a day by the end of the year, President Umar al-Bashir said.

Existing Home Sales Fall Modestly

- Existing Home Sales for October fell to 7.09 million versus estimates of 7.20 million and 7.29 million in September.

BOTTOM LINE: US previously owned home sales fell a larger-than-expected 2.7% last month, Bloomberg reported. Sales would have declined 3.2% in October excluding hurricane-related buying activity. The median price of an existing home rose 16.6% to $218,000 in October, the largest increase since July 1979. Sales fell 7.4% in the Northeast, 1.9% in the Midwest, 1.8% in the South and 1.2% in the West. Existing home inventories rose to 4.9 months’ worth at the current sales pace, an increase from 4.6 months’ worth the prior month. I continue to believe the housing market is slowing, not plunging, to more healthy sustainable levels.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Monday Watch

Weekend Headlines
Bloomberg:
- U.S. retail sales jumped 22 percent to $27.8 billion during the post-Thanksgiving weekend, as shoppers flocked to stores to buy electronics, clothing and books, the National Retail Federation said.
- Retail spending on Visa credit and debit cards rose 12% on Black Friday, the first day of the holiday shopping season, led by purchases of electronic and computers. Purchases of personal entertainment devices, including Microsoft’s Xbox and Apple’s iPod, as well as computers, accounted for 19% of all retail sales volume.
- Iraqis living abroad will be permitted to take part in the country’s December elections for a new National Assembly, with voting set up in 15 other countries.
- Wal-Mart Stores said November sales at its US stores rose about 4.3%.
- Crude oil is falling in NY after forecasters predicted above-average temperatures in the US Northeast this week, leading to lower demand for fuel.

Barron’s:
- The number of US family foundations has climbed more than 60% during the past six years to about 33,000.

NY Times:
- Roche Holding AG expects to make an announcement on licenses for Tamiflu in coming weeks.
- Web logs are becoming more mainstream and less rebellious as blog advertising rises.
- The switch by large retailers to wireless cash registers from dial-up connections is inevitable.
- The US military is working to help soldiers in Iraq and Afghanistan cope with stress and grief in an effort to ward off post-traumatic stress.
- New York has approved emissions standards for cars and light trucks, based on California regulations, that the state says will add more than $1,000 in costs to each vehicle when adopted.
- Public and corporate pension plans have been investing billions of dollars in hedge funds in an effort to generate higher returns to meet demand from an increasing number of retirees.
- Canadian Prime Minister Martin’s Liberal Party government may fall in a no-confidence vote tomorrow, undercutting an international conference on greenhouse gases in Montreal.
- Verizon Communications and AT&T face large capital expenditures and higher charges for content than cable providers in the telephone companies’ bid to enter the television business.

Washington Post:
- Candidates who aspire to succeed United Nations Secretary General Kofi Annan when his term ends next year have begun seeking backing from the US and other Security Council members.

San Francisco Chronicle:
- Advanced Micro Devices has gained 5 percentage points of share to account for 10% of the market for server microprocessors in the third quarter, citing Gartner Inc.

Crain’s Chicago Business:
- Crane leases in Chicago have soared as much as 25% in the past year as construction of high-rise hotels and office towers boosted demand.

Financial Times:
- Revenue at the biggest investment banks surged after being boosted by their brokerage of hedge funds, citing research by Morgan Stanley.

Sunday Times:
- Rolls Royce Group Plc may open a factory in the US to produce its Trent 1000 aero engines.

AME Info.:
- Saudi Arabia’s Oil Minister, Ali al-Naimi, ruled out a cut in OPEC’s oil production quota when it meets in Kuwait next month.

Le Parisien:
- French President Chirac has little influence on what’s happening in France, Europe and the rest of the world, according to a majority of French people polled by research company CSA.

Weekend Recommendations
Barron's:
- Had positive comments on MEL, PCZ and KEYN.
- Had negative comments on BOT.

Goldman Sachs:
- None of note

Night Trading
Asian indices are +.25% to +1.0% on average.
S&P 500 indicated -.02%.
NASDAQ 100 indicated -.03%.

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/Estimate
- None of note

Upcoming Splits
BRO 2-for-1

Economic Releases
10:00 am EST
- Existing Home Sales for October are estimated to fall to 7.2 million versus 7.28 million in September.

BOTTOM LINE: Asian Indices are higher on falling energy prices and optimism for exporters in the region. I expect US stocks to open modestly higher. The Portfolio is 100% net long heading into the week.

Weekly Outlook

There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - Existing Home Sales
Tues. - Durable Goods Orders, Consumer Confidence, New Home Sales
Wed. - Preliminary 32Q GDP, Preliminary 3Q GDP Price Index, Preliminary 3Q Personal Consumption, Chicago Purchasing Manager, Fed’s Beige Book
Thur. - Personal Income, Personal Spending, PCE Deflator, Initial Jobless Claims, Construction Spending, ISM Manufacturing, ISM Prices Paid, Total Vehicle Sales
Fri. - Change in Non-farm Payrolls, Unemployment Rate

A few of the more noteworthy companies that release quarterly earnings this week are:

Mon. - None of note
Tues. - GameStop Corp.(GME)
Wed. - Chico’s FAS(CHS), Copart(CPRT), Jack in the Box(JBX), McData(MCDTA), Mercury Interactive(MERQE), Synopsys(SNPS), Tiffany & Co.(TIF)
Thur. - Comverse Technology(CMVT), Novell Inc.(NOVL), Omnivision Technology(OVTI)
Fri. - Del Monte(DLM), Dillard’s(DDS)

Other events that have market-moving potential this week include:

Mon. - JPMorgan Consumer & Retail Holiday Conference
Tue. - CSFB Technology Conference, JPMorgan Consumer & Retail Holiday Conference, Merrill Lynch Health Services Conference, CIBC Best Ideas Conference
Wed. - Merrill Lynch Health Services Conference, CIBC Best Ideas Conference, CSFB Tech Conference
Thur. - AG Edwards Computer Conference, CSFB Tech Conference, Merrill Lynch Med Tech Conference, Citigroup Global Paper Conference
Fri. - CSFB Tech Conference

BOTTOM LINE: I expect US stocks to finish the week mixed as worries over the housing market and profit-taking offset more optimism over US economic growth, short-covering, moderating inflation fears and a better employment report. Stocks will likely consolidate recent gains in the near-term before mounting another push higher into year-end. My trading indicators are still giving bullish signals and the Portfolio is 100% net long heading into the week.

Market Week in Review

S&P 500 1,268.25 +2.05%*



Click here for the Weekly Wrap by Briefing.com.

BOTTOM LINE: Overall, last week's market performance was positive considering recent gains and holiday-shortened trading. The advance/decline line rose, most sectors gained and volume was about average on the week. Measures of investor anxiety were mixed. The average 30-year mortgage rate declined for the first time in 13 weeks, falling to 6.28%. This is 107 basis points above all-time lows set in June 2003. Mortgage rates will likely head modestly lower over the intermediate-term. Moreover, the benchmark 10-year T-note yield fell 7 basis points on the week as inflation fears continue to diminish and optimism increased for a Fed “pause” after traders viewed the Nov. 1 Fed minutes. Small-caps and cyclicals continued to outperform on increasing optimism over the health of the US economy. The US dollar rose slightly on the week even as increasing expectations of a European Central Bank rate hike and a US Fed “pause” should have pressured the currency. As well, gold rose again on continuing international diversification out of energy and the euro and into the precious metal. In my opinion, the rise in gold is not a result of increasing inflation fears. Unleaded Gas futures continued their recent collapse and are 50% below September highs even as refinery utilization still remains below normal as a result of the hurricanes. Natural gas supplies decreased slightly this week even as a substantial amount of daily Gulf of Mexico production remains shut-in. Natural Gas has now dropped 24% from recent highs. I continue to believe global energy demand destruction and a substantial increase in supplies into 2006 will continue pushing energy prices substantially lower over the intermediate-term. The S&P 500 is closing in on my mid-year prediction of a double-digit gain. The index is currently up 6.4% for the year.

*5-day % Change

Weekly Scoreboard*

Indices
S&P 500 1,268.25 +2.05%
DJIA 10,931.62 +1.97%
NASDAQ 2,263.01 +1.92%
Russell 2000 683.58 +2.46%
DJ Wilshire 5000 12,675.34 +2.09%
S&P Equity Long/Short Index 1,081.61 +1.37%
S&P Barra Growth 606.42 +1.84%
S&P Barra Value 657.45 +2.24%
Morgan Stanley Consumer 595.64 +.46%
Morgan Stanley Cyclical 776.42 +2.46%
Morgan Stanley Technology 536.06 +2.05%
Transports 4,179.14 +2.37%
Utilities 404.01 +1.63%
S&P 500 Cum A/D Line 8,423.00 +13.61%
Bloomberg Crude Oil % Bulls 34.0 -23.84%
Put/Call .89 +25.35%
NYSE Arms .89 +32.84%
Volatility(VIX) 10.88 -3.29%
ISE Sentiment 321.00 +76.37%
AAII % Bulls N/A
US Dollar 92.04 +.17%
CRB 314.67 +.47%

Futures Spot Prices
Crude Oil 58.71 +.53%
Unleaded Gasoline 145.76 -1.58%
Natural Gas 11.62 -5.76%
Heating Oil 168.92 -2.07%
Gold 492.90 +2.95%
Base Metals 144.16 +2.09%
Copper 185.35 -1.09%
10-year US Treasury Yield 4.42% -1.56%
Average 30-year Mortgage Rate 6.28% -1.26%

Leading Sectors
Oil Service +5.07%
Steel +4.35%
Computer Hardware +4.03%

Lagging Sectors
Computer Services -.77%
Software -1.27%
Airlines -3.79%

One-Week High-Volume Gainers
One-Week High-Volume Losers

*5-Day % Change

***Alert***

The exchanges close at 1 pm EST today. I will post the Weekly Scoreboard later in the afternoon.

Today's Headlines

Bloomberg:
- High-yield, high-risk debt may reward investors in 2006 with returns of 8%, or five times higher than this year, according to John Lonski, chief economist at Moody’s Investors Services.
- The US dollar is rising against the yen after Japan’s Finance Minister Tanigaki said mild deflation “still persists” in the world’s second-biggest economy and the central bank must cooperate with the government to end a seven-year bout of falling prices.
- Taser International said the Nasdaq Stock Market may stop trading its shares because the company has failed to file a quarterly report with the SEC.
- US Treasuries are rising on speculation the Fed may signal it is nearing the end of a series of interest-rate increases on signs inflation remains contained.

Wall Street Journal:
- Tribune’s Chicago Tribune and the Los Angeles Times newspapers may reduce the number of stocks and mutual-funds they list to cut costs.
- Louisiana’s levees may have sprung leaks in countless locations during Hurricane Katrina in addition to the three main breaches, citing engineers and a study by the National Science Foundation.

Chicago Tribune:
- DECT Corp., a Japanese investment group, plans to buy Chicago’s 181 West Madison tower for about $307 million.

SparkSpread:
- Lehman Brothers Holdings hired former Goldman Sachs Group and Amerada Hess oil trader in London as part of an effort to expand into European energy trading.

Detroit Free Press:
- GM CEO Wagoner said the automaker is selling more vehicles in other countries than in the US for the first time.

Business Week:
- Krispy Kreme Doughnuts is looking to build smaller 1,500- to 2,000-square-foot stores that are closer to the size of a traditional doughnut-chain shop, citing CEO Cooper.

Economic Releases

- None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Friday Watch

Late-Night Headlines
Bloomberg:
- Canadian stocks rose to the highest in five years, led by dividend-paying companies such as Toronto-Dominion Bank and BCE Inc., after the government lowered taxes on the payouts and decided against taxing income trusts.
- Jordan’s King Abdullah II appointed a new prime minister and called on the government to undertake a war on terrorism in the wake of the hotel bombings Nov. 9 in the capital, Amman, that killed at least 57 people.
- Nokia Oyj said the company’s handset sales in the greater China region rose 77% in the first nine months compared with a year earlier on increasing demand.

Financial Times:
- The US newspaper industry is under threat as classified advertising moves onto the Internet and circulations continue to fall, citing News Corp. Chairman Rupert Murdoch.

Commercial Times:
- China Steel forecasts its first-quarter sales will fall by $90 million from the fourth quarter on declining product prices and the closure of one of its major plants for maintenance.

Late Buy/Sell Recommendations
Goldman Sachs:
- None of note

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.13%.
NASDAQ 100 indicated -.15%.

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
- None of note

Upcoming Splits
- None of note

Economic Releases
- None of note

BOTTOM LINE: Asian indices are mixed as gains in Taiwan are offsetting losses in Japan. I expect US equities to trade mixed into the early close at 1 pm EST as short-covering offsets profit-taking. The Portfolio is 100% net long heading into the day.

***Alert***

I will be unable to post through Thanksgiving. I will resume posting on Friday. Have a safe and happy holiday and thanks for reading.

Stocks Higher Mid-day on Rising Optimism, Lower Energy Prices and Short-Covering

Indices
S&P 500 1,267.99 +.54%
DJIA 10,928.18 +.52%
NASDAQ 2,264.74 +.50%
Russell 2000 684.47 +.28%
DJ Wilshire 5000 12,672.98 +.51%
S&P Barra Growth 606.25 +.39%
S&P Barra Value 657.42 +.68%
Morgan Stanley Consumer 595.55 +.30%
Morgan Stanley Cyclical 777.36 +.55%
Morgan Stanley Technology 536.23 +.87%
Transports 4,182.99 +.07%
Utilities 401.30 +.70%
Put/Call .68 -29.90%
NYSE Arms .72 -1.97%
Volatility(VIX) 10.81 +1.89%
ISE Sentiment 174.00 -1.14%
US Dollar 91.48 -.02%
CRB 314.08 -.45%

Futures Spot Prices
Crude Oil 58.25 -1.0%
Unleaded Gasoline 146.10 -1.78%
Natural Gas 11.66 +.40%
Heating Oil 169.25 -2.51%
Gold 491.10 -.37%
Base Metals 139.70 -.32%
Copper 185.00 +.14%
10-year US Treasury Yield 4.46% +.97%

Leading Sectors
Steel +3.06%
Gaming +1.52%
Networking +1.47%

Lagging Sectors
Biotech -.71%
Oil Tankers -.72%
Gold & Silver -1.42%

BOTTOM LINE: The Portfolio is higher mid-day as gains in my Internet longs, Medical Information Systems longs, Semi longs, Computer longs and Retail longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is positive as the advance/decline line is modestly higher, most sectors are rising and volume is about average. Measures of investor anxiety are mostly higher. Overall, today’s market action is slightly positive considering recent gains and the bounce in long-term rates. Here are some thoughts on the Xbox 360:
1. The improvement over prior gaming systems is significant.
2. Microsoft (MSFT) over-promised to retailers.
3. There is going to be a severe shortage for the holidays.
4. Stories of ridiculous auctions on eBay (EBAY) will be common, generating more buzz.
5. The Xbox will take more market share from Sony (SNE) than most expect.
6. High definition television and surround sound equipment sales will accelerate as a result.
7. Rumors of excessive crashing are likely over-hyped.

I expect US stocks to trade modestly higher from current levels into the close on short-covering, lower energy prices and more optimism.

Today's Headlines

Bloomberg:
- Worldwide server sales increased 8.1% in the third quarter, the 10th straight advance, as demand increased for computers that run corporate networks and Web sites, researcher IDC said.
- Research In Motion, maker of the BlackBerry e-mail pager, cut its forecast for signing up new clients because of delay in introducing products.
- Crude oil, heating oil and gasoline are falling after an Energy Department report showed that US fuel stockpiles rose and on forecasts for warmer weather in the US Northeast.
- US Treasuries are falling after the government’s auction of two-year notes drew less demand than some traders expected, a day after the Fed signaled it may be ready to slow the pace of interest-rate increases.

Wall Street Journal:
- Google’s expansion has sparked a hiring frenzy in Silicon Valley as Internet companies compete for qualified candidates.
- Neurointensive care is helping stroke patients once considered untreatable to recover from brain damage.
- Saks Fifth Avenue, Ralph Lauren, Bergdorf Goodman and other retailers are finding e-mail advertising is one of fashion’s most effective marketing methods.
- Verizon Communications and Cablevision Systems are fighting in NYC and other US communities as phone companies’ network upgrades push them into competition with cable companies.
- Loral Space & Communications may add as many as 600 employees at its satellite-making unit.
- The Motion Picture Association of America and Bram Cohen, creator of software used to download movies illegally over the Internet, reached an accord to remove links to copyrighted movies from Cohen’s search engine and Web site.
- The IRS plans more audits next year as agents examine more returns of US taxpayers with incomes of at least $100,000 for evidence of abusive shelters, offshore accounts or transactions designed to avoid paying taxes.

Washington Post:
- The Defense Department plans to cut the number of US troops in Iraq early next year by as many as three combat brigades, from 18 now, citing unidentified senior military officers.

Rocky Mountain News:
- Denver-area single-family homes sold for an average of $309,030 in November, down from $314,586 in October and $289,934 a year ago.

NY Times:
- The US energy-drinks market grew 61% to $3 billion this year, citing Beverage Digest.

AP:
- Iraqi Foreign Minister Zebari arrived in Tokyo today for a four-day visit to meet with Prime Minister Koizumi and Foreign Minister Aso to discuss Japan’s support for Iraq’s reconstruction.

Gazeta Wyborcza:
- An Iraqi government delegation will visit Poland on Dec. 6 to discuss the presence of Polish troops in Iraq and investment opportunities for Polish companies in the Middle Eastern country.

Jobless Claims Rise, Consumer Sentiment Improves

- Initial Jobless Claims for last week rose to 335K versus estimates of 312K and 305K the prior week.
- Continuing Claims rose to 2824K versus estimates of 2750K and 2765K prior.
- The Final Univ. of Mich. Consumer Confidence reading for November rose to 81.6 versus estimates of 81.0 and a prior estimate of 79.9.

BOTTOM LINE: The number of Americans filing first-time claims for unemployment benefits rose more than forecast last week, suggesting the Veteran’s Day holiday may have helped push filings down to a four-month low a week earlier, Bloomberg reported. The unemployment rate for people eligible for benefits, which tracks the US unemployment rate, stayed at 2.2%. The four-week moving-average of jobless claims rose to 323,250 from 322,000. I continue to believe the labor market will remain healthy, but fail to surpass pre-hurricane levels, which will help hold unit labor costs(the largest component of inflation) in check.

Confidence among US consumers rose this month, rebounding from its lowest level in 13 years as people paid less at the gas pump, Bloomberg said. Unleaded gas futures have now collapsed almost 50% from September highs. The current conditions component of the index, which measures Americans’ perceptions of their financial health and whether or not it’s a good time to buy big-ticket items like cars, jumped to 100.2 from 91.2 the prior month. With the economy in the middle of the longest 3%+ growth streak since 1986, I continue to believe the irrational pessimism that has permeated the consumer psyche will evaporate over the intermediate-term.

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Economic Commentary
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Wednesday Watch

Late-Night Headlines
Bloomberg:
- Shanghai copper futures fell the most in a month following price declines in London and New York on speculation China has rescheduled part of the 200,000 tons of deliveries its was due to make to international markets.

Commercial Times:
- Quanta Computer sees its fourth-quarter to Dec. 31 notebook computer shipments gaining as much as 15% from the third quarter.
- AU Optronics plans to spin off three of its older plants early next year to focus on making large-sized liquid-crystal displays.
- International orders for Taiwan’s information technology products this year are expected to grow 19.7%, twice the original forecast of 10%.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Underperform on NFS and DE.

Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated +.06%.

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
DCN/-.02
HRL/.57
LGND/-.16
PDCO/.33

Upcoming Splits
- None of note

Economic Releases
8:30 am EST
- Initial Jobless Claims for last week are estimated to rise to 312K versus 303K the prior week.
- Continuing Claims are estimated to fall to 2750K versus 2793K prior.

9:45 am EST
- Final Univ. of Mich. Consumer Confidence for November is estimated to rise to 81.0 versus a prior estimate 79.9.

10:30 am EST
-Bloomberg consensus estimates call for a weekly crude build of 250,000 barrels. Gasoline inventories are estimated to rise 1.0 million barrels and distillate supplies are expected to rise 700,000 barrels. Finally, refinery utilization is expected to rise 1.5%.

BOTTOM LINE: Asian indices are higher, boosted by semiconductor companies in the region. I expect US equities to open modestly higher and to maintain gains into the afternoon. The Portfolio is 100% net long heading into the day.

Stocks Finish at Session Highs as Fed Hints at "Pause"

Indices
S&P 500 1,261.23 +.51%
DJIA 10,871.43 +.47%
NASDAQ 2,253.56 +.53%
Russell 2000 682.55 +.53%
DJ Wilshire 5000 12,609.54 +.53%
S&P Barra Growth 603.88 +.40%
S&P Barra Value 652.97 +.61%
Morgan Stanley Consumer 593.78 +.03%
Morgan Stanley Cyclical 773.08 +.67%
Morgan Stanley Technology 531.58 +.69%
Transports 4,180.19 +.57%
Utilities 398.51 +.21%
Put/Call .97 +22.78%
NYSE Arms .73 -7.35%
Volatility(VIX) 10.60 -2.03%
ISE Sentiment 176.00 -22.12%
US Dollar 91.50 -.58%
CRB 315.50 +.60%

Futures Spot Prices
Crude Oil 59.00 +.27%
Unleaded Gasoline 148.65 -.07%
Natural Gas 11.75 +1.21%
Heating Oil 174.60 +.57%
Gold 494.80 +.39%
Base Metals 140.15 -1.73%
Copper 184.75 unch.
10-year US Treasury Yield 4.42% -.74%

Leading Sectors
Oil Service +2.20%
Disk Drives +2.18%
Homebuilders +1.85%

Lagging Sectors
Computer Services -.20%
Steel -.95%
Airlines -2.09%

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
Goldman Sachs:
- Reiterated Outperform on ENH, UVN and COH.
- Reiterated Underperform on GCO, SBSA and ROIAK.

Afternoon/Evening Headlines
Bloomberg:
- Ahmed Omar Abu Ali, a US citizen accused of plotting with al-Qaeda terrorists, was found guilty on nine charges that included conspiracy to assassinate President Bush.
- Federal Reserve policy makers discussed the need “before long” to change their outlook for the benchmark US interest rate, with some expressing concern they might go too far, the minutes of their Nov. 1 meeting showed.
- US Treasuries rose after the minutes of the Federal Reserve’s most recent meeting on interest rates showed the central bank is preparing to slow down the pace of interest rate increases.
- Microsoft’s new Xbox 360 video-game console began selling out at stores across the US, a boon for Chairman Bill Gate’s aim to wrest control of the $28.5 billion industry from Sony Corp.
- Travelers entering the US with fever and other flu-like symptoms would be reported by the airline or ship that brought them, under new rules proposed today, a US public-health official said.

Reuters:
- CBS Corp. is in talks with Google about making its video searchable and available on demand, citing CBS Chairman Leslie Moonves.

AP:
- New York Supreme Court Justice Laura Blackburne should be fired for helping a robbery suspect evade arrest by having him taken out a back door of her Queens courthouse, the state’s Commission on Judicial Conduct found.
- The University of Kansas’s religious studies department plans to offer a class next semester that labels intelligent design a myth. Intelligent design holds that nature is too complicated to have happened by chance alone and had to have been created by a higher being.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my Internet longs, Retail longs, Medical longs, Semi longs and Homebuilding longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was positive today as the advance/decline line finished modestly higher, almost every sector rose and volume was above average. Measures of investor anxiety were mixed into the close. Overall, today's market action was positive. It appears to me that P/E multiple expansion was at work today. The S&P 500's forward P/E is 16.45. To put this in perspective, an expansion back to a P/E of 20, with no earnings growth, would mean a 22% gain for the market from current levels.