Tuesday Close

S&P 500 1,099.69 -.63%
NASDAQ 1,859.42 -1.73%

Leading Sectors
Energy +1.11%
Oil Service +.60%
Fashion +.43%

Lagging Sectors
Networking -2.22%
Airlines -2.32%
Semis -3.77%

Other
Crude Oil 44.10 -.09%
Natural Gas 5.83 -.01%
Gold 396.50 unch.
Base Metals 111.16 -.30%
U.S. Dollar 89.58 -.19%
10-Yr. T-note Yield 4.43% -.53%
VIX 16.03 +4.29%
Put/Call .73 -5.19%
NYSE Arms 1.58 +71.74%

After-hours Movers
GSLI +11.27% after reporting strong 2Q earnings.
IACI -13.8% after missing 2Q revenue estimates and lowering 04 guidance.
JILL -7.68% after meeting 2Q estimates, but giving no forward guidance.
CEPH -4.6% after meeting 2Q forecast, but lowering 04 outlook.
VCLK -24.4% after meeting 2Q forecast, announcing $29M Pricerunner acquisition and giving weaker 3Q/04 guidance.

Recommendations
Goldman Sachs reiterated Outperform on WAG, IR and ETN. Merrill Lynch named KMG Focus 1 stock of the week.

After-hours News
U.S. stocks finished lower today on continuing weakness in the technology sector, terrorism fears and weaker economic data. After the close, New York Attorney General Spitzer is expected to file a lawsuit against Express Scripts tomorrow, the Wall Street Journal reported. Bristol-Myers Squibb agreed to pay more than $75 million to settle U.S. SEC charges that the company used improper accounting to inflate sales, the Wall Street Journal reported. OPEC's crude oil output jumped to a 25-year high last month, raising concern that producers have little cushion left to cope with supply disruptions and check a rally that pushed prices to a record, Bloomberg said. IAC/InterActiveCorp, the Internet commerce and tv-shopping company controlled by Barry Diller, said second-quarter profit dropped 24% as sales and marketing expenses rose, Bloomberg said. Prudential Financial said quarterly profit more than doubled as income from the company's retirement savings and annuities units rose and it made money from investments, Bloomberg reported.

BOTTOM LINE: The Portfolio finished lower today as most of my longs declined, more than offsetting gains in my falling shorts. I exited some longs in the afternoon and added a few shorts, bringing the Portfolio's market exposure to 25% net long. One of my new shorts is MBT and I am using a $120.25 stop-loss on this position. The weakness I expected later in the week seems to have arrived early. I continue to expect U.S. stocks to sees new lows for the year within the next few weeks ahead of another Fed rate hike, the Olympics and the Republican convention. Longer-term investors should use any extreme weakness during this time period to add to favorite long positions.