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Despite the losses on the Nasdaq, the Model Portfolio continued to prosper and reached a positive monthly return. In the last eight sessions, the Model Portfolio has outperformed the market by leaps and bounds.

Today, the Dow Jones industrial average closed up 16.88 to 10,473.09, the broader Standard & Poor’s 500 ended up 1.23 to 1,216.89, while the Nasdaq composite bucked the trend and closed down 1.02 to 2,115.40.

The market breadth was negative. On the New York Stock Exchange, on volume of 1.57 billion shares, rising shares and falling stocks were in roughly equal portions. On the Nasdaq, decliners beat advancers by 17 to 12 on volume of 1.74 billion shares. The markets continued to flip-flop with investors reacting to both positive economic data and a disconcerting report that natural-gas prices are expected to rise this winter.

The gainers on the Dow were IBM that closed up $1.51 to $79.50, Microsoft that ended up $0.33 to $25.67, Verizon Communications that closed up $0.56 to $32.41, and SBC Communications closing up $0.26 to $23.90. McDonald’s closed up 9 cents at $33.10 on a report of likely splitting of the giant into three businesses.

Some prominent decliners were Caterpillar down $1.17 or 2% to $57.55, Agco was down $0.60 or 3.1% to $18.26, Fannie Mae closed down nearly 11% on a report of new accounting violations, Delphi continued its slump by 3% down $0.10 to $2.65. Delphi slumped as the CEO has suggested filing of bankruptcy despite reports about talks with unions and possible restructuring. Apple closed down $2.36 or 4.4% to $51.08, on complains about flaws in its new iPod nano digital music player. Incyte closed down $2.97 or 41% to $4.27 on news that U.S. regulators won’t approve late-stage trials of its HIV treatment Reverset. Eastman Kodak dropped 12 cents to $24.89 on news of lower than expected earnings from digital operations.

Reports state that NRG Energy is in talks to purchase Texas plant operator Genco Holdings in a deal that could be worth more than $5 billion. This led the NRG Energu stock to close up $1.52 or 3.7% to $43.05. Paychex closed up $3.16 or 9% to $37.25, on news of better than expected quarterly earnings.

The Energy Department announced that motor-gasoline supplies in the latest week climbed unexpectedly, rising 4.4 million barrels to 199.8 million. The government also said that crude inventories fell 2.4 million barrels for the week ended Sept. 23 to total 305.7 million, and that distillate stocks declined 500,000 barrels to 133.6 million barrels.

U.S. light crude oil for November delivery closed up $1.28 or 2% to settle at $66.35 a barrel on the New York Mercantile Exchange. Earlier, crude had risen as high as $67.40 a barrel. Unleaded-gasoline futures closed up 17.29 cents at $2.3393 after trading as high as $2.35, while October heating oil closed up 7.25 cents at $2.1411 after rising to $2.16 earlier.

All the best,
Manuel Jesus-Backus
The Portfolio Crafter