Tuesday's US Market Wrap

by: Between the Hedges

From Between the Hedges:

Stocks Finish Sharply Higher as Energy Prices Continue to Plunge and Retail Sales Rise More than Estimates

S&P 500 1,275.53 +1.0%
DJIA 11,028.39 +1.25%
NASDAQ 2,262.17 +1.0%
Russell 2000 719.70 +1.29%
S&P Barra Growth 604.49 +.81%
S&P Barra Value 667.39 +1.21%
Morgan Stanley Consumer 597.95 +.92%
Morgan Stanley Cyclical 796.19 +2.23%
Morgan Stanley Technology 532.37 +.80%
Transports 4,407.78 +2.55%
Utilities 403.19 -.19%
Put/Call .85 -15.84%
NYSE Arms .78 -22.38%
Volatility(VIX) 12.25 -8.24%
ISE Sentiment 117.00 -30.36%
US Dollar 90.51 -.03%
CRB 325.05 -.77%

Futures Spot Prices
Crude Oil 59.42 -.25%
Unleaded Gasoline 138.20 -.21%
Natural Gas 7.09 -.30%
Heating Oil 160.71 -.18%
Gold 550.30 +.26%
Base Metals 168.37 +1.57%
Copper 226.65 unch.
10-year US Treasury Yield 4.60% +.69%

Leading Sectors
Airlines +3.78%
Steel +3.47%
Wireless +2.63%

Lagging Sectors
Alternative Energy -.68%
Energy +1.23%
Oil Service -2.76%

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
PM Market Call
After-hours Movers
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on (NYSE:SSP).
- Reiterated Underperform on (NYSE:MMC).

Afternoon/Evening Headlines
- Microsoft(NASDAQ:MSFT) is aiming to get the next version of its Windows program in stores in time for the holiday shopping season.
- Alcoa(NYSE:AA), Alcan(NYSE:AL) and the rest of the aluminum industry will see their already weak credit quality worsen as they boost spending to build new smelters in areas with lower energy costs.
- Legg Mason(NYSE:LM), Eastman Kodak’s(EK) biggest shareholder, increased its bet on the world’s largest photography company in the fourth quarter as Kodak’s shares approached 25-year lows.
- Bill Ackman, the activist investor who lobbied for spinoffs at two of the nation’s largest fast-food chains, said that his hedge funds have acquired stakes in Hilton Hotels(NYSE:HLT) and Office Depot(NASDAQ:ODP).
- Abercrombie & Fitch(NYSE:ANF) said fourth-quarter profit jumped 58%, helped by sales of jeans, fleece tops and polo shirts.
- Crude oil fell below $60 a barrel for the first time in 2006 and gasoline futures dropped to the lowest in almost a year as speculation increased that inventories would rise further this week.

- Afghanistan’s President Hamid Karzai, who visits Pakistan today, will call on Pakistani leaders to find and close bases used by Taliban fighters on Pakistani territory.

BOTTOM LINE: The tone of the market was positive today as the advance/decline line finished higher, almost every sector gained and volume was average. Measures of investor anxiety were mostly lower into the close. Overall, today's market action was positive as investors finally acknowledged the very positive implications of the decline in energy prices. As I predicted a couple of weeks ago, it looks like the oil speculators did in fact run out of firepower on Feb.1 when oil was trading near $70/bbl. Oil closed floor trading at session lows today and is now down $1.72 to $59.52 on the day. Around $56/bbl. is a key technical level for the long-term oil bulls. I expect this level to give way convincingly over the coming weeks, which should signal an end to the energy mania.