Mid-day Update

S&P 500 1,115.19 +.71%
NASDAQ 1,935.61 +.81%

Leading Sectors
Gaming +2.53%
Energy +2.32%
Airlines +1.71%

Lagging Sectors
Disk Drives -.41%
Iron/Steel -1.43%
Semis -1.80%

Other
Crude Oil 38.07 +1.85%
Natural Gas 6.15 +5.0%
Gold 387.50 unch.
Base Metals 104.19 +.72%
U.S. Dollar 90.81 +.36%
10-Yr. Long-Bond Yield 4.49% -.31%
VIX 16.92 -1.63%
Put/Call .83 -12.63%
NYSE Arms .82 -52.87%

Market Movers
IACI -4.77% on profit-taking after beating 1Q estimates.
RDWR -29.21% after meeting 1Q estimates and lowering 2Q guidance.
ACCL -29.56% after completing the spin-off of its drug discovery business.
NTE -16.93% after disappointing 1Q results.

Economic Data
Construction Spending for March +1.5% versus expectations of +.5% and -.1% in February.
ISM Manufacturing was 62.4 in April versus 62.7 forecast and 62.5 prior month.
ISM Prices Paid was 88.0 in April versus 85.0 estimate and 86.0 in March.

Recommendations
Goldman Sachs says momentum is gaining in lodging sector, favorite beneficiary is FS. GS reiterated Outperform on AMGN, AGN, DDR, SPG, IACI, DTV, BIIB, MDT, EBAY and AMX. Citi SmithBarney downgraded the Capital Goods and Retailing industry groups and upgraded the Health Care Services and Foods industry groups. Citi removed CAT from focus list and added WMT, MSFT and AW. Citi reiterated Sell on SPW, target $42. Citi reiterated Buy on CI, target $75. UBS raised FS to Buy, target $62.50. UBS raised NCX to Buy, target $30. GTIV raised to Buy at Legg Mason, target $18. DJ raised to Overweight by Prudential, target $55. IPMT rated Buy at Deutsche Bank, target $45. PKG raised to Outperform at CSFB, target $25. ESV and THE raised to Overweight at Moran Stanley. RDK raised to Buy at Merrill Lynch, target $25.

Mid-day News
U.S. stocks are rising this afternoon as strong manufacturing and construction reports lifted optimism corporate profits would continue to beat estimates. The U.S. health care system must adopt electronic medical records technology to boost efficiency and guard against mistakes in the treatment of patients, the NY Times said. A list of about 270 recipients of suspected bribes, from Saddam Hussein's regime under the UN oil-for-food program, is filled with countries and politicians that opposed the Iraq war, the Washington Times reported. Nortel Networks is in default of rules for filing financial statements with "significant" deficiencies, the Ontario Securities Commission said. A computer worm called Sasser is infecting computers worldwide through the Internet and is still spreading, Bloomberg reported. U.S. companies including Caterpillar and Marriott have begun to raise prices, signaling a rise in demand that may spur more corporate investment and hiring, Bloomberg reported. The ISM Manufacturing Index held close to a 20-year high last month as production increased and more factories added workers than at any time since 1987, Bloomberg reported. Frank Quattrone, who managed more IPOs for Internet companies than any banker, was found guilty of obstructing investigations of IPOs by urging bankers to discard records after learning of the probes, Bloomberg reported.

BOTTOM LINE: The Portfolio is down slightly today as my shorts are mixed. I added few new shorts into this morning's strength and one new long, bringing the Portfolio's market exposure to 50% net short. Today's rally is not very strong as volume and breadth readings are weak. As well, investor complacency continues to be a problem. Natural Gas is breaking out today, thus I added a new long position in APA with a 42.25 stop-loss.