Portable Alpha Daily

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Tuesday, January 09, 2007

Good Morning

The bulls fought back on Monday and U.S. stocks advanced moderately with help from brokerage upgrades in tech sectors. UBS and Goldman Sachs boosted investor optimism with upgrades of International Business Machines Corp. (IBM) and Apple Computer Inc. (AAPL). Retailer Gap Inc. (GPS) also had a solid session with shares up 7.3 percent on a report that it had hired Goldman Sachs to explore strategic alternatives. However, not all news was good in the retail sector, as Goldman Sachs downgraded Wal-Mart Stores Inc. (WMT) saying returns from earlier investments will take longer than originally expected.

Also paring broad-market gains yesterday was the pharmaceutical sector, as traders exhibited concern that a Democrat-led U.S. Congress would lead to lower Medicare prescription drug prices. GlaxoSmithKline (GSK) fell by 2.2 percent and AstraZeneca (AZN) by 1.9 percent.

The Dow Jones Industrial Average improved 25.48 points, or 0.21 percent, at 12,423.49 while the S&P 500 Index added 3.13 points, or 0.22 percent, at 1,412.84. The NASDAQ Composite Index advanced 3.95 points, or 0.16 percent, at 2,438.20. Trading was moderate on the NYSE where about 1.57 billion shares changed hands and advancing issues beat decliners by about 3 to 2. On the NASDAQ, about 1.95 billion shares traded, with advancers equaling decliners.

A speech by Federal Reserve Vice Chairman Donald Kohn boosted shares after he said the U.S. economy is poised for moderate growth and lower inflation. This quelled fears raised last week after minutes from the Fed's December meeting showed some Fed officials felt risks to economic growth had increased. Aside from fourth-quarter earnings beginning today with Dow component Alcoa Inc. (AA), investors are looking ahead to tomorrow’s Commerce Department report on international trade and retail sales on Friday.

The dollar traded mixed against the other major currencies Monday. The Euro bought $1.3019, up slightly from $1.3009 on Friday. The British pound rose to $1.9378 from $1.9301, while the dollar bought 118.74 yen.

U.S. crude prices dipped to $55 a barrel toward the end of the day. They had risen earlier after Russia halted exports through a pipeline that supplies a fifth of Germany's demand and top exporter Saudi Arabia detailed February supply cuts. U.S. light crude oil for February delivery was down 78 cents a barrel to $55.30. Brent crude fell 88 cents to $54.70.

The FTSE 100 Index ended down 25.9 points at 6,194.2 on Monday, weighed down by property and oil shares while miners gained due to rallying metals prices. Japan's Nikkei Average ended up 146.18 points at 17,237.77 as expectations of an interest rate hike next week helped banking stocks post gains. The broader TOPIX Index was up 1.00 percent at 1,692.12.with heavy volume on both the NYSE and NASDAQ.

Short-Term Technical Indicators

Investor Sentiment

Long-Term Market Model – Bearish since December 8th.

Asset Allocation – 18.25% to 75% long within the actively-managed, alpha producing portion of the overall portable alpha portfolio.

Beta Exposure and Portable Alpha Generation
Date = Date of AAS “Buy” or “Short/Sell” Recommendation

Top Rated Major Market Derivative – No buy recommended major markets

Top Rated Style-Box Derivative – No buy recommended style-boxes

Top Rated Sector Derivative – No buy recommended sectors

Today’s Top “Buy” Recommended Stocks

NBTY, Inc. (NTY 12/5/06)

F5 Networks Inc. (FFIV 9/20/06)

The Goodyear Tire & Rubber Co. (GT 8/23/06)

Precision Castparts Corp. (PCP 9/20/06)

Savient Pharmaceuticals Inc. (SVNT N/A)

Par Pharmaceutical Companies Inc. (PRX 12/20/06)

Rock-Tenn Co. (RKT 4/27/06)

Angelica Corp. (AGL 10/12/06)

Polo Ralph Lauren Corp. (RL 8/28/06)

Ceradyne Inc. (CRDN 11/1/06)

Today’s Top “Sell” Recommended Stocks

CONSOL Energy Inc. (CNX 12/15/06)

Lenox Group Inc. (LNX 12/22/06)

Intuitive Surgical Inc. (ISRG 12/19/06)

Peabody Energy Corp. (BTU 12/14/06)

Carpenter Technology Corp. (CRS 10/26/06)


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