Tuesday, May 25, 2004

Mid-day Update

S&P 500 1,100.56 +.48%
NASDAQ 1,934.78 +.63%

Leading Sectors
Homebuilders +3.26%
Airlines +2.10%
Nanotechnology +1.84%

Lagging Sectors
Telecom -.79%
Fashion -.80%
I-Banks -1.08%

Crude Oil 41.04 -1.61%
Natural Gas 6.58 -1.86%
Gold 388.30 +.67%
Base Metals 105.56 -.68%
U.S. Dollar 89.89 -.73%
10-Yr. T-note Yield 4.72% -.38%
VIX 16.73 -7.47%
Put/Call 1.13 +48.68%
NYSE Arms 1.00 -15.25%

Market Movers
IPIX +20.7% after announcing a new patent and reseller agreement with JCS Digital.
BSX +4.7% after announcing positive results from it Taxus VI stent clinical trial.
DYAX -34.7% after reporting that the FDA has advised the company that INDs for its recombinant protein DX-88 have been placed on clinical hold.
SWFT +16.0% after raising 2Q guidance substantially, announcing $40M stock buyback and Legg Mason upgrade to Buy.
TEN +16.85% after withdrawing secondary offering.
OCR +6.0% after multiple positive comments from analysts on NeighborCare acquisition.
BOBE -10.0% after lowering 1Q/05 guidance and downgrade to Underperform by Whitaker Securities.
IPMT -7.9% after multiple analyst downgrades.

Economic Data
Existing Home Sales for May came in at 6.64M versus expectations of 6.46M and 6.48M in April.
Consumer Confidence for May 93.2 versus expectations of 94.0 and 93.0 in April.

PFG cut to Underperform at JP Morgan. CVX raised to Buy at Deutsche Bank, target $99. ADP raised to Overweight at Morgan Stanley, target $61. EFX cut to Underweight at Morgan Stanley. MANH rated Outperform at CSFB, target $33. OCR raised to Outperform at Schwab SoundView, target $50. LMT rated Buy at Legg Mason, target $64. RTN rated Buy at Legg Mason, target $42. Goldman Sachs reiterated Outperform on MDT. Goldman downgraded CVH to Underperform. Citi SmithBarney said it favors GE over 3M. Citi said to Buy MO and RJR on weakness. Citi reiterated Buy on MAR, target $58. Citi said recent US semiconductor purchasing manager's survey is positive for LLTC, ADI, TXN and MXIM. Citi also likes INTC and CY at current levels. Citi reiterated Buy on UNM, target $20. Citi reiterated Buy on MDT, target $59. Goldman reiterated Outperform on DELL, target $42.

Mid-day News
U.S. stocks are higher mid-day led by homebuilders and airlines as energy prices and interest rates fall. Russia will enter the World Trade Organization in 2007, the Itar-Tass news service reported. Linux users are adopting a way to track contributions to the operating system, a process that may head off future disputes about who added what, the Wall Street Journal reported. Ford may cut production of sport-utility vehicles during the third quarter because of slow sales, Dow Jones Newswires reported. Cisco introduced a faster router to help retake market share from Juniper, Reuters reported. Trump Hotels & Casino Resorts is expected to make a $73.1M interest payment that was due May 1 to avoid default, the Star-Ledger reported. Harvard University's student-run sex magazine, H Bomb, made its debut this morning to students and newsstands around the Cambridge, Mass. campus, the Boston Globe reported. Russia will seek to increase oil exports amid higher prices, Interfax news service reported. TV political ads in the 2004 presidential election campaign have been filled with exaggerations, leaving voters with distorted impressions of both President Bush and Senator Kerry, the NY Times reported. The world's seven most industrialized nations and Russia expect the world economy to growth at a strong pace next year, the Financial Times reported. A multinational force will be needed in Iraq "for months, rather than years," as the country develops its own military to maintain security, Iraqi Defense Minister Allawi said today. SBC Communications and the Communications Workers of America agreed on a five-year contract that guarantees the jobs of 100,000 employees, Bloomberg reported.

BOTTOM LINE: The Portfolio is having another good day today as a few of my biotech, basic material and semi-equipment longs post solid gains. I took profits this morning in one of my basic material longs and bought PETS. I am using a $6.50 stop-loss on the position. The Portfolio is still 125% net long. A high put/call ratio, falling interest rates/energy prices and significant outperformance by small-caps leads me to believe today's rally is sustainable and may improve this afternoon.

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