Portable Alpha Daily

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Thursday, January 18, 2007

Good Morning

Mild declines were seen across the board yesterday, due in part to lower-than-expected results from bellwether Intel Corp. (INTC) and a surprisingly strong increase in the December Producer Price Index. Helping to contain losses was a rally in crude oil prices, a brokerage upgrade of Procter & Gamble Co. (PG) and record profit results from Apple Inc. (AAPL).

The Dow Jones Industrial Average retreated by a meager 5.44 points, or 0.04 percent, to end at 12,577.15. The S&P 500 Index lost 1.28 points, or 0.09 percent, to close at 1,430.62 while the NASDAQ Composite Index declined by 18.36 points, or 0.74 percent, to finish at 2,479.42.

Volume on the NYSE was moderate, with about 1.53 billion shares traded and advancing stocks outnumbering declining ones by about 9 to 8. On the NASDAQ, about 2.38 billion shares were traded, well above last year's daily average of 2.02 billion, with decliners outnumbering advancers by 4 to 3.

NYMEX February crude rose $1.03 to settle at $52.24 a barrel, facilitating gains in oil stocks and helping the broad indexes stifle loses. Shares of Exxon Mobil Corp. (XOM) gained 1.2 percent, or 83 cents, to finish the session at $72.46. London Brent rose $1.16 to $52.78 a barrel. Precious metals also rebounded, with COMEX February gold up $7.40, or 1.2 percent, to settle at $633.30 an ounce.

With inflation still a concern and hopes of a near-term Fed rate cut falling by the wayside, U.S. Treasury prices faltered, with the benchmark 10-year Treasury notes down 8/32 in price for a yield of 4.79 percent.

The benchmark Nikkei Average was up 109.58 points, or 0.81 percent, to finish at 17,370.93, while the broader TOPIX Index rose 0.49 percent to finish at 1,715.17. Asian markets were fueled by the Bank of Japan’s decision to keep its benchmark interest rate steady at 0.25 percent. Britain's FTSE 100 edged higher on Thursday thanks to a mild rally in oil and mining stocks. By 0836 GMT the FTSE 100 was 22.4 points, or 0.36 percent, higher at 6,226.9.

Economic data on Wednesday showed a stronger-than-expected gain in the Producer Price Index in December, however, the index rose at a slower pace than in November, which points to a successful inflation-fighting campaign thus far by the Fed. Industrial production also improved in December, helped by increases in manufacturing and mining. Additionally, the Fed’s Beige Book noted that labor markets are tightening and some businesses are having trouble finding skilled workers. U.S. unemployment was 4.5 percent in December.

Short-Term Technical Indicators

Investor Sentiment

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

Asset Allocation – AAS Model Portfolios are between 56.25% and 75% long currently.

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

Top Rated Major Market Derivative – No buy recommended major market investments

Top Rated Style-Box Derivative – No buy recommended style-box investments

Top Rated Sector Derivative – iShares Dow Jones U.S. Financial (IYF 1/16/07)

Today’s Top “Buy” Recommended Stocks

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

Volt Information Sciences, Inc. (VOL 11/6/06)

Savient Pharmaceuticals Inc. (SVNT 8/9/06)

Martin Marietta Materials, Inc. (MLM 11/6/06)

CarMax Inc. (KMX 7/25/06)

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

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

Hansen Natural Corp. (HANS 1/3/07)

Brown Shoe Company Inc. (BWS 9/12/06)

Public Storage Inc. (PSA 12/13/06)

Today’s Top “Sell” Recommended Stocks

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

Brightpoint Inc. (CELL 9/19/06)

Plexus Corp. (PLXS 12/29/07)

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

Rogers Corp. (ROG 12/6/06)


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