Monday, July 19, 2004

Mid-day Update

S&P 500 1,098.43 -.28%
NASDAQ 1,875.20 -.41%
Leading Sectors
Restaurants +.62%
Airlines +.56%
Computer Boxmakers +.48%
Lagging Sectors
Internet -1.79%
Homebuilders -1.89%
Biotech -2.52%
Crude Oil 41.57 +.56%
Natural Gas 5.84 -.80%
Gold 406.10 -.15
Base Metals 112.61 -.37%
U.S. Dollar 87.16 +.02%
10-Yr. T-note Yield 4.36% +.22%
VIX 15.51 +8.16%
Put/Call .66 -39.45%
NYSE Arms 1.61 -12.50%
Market Movers
TASR -6.65% after the NY Times reported an increasing number of people have died after being shocked by Tasers.
BSX -3.88% on further sell-off after recalling 96,000 heart stents after 3 patients died and 43 were injured during implant surgery.
MMM -5.44% after slightly missing 2Q revenue forecast, lowering 3Q estimates and raising 04 forecast.
NFLX -9.2% after Thomas Weisel downgrade to Peerperform.
NTMD +108.2% after saying its experimental drug BiDil increased the survival of African Americans with heart failure in a study.
BDK +10.6% after beating 2Q estimates, raising 3Q and 04 guidance and agreeing to buy the tools business of Pentair.
SSNC +10.03% after JP Morgan upgrade to Overweight.
SWFT +7.96% after beating 2Q estimates substantially.
INSP -11.2% after announcing a partnership with Amplify.
LM -9.1% after missing 1Q estimates.
LXK -6.1% after slightly missing 2Q revenue estimate and lowering 3Q estimate. 
Economic Data
NAHB Housing Market Index came in at 67 in July versus estimates of 67 and an upwardly revised reading of 68 in June.
AMX raised to Buy at UBS, target $44.07.  SSNC raised to Overweight at JP Morgan.  SIR rated Outperform at CSFB, target $33.  PPDI raised to Outperform at Thomas Weisel, target $42.  Goldman Sachs reiterated Outperform on MSFT, BSX, ITT, FS and INTC.  Goldman reiterated Underperform on RKY.  Citi SmithBarney raised SONSE to Buy, target $5.50.  Citi reiterated Buy on HAS, target $24.  Citi reiterated Buy on COX, target $34.
Mid-day News
U.S. stocks are lower mid-day on continuing earnings worries, stubbornly high oil prices and weakness in internet-related shares.  The Bush administration is under pressure to develop policies to deal with Iran, as a pending report will say the country allowed terrorists to pass through its borders and as concern grows about the nation's nuclear weapon capacity, the Washington Post said.  A U.S. Senate Intelligence Committee report raises serious questions about the credibility of former diplomat Joseph Wilson, whose wife, Valerie Plame, was publicly identified as a CIA operative, the Wall Street Journal reported.  Lawyers who led a class-action lawsuit against AT&T Wireless Services could receive $3.75 million while customers won't receive any cash in the settlement, the Rocky Mountain News reported.  Real estate prices in Baghdad are rising as wealthy Iraqis who guarded their money while Saddam controlled the country begin to spend, the LA Times said.  Real estate prices in Iraq could multiply 10 times in two to three years if the nation becomes more secure, the Times said.  Nasdaq is planning to increase the number of its non-U.S. listed companies by 50% to boost its global presence, the Financial Times said.  General Dynamics has won a contract to supply U.S. troops with handheld radios, valued at $5-$10 billion, CNBC reported.  Boeing won an order from Emirates airlines for four 777 aircraft with an additional nine options, valuing the contract at as much as $2.96 billion.  Johnson & Johnson may sell more heart stents after Boston Scientific expanded a recall Friday of its Taxus stent, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly higher today as my retail and medical shorts are falling and Chinese ADR longs are rising.  I have not traded this morning and the Portfolio is still 25% net short.  The market's tone continues to deteriorate and investor complacency remains relatively high.  The probability of the Fed raising rates in August is falling.  Recent inflation data and a slowing in U.S. economic growth from blistering levels to more sustainable rates may prompt the Fed to adopt a wait and see approach with respect to raising rates.  Greenspan's comments over the next 2 days should make his intentions evident.  I would expect a tradable rally under this scenario.

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