Start of the 4th quarter rally?

Morning News of Note:

• CVC: The family that controls Cablevision Systems Corp. said Tuesday it has withdrawn its offer to take the cable-TV provider private, and is encouraging the company's board to pay shareholders a special $3 billion dividend. Charles and James Dolan, Cablevision's chairman and chief executive, respectively, issued a statement saying that, after four months of negotiations, the Dolan family and the company have been unable to agree on terms of the transaction.
• CMCSK TWX S: Cable Firms Near Pact With Sprint Cellular Deal Would Arm Comcast, Cox, Time Warner In Battle With Phone Rivals A consortium of cable operators including Comcast Corp., Cox Communications Inc. and Time Warner Inc. are close to an agreement to sell cellular service using the wireless network of Sprint Nextel Corp., according to people familiar with the talks. The deal, expected to be announced in the next few weeks, would give cable operators another weapon in their battle with telephone companies. (Full Story) WSJ
• WMT: Wal-Mart to Seek Savings in Energy Wal-Mart's chief executive is set to announce on Tuesday a set of sweeping, specific environmental goals to reduce energy use in its stores, double its trucks' fuel efficiency, minimize its use of packaging and pressure thousands of companies in its worldwide supply chain to follow its lead. Embracing energy-conscious and environmentally conscious goals will help both the company's bottom line and its customers' needs, H. Lee Scott said in an interview Monday. (Full Story) NY Times
• JNJ GDT: Sources say FTC set to approve Johnson & Johnson-JNJ and Guidant-GDT deal-Reuters: A source close to the matter says that the US FTC is set to approve the JNJ/GDT deal "on the condition that JNJ license a key cardiac stent technology to a competitor."
• ZMH: @ BOFA... • ZMH will report 3Q on October 26 AMC. ZMH shares have been weak on pricing concerns and on lower than expected 3Q from competitors. We forecast 3Q revs of $783M (+12%) and EPS of $0.67 (+20%). • As we await ’06 guidance, we are lowering our ests for two issues: 1) Loss of distribution rights to Haemonetic’s OrthoPAT system and 2) Applying a base 0% pricing scenario given ZMH previously communicated internal scenario analysis of –2%, 0% and+2% in its forecast models.

Market Comments: After a soft open, the SPX has climbed back into positive territory. The senior index is right at its 200-day moving average, so it may need a little time to consolidate here before breaking above that resistance. That is, unless panic short covering sets in and pushes the market higher today.

TXN gave soft guidance last night, and that is pressuring chip stocks. The market is not being kind to any company that reports a shortfall or lowers guidance (see PLAY). Energy stocks are catching a bid again today, as oil is back above $60. The question now is: was yesterday's surge the start of the 4th qtr. rally?

long CMCSK, JNJ