Record High Oil…But The Dow Doesn’t Seem To Care!

Stocks shrugged off record high oil on this
quadruple witching Friday. Stocks closed higher for the seventh
straight day. First-hour volume was an all
time record at over 700,000 shares. The
major indices are just off multi-year highs. S&P 500 is 1% off, and the Dow is
3% under its multi-year highs. The S&P turned positive for the year–the first
time since early March. So far this quarter, guidance has been strong and many
companies have announced stock buyback programs.

The current account deficit widened 3.6% to $195.1 billion, hotter
than expected and a new record. The deficit amounts to a record 6.4% of gross
domestic product. The University of Michigan Consumer Sentiment Index
rebounded to 94.8 in June vs. 86.9 in May.

Crude rose above $58, to double top territory and new record highs.
The U.S., British and German embassies in Nigeria were closed, adding to
geopolitical concerns. Nigerian light sweet crude is highly prized by refiners
because it can easily be turned into gasoline. Nigerian is an OPEC member, the
largest producer in Africa and the 11th largest in the world. To top it all off,
the Shell Deer Park refinery is closing for two weeks for unexpected
maintenance.

Demand for gasoline is 3% higher than this time last year. Distillate demand
is up  6.5%. Refiners are operating near capacity and with inventories 9%
over last year, traders are worried not about supply, but about output. 
Technical analyst John Murphy said crude could rise above $70/bbl.
“I don’t think there’s any doubt we’re headed higher,”
Murphy said in an interview today.

Adobe
(
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guidance was a disappointment.

Circuit City
(
CC |
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expected. CC has been losing market share to Best Buy and Wal-Mart recently.
Earlier this week, Best Buy
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KB Homes
(
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in-line. Sales jumped nearly 80%.  Many homebuilders are making historic
highs.

Genentech
(
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Idec
(
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manufacture the recalled drug Tysabri.

Guidant
(
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were reported. GDT fell 1.6%. Johnson & Johnson
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Guidant..

Smith Barney upgraded the hombuilders–after downgrading the sector in
February.

Former Tyco chairman Dennis Kozlowzski was convicted on 23 of
23 counts today, including grand larceny and conspiracy. He was accused of
looting Tyco of more than $500 million.

An FDA advisory committee recommended NitroMed’s
(
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drug for African Americans be approved. 

What is quadruple witching? It’s when stock index futures, stock index
options, stock options and single stock futures all expire. It happens four
times a year, on the third Friday of March, June, September and December.
Sometimes you will see wild gyrations, inconsistency and false price moves as
contracts are covered and rolled over. Some traders either trade lightly or not
at all on options expiration days.

Strong sectors were:  Biotech  
(
$BTK.X.X |
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+2.03%       Homebuilders
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+2.08%     Oil
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+1.95%

Weak sectors were:  Airlines
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-2.41%    Disk Drives
(
$DDX.X |
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(
$GSO.X |
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FedEx
(
FDX |
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Wachovia downgraded Goldman Sachs
(
GS |
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outperform.

Bank of America
(
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Construction Bank for $2.5 billion. IT is the largest single investment to
date in the Chinese banking sector. The company plans to sell shares to the
public later this year.

Host Marriot
(
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Valero
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is too low.

Canada gave 7-years licenses to XM Satellite Radio
(
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Sirius Satellite
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PowerRating). The Canadian market is only 1/10 the size of
the U.S. market.