Monday, March 15, 2004

Monday Close

S&P 500 1,104.49 -1.43%
NASDAQ 1,939.20 -2.29%


Leading Sectors
Oil Service +.82%
HMO's +.35%
Homebuilders -.05%

Lagging Sectors
Iron/Steel -3.22%
Networking -3.41%
Airlines -7.05%

Other
Crude Oil 37.46 +.05%
Natural Gas 5.72 +.09%
Gold 400.50 +.23%
Base Metals 109.20 +.56%
U.S. Dollar 88.77 -.39%
10-Yr. Long-Bond Yield 3.76% -.40%
VIX 21.13 +15.46%
Put/Call 1.02 -.97%
NYSE Arms 2.78 +595.0%

After-hours Movers
JILL +8.8% after boosting 1Q guidance significantly.
MXT +8.9% after reporting better-than-expected 4Q.
PFCB -8.2% after announcing that it was restating 01,02 and 03 earnings.
SAFC Halted after announcing that its Talbot Financial life insurance division would be acquired for $1.35B.
MGM +12.79% on announcing that it is considering a one-time dividend of as much as $9 a share.

Recommendations
Friedman Billings analyst said he likes BR, KMG on CNBC. CNBC had analysts on that were positive on security stocks, favorites are DRXR, VRNT, MAGS, IDNX and OSIS.

After-hours News
U.S. stocks closed at their lows for the day as major indices broke through their recent lows set last week. Rising energy prices and terrorism fears provided the catalyst for the sell-off. The S&P 500 is now down 4.6% from its recent high. The index has not declined more than 5% in over a year, the longest such stretch in 8 years. Crude oil jumped to a one-year high as oil ministers from Venezuela and Qatar said OPEC will proceed with a production cut in April. Bank of America and FleetBoston reached a record $675M settlement with the SEC and Eliot Spitzer over illegal mutual fund trading. The U.S. Dept. of Agriculture will increase the number of cattle it tests for mad cow disease by up to 12-fold to help restore confidence in the safety of the beef supply, Bloomberg reported. 3M(MMM) raised 1Q guidance after the close citing strength in its core industrial businesses.

BOTTOM LINE: The Portfolio was down today as my market exposure was too high. I incorrectly anticipated a follow-through to the rally on Fri. Instead, the major indices made new short-term lows, thus forcing me to exit some recent longs and bring the Portfolio's market exposure back down to 25% net long. Volume was light again today, with indicators of fear continuing to rise. Signs of a bottom are starting to surface, however I am not ready to get aggressive. A short-term bounce is likely at any time, but a few more weeks of corrective action will likely follow.

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