Mid-day Update

S&P 500 1,085.32 -.88%
NASDAQ 1,837.04 -1.72%

Leading Sectors
Iron/Steel +2.13%
Oil Service +1.71%
Commodity +.75%

Lagging Sectors
Semis -2.69%
Airlines -3.26%
Disk Drives -3.42%

Other
Crude Oil 42.85 +2.41%
Natural Gas 6.05 +1.02%
Gold 392.00 +.56%
Base Metals 110.09 +1.62%
U.S. Dollar 89.73 -.07%
10-Yr. T-note Yield 4.60% -.26%
VIX 17.15 +3.63%
Put/Call .71 -1.39%
NYSE Arms 1.15 +47.44%

Market Movers
CECO -23.4% after beating 2Q estimates, lowering 3Q sales forecast and multiple downgrades.
UTSI -28.8% after missing 2Q forecast, lowering 3Q/04 outlook and multiple downgrades.
TEVA -6.5% after a U.S. court blocked final approval for Alpharma's gabapentin capsule.
ZRAN +15.6% after beating 2Q estimates and raising 3Q/04 outlook.
CELL +15.2% after reporting strong 2Q results.
WBSN +14.2% after beating 2Q estimates, raising 3Q guidance and multiple upgrades.
KRON +11.77% after beating 3Q estimates and raising 4Q guidance.
AV +11.4% after beating 3Q estimates and giving positive outlook.
GRMN +11.0% after beating 2Q estimates and raising 3Q guidance.
X +5.2% after beating 2Q estimates, giving positive outlook and Prudential upgrade to Overweight.
ALD +7.4% after beating 2Q forecast.
CREE +8.4% after beating 4Q estimates and raising 1Q guidance.
WIRE -27.2% after weaker-than-expected 2Q.
ASCA -19.3% after missing 2Q estimates and lowering 3Q forecast.
NILE -18.3% after beating 2Q estimates and lowering 3Q/04 guidance.
EEFT -21.3% after beating 2Q estimates and lowering 3Q outlook.
WMGI -17.6% after meeting 2Q estimates, lowering 3Q/04 outlook and multiple downgrades.
LSCP -17.8% after beating 2Q estimates, but giving disappointing guidance.

Economic Data
Durable Goods Orders for June rose .7% versus estimates of a 1.5% rise and an upwardly revised decline of .9% in May.
Durable Goods Orders Less Transportation for June fell .6% versus estimates of a 1.1% rise and an upwardly revised .6% decline in May.

Recommendations
PENN raised to Buy at Deutsche Bank, target $45. MDCA rated Sector Outperform at CIBC, target $16. BBBB rated Outperform at Thomas Weisel. X raised to Overweight at Prudential, target $45. ABX cut to Underweight at Prudential, target $15. CB raised to Overweight at Prudential, target $80. MTSN raised to Overweight at JP Morgan. VRTS raised to Sector Outperform at CIBC, target $25. WBSN raised to Outperform at Raymond James, target $41. Goldman Sachs reiterated Outperform on AMGN, BIIB, DNA, AVP, AGN, IR, ETN, MERQ and LIZ. Goldman reiterated Underperform on LSI, AG and EW. Citi SmithBarney said to Buy Auto Suppliers for a trade, favorites are AXL, MGA and LEA. Citi reiterated Buy on VZ, target $43. Citi reiterated Buy on ATH, target $113. Citi reiterated Buy on WLP, target $140. Citi rated BRCD Buy, target $6.30. Citi reiterated Buy on SBUX, target $54. Citi reiterated Buy on BCII, target $30. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on LLY, target $82.

Mid-day News
U.S. stocks are falling mid-day on rising oil prices, weaker-than-expected economic data and a few disappointing earnings reports. US Air will change its flight system later this year, including taking apart its Pittsburgh hub, to stay solvent and compete against low-fare carriers in its major East Coast markets, the New York Times reported. Paul Volcker, the head of a UN panel investigating corruption in its Iraq oil-for-food program, won't share information with U.S. congressional committees that also are conducting inquiries, the NY Times reported. California's proposed budget agreement would restore millions of dollars to the Univ. of California and allow it to offer admission to 5,800 freshmen whose entry would have been deferred for two years, the San Francisco Chronicle reported. Vice President Cheney drew the loudest cheers on his first bus tour of the 2004 election when he told audiences that trial lawyers wreck good companies, wipe out jobs and saddle doctors with costs they pass to patients, Bloomberg reported. A homicide car bomber today drove into a crowd of Iraqi civilians waiting in line for jobs in the central Iraqi city of Baqubah, killing 68 and wounding 56, the AP reported. OAO Yukos Oil, Russia's biggest oil exporter, said the government ordered a halt to production from its main Siberian unit as court bailiffs seek to recover $3.4 billion in back taxes and fines. This sent crude oil futures to a record, Bloomberg said.

BOTTOM LINE: The Portfolio is lower today on weakness in my technology longs. I sold several tech positions this morning as they hit stop-losses, bringing the Portfolio's market exposure to 50% net long. Another disappointing day for the Bulls as the averages are unable to hold even one day's gains. However, any slight pullback in oil prices should result in a tradable rally. I still believe the markets will form a short-term bottom this week as the Democratic Convention concludes with no domestic terror attacks. I expect U.S. stocks to rise modestly into the close on short-covering.