Mid-day Update

S&P 500 1,140.45 +.73%
NASDAQ 2,048.10 +1.64%

Leading Sectors
Airlines +3.52%
Semis +3.04%
Broadband +2.61%

Lagging Sectors
Utilities -.52%
Banks -1.06%
Homebuilders -3.16%

Other
Crude Oil 33.95 -.93%
Natural Gas 5.79 +.43%
Gold 420.50 -1.94%
Base Metals 114.77 -.26%
U.S. Dollar 88.62 +1.62%
10-Yr. Long-Bond Yield 4.14% +6.63%
VIX 15.84 -4.74%
Put/Call .67 +17.54%
NYSE Arms .55 -37.50%

Market Movers
SWIR +12.5% after raising 1Q sales and earnings estimates.
SCHN +14.66% after beating 2Q estimates substantially and raising 3Q guidance.
MNST +9.7% on much stronger-than expected jobs report.
ZMH +5.54% after boosting 1Q guidance substantially and multiple upgrades.
SUNW +18.6% after announcing 2Q earnings shortfall, layoffs and settlement with MSFT.
VISG +15.75% after announcing U.S. government contract for $6-10M in smart cards.
Homebuilders/Financials down across the board on much stronger-than-expected jobs report, resulting in higher interest rates.

Economic Data
Unemployment Rate for March 5.7% vs. 5.6% estimate.
Change in Non-farm Payrolls for March +308K vs. estimates of +120K.
Change in Manufacturing Payrolls for March unch. 0K vs. expectations of 5K.
Average Weekly Hours for March 33.7 vs. 33.9 estimates.

Recommendations
Goldman Sachs reiterated Outperform on DELL, PFE, MSFT, ADP, CEN, PAYX and YHOO. GS maintains Attractive on Machinery sector, expects PH, IR and ETN to post greatest upside surprises in coming reports. GS rates STA Outperform. Citi Smith Barney upgraded HNT to 1H. Citi says recent survey backs up bullish thesis on restaurant stocks, MCD, SBUX, WEN, YUM and PFCB are favorites. Citi reiterated Buy on CAM and HAL. Citi expects defense companies to post strong quarterly results, believes NOC, LMT and LLL will beat estimates. JP Morgan rated GMRK, ARW and SERO Overweight. JP Morgan rated TECD and SYY Underweight. INTC rated new Buy at Legg Mason. BYD and CZR raised to Outperform at Thomas Weisel. Merrill Lynch rated HD, LIN, AAP and LOW Buy. CLX raised to Overweight at Prudential. FTO, SUN and VLO cut to Underweight at Prudential.

Mid-day News
U.S. stocks are substantially higher mid-day after a government report showed the economy added 308,000 jobs in March, the most in 4 years and 157% above expectations. This resulted in the largest drop in Treasury notes in 8 months on concern the Fed would move rates higher in the near future. Worldwide semiconductor revenue for February was $15.8B, +14.2% M/M(vs. 19-yr historical avg. of up 5.4%), up .6% Q/Q(vs. historical avg. of -3.4%), and up 39.2% Y/Y(vs. historical average of up 11.5%). Microsoft and Sun Micro announced an agreement that resolves outstanding antitrust issues(MSFT pays Sun $700M), resolves patent issues(MSFT pays $900M), and co-licensing of each others technology(MSFT paying advanced fees of $350M). Total cost to MSFT $1.95B. Police found explosives on a railway between Seville and Madrid and halted all trains between the Spanish cities three weeks after the March 11 bombings that killed 191 people, altering the outcome of the Spanish presidential election, Bloomberg reported. The six-month trial of former Tyco CEO Kozlowski and his top lieutenant Swartz ended today after the judge declared a mistrial, citing outside pressure on a juror, Bloomberg reported.

BOTTOM LINE: The Portfolio is having a very good day today as longs are up substantially and shorts are even. I took profits in a few recent winners that are showing relative weakness today and rotated into new tech positions that have good fundamentals, low valuations and positive technical patterns. I also initiated a couple of new shorts in the homebuilding sector as a result of the jobs report. This is just a trade, as I believe this group will correct until the first rate hike. Fundamentally, I like the sector and expect it to reach new highs in the intermediate-term. The bond market's reaction is about what I expected on a much stronger jobs number. Rates are up, but not dramatically, leaving their short-term downtrend still in tact. The jobs report today was the blow-out number I have been expecting, although it arrived earlier than anticipated. I believe it will take one more very strong report before the Fed starts to move. This will likely come within the next 2 months. Retailers, drugs, homebuilders and financial should underperform under this scenario, while technology and cyclicals should outperform. The Portfolio is now 100% net long.