Quarter-end strength shows up

"The rung of a ladder was never meant to rest upon, but only to hold a man's foot long enough to enable him to put the other somewhat higher." - Thomas H. Huxley

Morning News of Note:

• Tobacco: Canadian Supreme Court upholds British Columbia govt ruling that BC Govt can sue tobacoo co's to recover money spent to treat smokers' illnesses (Thursday)
• US Economy: Fed Govt Santomero said US interest rates must rise to contain inflation; US consumer confidence to rebound after storms; confident 2006 US GDP 3.5%- % // Fed Gov Kohn said oil surge will ultimately boost non-energy prices; said Fed needs much better understanding of inflation, needs to improve models of inflation risk; Fed Gov Stern said Fed grappling with energy impact on inflation (Thursday)
• NAND Chips: Remember Lowly Memory Chips? They're Back, Changing Industries The falling cost and rising capacity of a popular memory chip are triggering a shake-up in the global electronics market. The chip, perhaps best known from the memory cards in digital cameras, uses something called NAND flash memory to store data, songs, photos and lately video in a tiny sliver of silicon. Major advances in the chip's technology have giant electronics companies jockeying for position as suppliers of NAND chips are scrambling to protect other product lines from the competition. (Full Story) WSJ
• Oil Output: Oil Output Will Peak, But When? A peak in global oil production is either upon us or comfortably decades away, depending on whom you ask. Experts on a panel discussion on the subject at the John S. Herold energy conference here this week agreed that daily global oil production, now about 85 million barrels a day, will indeed "peak" at some point. The question, of course, is when. (Full Story) BARRONS

Market Comments: Personal income and personal spending both came in below expectations this morning, due in part to the affects of Hurricane Katrina. Consumer sentiment also came in lower than expected.

Despite the subdued economic reports rolling in, the market was able to reverse yesterday's early losses, and finish with a solid accumulation day (large-range outside day). The SPX recaptured both the 20-day and 50-day overhead necktie, as well as closing above the key 1225 level. So count yesterday as Day 1 in a new rally attempt, but don't get too excited unless we see a confirmation rally sometime next week.