Mid-day Update

S&P 500 1,094.53 +.30%
NASDAQ 1,827.50 +.42%

Leading Sectors
Oil Service +3.35%
Airlines +2.95%
Energy +1.48%

Lagging Sectors
Internet -.12%
Retail -.36%
Fashion -.85%

Other
Crude Oil 47.88 +.50%
Natural Gas 5.58 +1.33%
Gold 416.00 +1.64%
Base Metals 110.71 -.31%
U.S. Dollar 88.02 +.26%
10-Yr. T-note Yield 4.23% +.37%
VIX 16.38 -3.42%
Put/Call 1.16 +30.34%
NYSE Arms .74 -30.19%

Market Movers
CYBX +37.5% after announcing ANSI bought a 15% stake in the company last week and said it wants to discuss a merger. ANSI -5.1%.
RSE +40.0% after General Growth Properties agreed to buy it for about $7.2 billion in cash.
MRVL +6.7% after beating 2Q estimates and raising 3Q guidance.
ELBO +11.8% after beating 2Q estimates substantially and raising 3Q outlook.
CRDN +15.6% after announcing the receipt of a new 36-month Indefinite Delivery/Indefinite Quantity government contract for lightweight ceramic body armor with a maximum value of $461 million.
ADSK +9.8% after beating 2Q estimates and raising 3Q forecast.
BCSI -10.5% after Wachovia downgrade to Market Perform.
JWN -8.5% after missing 2Q forecast, lowering 3Q outlook, boosting 04 guidance and raising dividend.
SMRT -7.4% after beating 2Q estimates, raising 3Q outlook and downgrade to Neutral by SunTrust Robinson Humphrey.

Economic Data
None of note.

Recommendations
CREE rated Buy at Wells Fargo, target $31. FMX raised to Overweight at JP Morgan. RD raised to Buy at Merrill, target $53.27. BBA raised to Strong Buy, target $9. JNJ rated Overweight at Prudential, target $61. Goldman Sachs reiterated Outperform on BBY, STZ, MRVL, TRW, HD, PETC, AET, AIG, BIIB, PFE, NT, EXC, BSX and N. Goldman reiterated Underperform on GM, RAI, HCC, WIN and F. Citi SmithBarney raised HAIN to Buy, target $21. Citi upgraded PXLW to Buy, target $13. Citi reiterated Buy on WB, target $53. Citi rated IPXL Buy, target $18. Citi reiterated Buy on NT, target $5. Citi reiterated Buy on AMAT, target $22.

Mid-day News
U.S. stocks are modestly higher mid-day on improvements in the big picture in Iraq and falling oil prices. Home Depot's Canadian unit plans to open stores with about half the space of its warehouse-size outlets to compete against Rona Inc. and Canadian Tire Corp. in smaller communities, the National Post reported. Lehman Brothers lowered its estimates for inflation next year, cutting its forecast for the CPI from 2.5% to 2.0%, Bloomberg reported. Moqtada al-Sadr favors a political role in the nation's future rather than persisting with a military standoff, said Rime Allaf at London's Royal Institute of International Affairs, Bloomberg said. Anadarko Petroleum, a U.S. oil and natural-gas producer agreed to sell properties in the Gulf of Mexico to Apache Corp. and Morgan Stanley Capital Group for a combined $1.31 billion, Bloomberg reported. Rubina Muqimyar, the first Afghan woman to compete in track and field at the Olympics, set a national 100-meter record in her heat in Athens, Bloomberg said. The U.S. charged three men with supporting the Islamist terror group Hamas through a 15-year racketeering conspiracy, Bloomberg reported. Oil prices approaching levels that triggered past recessions are unlikely to cause a downturn this time because interest rates are so low, economists at NY-based Economic Cycle Research Institute said. The Arab Janjaweed militia continues to attack black Africans in the Darfur region of Sudan and 30,000 people might flee across the border to Chad, Bloomberg reported. Phelps Dodge, Canada's Teck Cominco and the U.K.'s Antofagasta Plc are profiting from record prices for molybdenum, a byproduct of copper mining, as stainless-steel mills buy more of the metal that prevents corrosion, Bloomberg said.

BOTTOM LINE: The Portfolio is substantially higher mid-day as my alternative energy, homebuilding and technology longs are rising and my Chinese ADR shorts are falling. I have not traded and the Portfolio is still 125% net long. The tone of the market is pretty good. Most sectors are higher and the advance/decline line is showing strength. As well, the Put/Call ratio is rising again. I expect U.S. stocks to rise modestly into the close. However, a significant reversal in oil prices could send shares meaningfully higher.