Climbing the Wall of Worry

Morning News of Note:

• Short Interest: Short Interest Hits a Record As Stocks Rise Bears Betting on Brief Rally Push Short-Selling Up 1.8% Despite Increase in Market Stocks have been rallying, but the professional bears remain unconvinced: Short interest hit a record on the New York Stock Exchange in the latest measuring period. For the month ended Nov. 15, the number of short-selling positions not yet closed out at the Big Board, including all issues, rose 1.8% to 8,805,471,445 from 8,646,881,921 in mid-October. (Full Story) WSJ
• TWX: AOL Hopes to Steer Message-System Fans To Its Web-Site Ads Time Warner Inc.'s America Online unit has struggled for years to figure out how to make money from its most popular feature: instant messaging. AOL pioneered the "buddy list" and its accompanying pop-up messages from correspondents, and the service is wildly popular among both teens and office workers. But AOL has long provided the service free, and it has had trouble selling ads on the tiny buddy-list screen. (Full Story) WSJ
• GOOG: Google's Shopping Service to List User's Local Stores Google executives said last night that the company planned to move quickly to capitalize on its new Google Base database service, adding a feature that lets merchants provide local shopping information. Many publishers had become concerned about the potential of Google Base, which could allow the company to dominate the classified advertising business. (Full Story) NY Times
• S APCS: Sprint to Acquire Affiliate Alamosa For $3.4 Billion Sprint Nextel Corp. agreed to acquire an affiliate carrier, Alamosa Holdings Inc., for about $3.4 billion in cash and will assume $900 million in debt to sell services to more customers directly and to end a lawsuit. Sprint said it will pay $18.75 for each of Alamosa's shares outstanding. That represents a 15% premium over Alamosa's closing price of $16.26 on the Nasdaq Stock Market on Friday. (Full Story) WSJ
• MSFT SNE AAPL: Microsoft's Xbox Reflects New Focus on Hardware Software Giant Broadens Business Model as It Seeks Ways to Take On Apple, Sony Today's launch of Microsoft Corp.'s Xbox 360 videogame console underscores the growing strategic importance to the software giant of getting easy-to-use hardware into the hands of consumers. Inspired by Apple Computer Inc.'s iPod music player and its own experience with the Xbox, Microsoft has waded deeper into the tricky business of hardware manufacturing as it struggles to compete in the increasingly important home-entertainment market with Apple, Google Inc., Sony Corp. and others. (Full Story) WSJ
• Mad Money Summary: Jim Cramer wants investors to buy shares of UPS for a trade ahead of the Holiday season. He believes that the company will be the biggest beneficiary from the growth of online shopping. Cramer also likes FDX, but is giving a slight edge to UPS. Cramer favors the trucking companies YELL, SWFT and WERN but they do not have the upside that UPS does for the Holiday season. Cramer was positive on shares of MTXX and says that it is his favorite play for the cold and flu season. He also believes that MTXX's Zicam will gain market share this cold and flu season. Cramer said that there are risks to buying shares of MTXX, such as the 40 or so pending lawsuits against the company but Cramer said he would buy some now and more on weakness in the shares. Cramer said that USNA was "not a high quality stock" and he would sell shares. Cramer likes shares of GB as well and believes that prices are going down for medical devices, which means more sales. ECO's CEO Daniel Jones joined Cramer on his show by telephone, Cramer said that shares are too high for him to buy, but he would do so on a pullback. Cramer said that it was time to "ring the register" on shares of ATYT as the shares were a play on the Xbox 360 launch. Cramer said that he would also take some money off the table in shares of MU as the joint venture deal with INTC was anticipated

Market Comments: The market is down slightly this morning, after another strong close yesterday. Volume was fairly light, but the market was able to close at new highs again, and the Dow joined that list also.

Energy stocks are up again this morning on a slight uptick in oil prices. Bond yields are still down at 4.46%. And semi stocks are in the green so far also.

The NYSE reported that short interest is at record highs, indicating that many bears are pressing their bets. If the market can continue to climb its wall of worry, it could spark some additional waves of short covering. Many short-only funds have very good years going, and I doubt they want to see their gains erode.

Two of my recent picks are SIRF and MCRS. Both of these have breakout potential, and strong fundamentals to boot.

long MCRS, MSFT, TWX