Mid-day Update

S&P 500 1,089.19 +.47%
NASDAQ 1,853.49 +.75%

Leading Sectors
Telecom +2.60%
Retail +2.15%
I-Banks +1.8%

Lagging Sectors
Hospitals -1.33%
Airlines -1.67%
HMO's -5.37%

Other
Crude Oil 41.95 +1.23%
Natural Gas 5.98 +.39%
Gold 387.50 -.72%
Base Metals 108.33 -.74%
U.S. Dollar 89.68 +.73%
10-Yr. T-note Yield 4.57% +1.93%
VIX 16.85 -2.60%
Put/Call .69 -15.58%
NYSE Arms 1.23 +6.03%

Market Movers
NT -15.5% after saying it won't meet its gross margin target because of higher-than-expected operating costs.
VZ +3.9% after beating 2Q estimates and boosting 2H outlook.
CAH -13.7% after the company said yesterday that it CFO resigned amid U.S. accounting investigations.
ATH -8.4% after lowering 04 forecast.
SLAB -17.7% after beating 2Q estimates and lowering 3Q guidance.
TRMB +18.6% after beating 2Q estimates and raising 3Q/04 outlook.
IFLO +20.5% after beating 2Q revenue forecast and announcing 1M share buy-back.
GNSS +14.6% after beating 1Q estimates.
ATRS +13.2% after beating 2Q estimates.
RTEC +14.3% after beating 2Q estimates and raising 3Q outlook.
HYDL +9.6% after strong 2Q results and CSFB upgrade to Neutral.
ICLR -19.1% after beating 4Q estimates and lowering 05 outlook.
LNCR -7.6% after the NY Times reported that it may be hurt by a proposed 89% drop in the price paid by the U.S. government for two lung treatments.
SWK -5.2% after missing 2Q estimates and lowering outlook.

Economic Data
Consumer Confidence for July rose to 106.1 versus estimates of 102.0 and an upwardly revised 102.8 in June.
New Home Sales for June were 1326K versus estimates of 1272K and a downwardly revised 1337K in May.

Recommendations
Kellogg raised to Buy at Deutsche Bank, target $46. AXP raised to Buy at Deutsche Bank, target $57. CMCSA raised to Overweight at Prudential, target $39. Goldman Sachs reiterated Outperform on ATYT, ADP, CMX, PFE, BHI, SSL and CTSH. Goldman reiterated Underperform on ASH and TGS. Citi SmithBarney said to Sell DAL, target $1. Citi said to Buy AAI, target $18. Citi reiterated Sell on COP, target $65. Citi reiterated Sell on XOM, target $40.50. Citi reiterated Buy on CHE, target $64. Citi reiterated Buy on KIND, target $35. Citi reiterated Buy on WLP, target $150. Citi reiterated Buy on ATH, target $131. Citi reiterated Buy on BLS, target $32. Citi reiterated Buy on HCA, target $48. Citi reiterated Buy on CVH, target $65.

Mid-day News
U.S. stocks are rising mid-day on stronger-than-expected economic reports. Saks Fifth Avenue may close an undisclosed number of stores and remodel its flagship in Manhattan as part of an overhaul, the NY Times reported. Advertising dollars spent on Internet sites and other online media are expected to equal spending on magazines by 2007, and overtake more traditional areas in 2008, the Wall Street Journal reported. Starwood Hotels plans to build two of its W designer hotels in China, the Wall Street Journal reported. More than 35 bloggers received media credentials to cover the Democratic Convention, giving the Internet postings a new place in the press, the Wall Street Journal reported. The U.S. State Dept. wants to increase the pace of its rebuilding effort in Iraq, hoping to provide more jobs and show off the results of projects more quickly to Iraqis, the NY Times reported. Closely held Flight Options is expected to off business customers the opportunity to rent time on aircraft instead of forcing them to buy a share in the plane, the Wall Street Journal reported. Iran has resumed building and installing equipment that could be used to make nuclear weapons, the AP reported. U.S. new home sales fell less than forecast to a 1.326 million annual rate in June, the second-fastest on record, evidence more jobs and higher incomes are keeping homes affordable as interest rates rise, Bloomberg reported. Consumer confidence in the U.S. economy rose this month to a two-year high as expectations for the job market improved, Bloomberg said. Crude oil and interest rates are rising on strong U.S. economic reports, Bloomberg reported. California Republican Governor Schwarzenegger and legislative leaders reached agreement on a $103 billion spending plan that has no tax increases and relies on $7 billion in bonds, loans and spending cuts to cover a $14 billion projected deficit, Bloomberg reported. The Democratic Party is giving filmmaker Michael Moore what he called "red carpet treatment" at the party convention, including a box inside the FleetCenter and credentials to mingle with the delegates and press, Bloomberg reported. The Holy Land Foundation for Relief and Development, the largest Muslim charity in the U.S., was indicted on charges it provided financial support to the Islamist terror group Hamas, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly lower today as my retail and technology shorts are rising more than my longs. I took profits in a number of shorts this morning and added a few longs, bringing the Portfolio's market exposure to 25% net long. One of my new longs is CCMP and I am using a $31.25 stop-loss on the position. I expect U.S. stocks to rise modestly into the close, notwithstanding rising interest rates and oil prices. This appears to be the beginning stages of a tradable rally, however I do not believe we have seen the lows as of yet. Weakness will likely resurface in the next couple of weeks.