Mid-day Update

S&P 500 1,127.60 -.05%
NASDAQ 2,003.66 -1.05%

Leading Sectors
Drugs +3.23%
Oil Service +2.09%
Energy +1.04%

Lagging Sectors
Disk Drives -3.14%
Semis -3.24%
HMO's -4.06%

Other
Crude Oil 37.00 +.76%
Natural Gas 5.65 -1.55%
Gold 399.20 -.30%
Base Metals 111.32 -.28%
U.S. Dollar 90.37 +.14%
10-Yr. Long-Bond Yield 4.36% -.04%
VIX 15.81 +1.22%
Put/Call .76 -5.00%
NYSE Arms 1.05 +69.35%

Market Movers
AAPL +7.9% after substantially beating 2Q estimates and raising 3Q guidance.
AMD -6.6% after substantially beating 1Q estimates and saying 2Q margins could be lower.
TBI +23.01% on $2.7B acquisition by ECA.
NAP +19.78% after substantially beating 1Q forecast and raising 04 guidance.
SNDK -11.9% after substantially beating 1Q estimates, CEO said he cut prices 20% as pre-emptive move because cards aren't selling fast enough.
CCBL -19.01% after announcing purchase of Lantern Communications, saying it will meet 3Q estimates, but miss 4Q.
CNET -17.18% after beating 1Q estimates, but weaker-than-expected guidance.

Economic Data
Empire Manufacturing for April 36.05 vs. 28.25 estimate.
Initial Jobless Claims last week 360K vs. 335K estimate.
Continuing Claims 2980K vs. 3000K estimate.
Philadelphia Fed. for April 69 vs. 65 estimate.

Recommendations
Deutsche Bank rated GTK BUY, target $72. PCG raised to BUY at Bank of America, target $33. FCN cut to UNDERPERFORM at CSFB. ATK raised to BUY at Bank of America, target $64. DAL cut to UNDERWEIGHT at Prudential. GE rated OVERWEIGHT at Morgan Stanley, $38 target. JBHT rated OUTPERFORM at Raymond James, target $36. TXN rated OUTPERFORM at Raymond James, target $35. Goldman Sachs says Gold is a BUY right here with 22% upside potential, favorite stocks are NEM and PDG. GS reiterated OUTPERFORM on SNDK, EQT and UNH. Citi Smith Barney upgraded MTG to BUY. Citi says VZ is favorite telecom service stock going into second quarter. Citi reiterates 1S on CNET, would buy on weakness. Citi reiterated BUY on EXTR, $11 target. Citi raised KMP to BUY.

Mid-day News
U.S. stocks are falling mid-day as strength in pharmaceuticals and energy stocks is not offsetting weakness in technology and hmo shares. RealNetworks CEO Glaser proposed creating a musical alliance with Apple, the NY Times reported. Google plans to announce today that it will offer businesses the Internet equivalent of local advertising, the NY Times reported. PacifiCare Health and Humana are among managed-care companies that could see a significant reduction in payments amid a debate about trimming Medicare spending, the NY Times reported. Equipment used in nuclear-related projects, some of it contaminated by radiation, and a small number of missile engines were smuggled out of Iraq to scrap yards in Europe, the Washington Post reported, citing the head of the UN's nuclear watchdog group. Iraqis growing middle class is spending more on their homes, benefiting furniture and electronics retailers, lighting companies, building companies and plant stores. Many Iraqis first purchase a TV and satellite dish, which were outlawed under Saddam Hussein's regime, the LA Times reported. A company in Sausalito, California, is offering to clone people's cats for $50,000, the San Francisco Chronicle reported. The number of Americans filing initial claims for jobless benefits rose to 360,000 last week, a 30,000 increase that was the biggest in more than a year. International investors increased their holdings of U.S. government debt, corporate bonds and stocks by a net $83.4B in February.

BOTTOM LINE: The Portfolio is down slightly today as my declining shorts are not offsetting losses in my tech longs. I added a few new shorts in the biotechnology sector this morning, lowering the Portfolio's market exposure to 25% net long. My short-term indicators have now turned negative. The action in technology shares is not good for the bulls. Quarterly reports that should be viewed positively are not, thus leading me to believe that there is more downside in this sector. However, 2000 on the NASDAQ may provide some support in the short-term. U.S. stocks will likely remain weaker to neutral until the first rate hike as investors are very worried the Fed is falling behind the curve on inflation. I do not believe that this fear is valid at this time, however I am not going to fight the perceptions of the market.