Back in the Saddle

"Many of life's failures are people who did not realize how close they were to success when they gave up." - Thomas Edison

Morning News of Note:

• Small Cap Stocks: Heard on the Street... As They Play Catch-Up, Smaller Stocks May Outperform Their Bigger Brethren While the major stock indexes have been muddling along for months, below the market's surface, shares of small and midsize companies continue to climb. Some experts warn that things are getting overheated for shares of these kinds of companies. But as long as the economy -- now experiencing the aftereffects of Hurricane Katrina -- continues to show strength, these stocks could outperform. (Full Story) WSJ
• GOOG MSFT: Microsoft, Google Dispute Heats Up Tones of Rivalry Are Heard In Battle Over the Defection Of a Worker to Search Engine Microsoft Corp. and Google Inc. meet in a Seattle courtroom today to debate a decision in an increasingly heated employment battle over Google's hiring of a former Microsoft vice president. Microsoft plans to argue that it should be granted a preliminary restraining order barring the former vice president, Kai-fu Lee, from performing work at Google that would compete with his previous work at Microsoft. Google opposes the order. (Full Story) WSJ
• WMT: Wal-Mart Cancels Annual Meeting On Holiday Plans Wal-Mart Stores Inc., battling lackluster sales and concern about rising energy prices, faces another potential business hurdle as it was forced to cancel its annual managers meeting for holiday planning in Dallas because the city's convention center is being used as a shelter for Hurricane Katrina evacuees from New Orleans. The meeting, which had been scheduled for next week, brings together managers from the Bentonville, Ark., retailer's 3,200 Wal-Mart stores for strategy sessions and a look at the featured merchandise and marketing plans for the important holiday selling season (Full Story) WSJ

Market Comments: The market is rallying strongly at the open. Oil prices are down as increasing supply in the form of relief from other parts of the globe are heading toward the gulf. Wall St. is back from their summer vacations, and the fall trading season is in full tilt.

Retail stocks are up nicely (+1.2%), likely on a bounce after last week's schmeissing, as are biotechs (+2.1%). Energy stocks are lower, likely on profit taking after last week's runup.

It's still early, so it remains to be seen if this early rally can maintain strength into the close. But I wouldn't be surprised to see additional short covering to keep a bid under the market.

long GOOG