Thursday, July 22, 2004

Mid-day Update

S&P 500 1,091.01 -.26%
NASDAQ 1,869.78 -.24%    

Leading Sectors
Semis +1.54%
Wireless +1.21%
Homebuilding +1.08%    

Lagging Sectors
Airlines -1.64%
Computer Services -1.66%
Fashion -2.23%    

Other
Crude Oil 41.45 +2.14%
Natural Gas 6.18 +4.28%
Gold 397.70 +.10%
Base Metals 110.98 +.12%
U.S. Dollar 88.30 -.29%
10-Yr. T-note Yield 4.46% -.13%
VIX 16.21 -1.22%
Put/Call .85 +13.33%
NYSE Arms 1.0 -30.07%    

Market Movers
LRCX +16.6% after substantially beating 4Q estimates and multiple upgrades.
ELN -9.4% after a presentation by the company and its partner Wyeth contained little new information about their experimental Alzheimer's vaccine.
ISSX +10.7% after beating 2Q estimates and raising 04 guidance.
FLIR +10.4% after beating 2Q estimates and raising 04 outlook.
ALGN +9.2% after beating 2Q estimates.
PTRY +8.97% after beating 3Q estimates and raising 04 guidance.
PHCC +9.8% after beating 2Q sales estimate.
KAR -21.9% after missing 2Q forecast and lowering 04 guidance.
ROG -21.3% after missing 2Q estimates and lowering 3Q forecast.
AFCO -18.4% after missing 4Q estimates and lowering 1Q guidance.
TSA -18.5% after cutting 2Q forecast and multiple downgrades.
AVCT -9.1% after only meeting 2Q estimates.
ELAB -15.7% after largest holder filed to sell 14.7 million shares and disappointing earnings guidance.

Economic Data
Initial Jobless Claims for last week were 339K versus estimates of 345K and an upwardly revised 350K prior week.
Continuing Claims were 2797K versus estimates of 2930K and a downwardly revised 2964K prior.
Leading Indicators for June fell .2% versus estimates of unch. and an increase of .4% in May.    

Recommendations
SYMC raised to Buy at Deutsche Bank, target $53.  OMM raised to Sector Outperform, target $20.  SKYW cut to Underweight at Morgan Stanley.  COP raised to Overweight at Prudential, target $80.  LRCX raised to Buy at Bank of America, target $30.70.  SIGI cut to Underperform at CSFB, target $34.  SGP raised to Buy at Merrill, target $23.  MXO cut to sell at Merrill.  CVG cut to Underperform at Raymond James.  Goldman Sachs reiterated Attractive view of Paper sector, favorites are IP, DTC and SPP.  Goldman reiterated Outperform on AIG, SYMC, DD, GLK, BAC, WFC, FS, EBAY and FON.  Goldman reiterated Underperform on TLAB, AZR, EK, CL, PYX, DO, AKS and CVD.  Citi SmithBarney reiterated Buy on SBUX, target $54.  Citi reiterated Buy on EXTR, target $11.  Citi reiterated Buy on FFIV, target $45.  Citi reiterated Buy on LRCX, target $35.  Citi reiterated Buy on DPMI, target $26.  Citi reiterated Buy on NCX, target $32.  Citi reiterated Buy on TGT, target $50.  Citi reiterated Buy on FON, target $22.  Citi reiterated Sell on GD, target $84.  Citi reiterated Buy on TEX, target $52.  Citi reiterated Buy on JPM, target $50. Citi reiterated Buy on SEBL, target $11.  Citi reiterated Sell on USM, target $38.

Mid-day News
U.S. stocks are modestly lower mid-day on rising oil prices and a weaker-than-expected economic report.  TiVo, which makes video recorders that can pause and replay live tv, faces opposition from film studios and the NFL over its plan to introduce technology allowing copies of shows to be transferred to computers, the Washington Post reported.  China wants to reform its system of allocating investments and reduce government interference in business decisions, China Central tv said.  French wine growers sought government help in coping with one of the industry's biggest slumps in a meeting last night with the Agriculture Minister, the Times of London reported.  The New York state legislature is the least deliberative in the U.S., "strikingly inefficient" and has the lowest rate of bills that become law, the NY Times reported.  Tribune's Newsday has been sued by 50 car dealerships who say the newspaper charged them advertising rates that were tied to inflated circulation figures, the NY Times reported.  OAO Yukos Oil, Russia's biggest oil exporter, said it will go bankrupt if the government carries out plans to sell the company's main unit, after a freeze on its assets left Yukos with enough cash to produce oil for three more weeks, Bloomberg reported.  The number of Americans filing new claims for unemployment benefits fell more than forecast last week, Bloomberg reported.  The index of leading U.S. economic indicators fell for the first time in more than a year in June, as a decrease in building permits and hours worked restrained the measure, Bloomberg said.  JP Morgan's buyout unit agreed to acquire a majority stake in AMC Entertainment for $2 billion and plans to take the movie chain private, Bloomberg reported.  With 181 S&P 500 companies reporting, 71.3% have exceeded estimates, 11.05% have missed estimates and the average profit gain has been 22.4%, CNBC reported. 

BOTTOM LINE:  The Portfolio is higher today as my medical and technology shorts are falling substantially and my gold longs are rising.  I have not traded and the Portfolio is still 25% net short.  While the market has rallied off its lows from this morning, it appears to me to be mainly a result of short-covering.  With oil rising again and investor complacency readings still too high, I expect stocks to fall into the afternoon.

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