Wednesday, September 01, 2004

Mid-day Update

S&P 500 1,102.69 -.14%
NASDAQ 1,840.82 +.15%

Leading Sectors
Oil Service +2.33%
Broadcasting +1.13%
Homebuilding +1.02%

Lagging Sectors
Banks -.91%
Insurance -1.05%
Airlines -1.25%

Crude Oil 43.60 +3.51%
Natural Gas 5.08 +.12%
Gold 410.10 -.56%
Base Metals 108.18 -.23%
U.S. Dollar 88.93 -.01%
10-Yr. T-note Yield 4.12% unch.
VIX 15.29 +.26%
Put/Call .92 +31.43%
NYSE Arms .89 -19.09%

Market Movers
COCO +15.2% after beating 4Q estimates and raising 1Q guidance.
BSX +5.6% on bargain hunting after slightly lowering 3Q and 4Q estimates.
FRX -8.1% after the maker of the first medicine in the U.S. for severe Alzheimer's disease said a separate, experimental treatment for the memory-robbing disease wasn't effective.
OTEX -23.3% after missing 4Q estimates, lowering 1Q guidance and multiple downgrades.
MGPI +19.7% after Roth Capital rated it Strong Buy.
MOGN +12.65% after saying it agreed to license SuperGen's Dacogen treatment for bond marrow disorders for as much as $85 million.
COO +8.25% after beating 3Q estimates and giving strong outlook.

Economic Data
Construction Spending for July rose .4% versus estimates of a .4% gain and an upwardly revised .3% decline in June.
ISM Manufacturing for August was 59.0 versus estimates of 60.0 and 62.0 in July.
ISM Prices Paid for August was 81.5 versus estimates of 79.0 and 77.0 in July.

Goldman Sachs reiterated Outperform on BBY, GCI, ALL and AET. Goldman reiterated Underperform on FRX. Citi SmithBarney reiterated Buy on FLEX and JBL. Citi said to Buy INTC on weakness. Citi reiterated Buy on BLS, target $32. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on PCG, target $33. Citi reiterated Buy on CHS, target $48. BUCY rate Buy at Legg Mason, target $35. APD raised to Buy at Bank of America, target $60.

Mid-day News
U.S. stocks are mixed mid-day on rising energy prices, terrorism concerns and short-covering. Video games sales are expected to stay at about $18.2 billion in 2004, the same as last year, because players are waiting for new consoles in 2005 and 2006, Reuters reported. Frontier Air's pilots agreed to be paid hourly rather than receiving a monthly salary, which may help the discount airline save millions of dollars a year, the Rocky Mountain News reported. Apple Computer expects a delivery bottleneck for the new version of its iMac computer because of high demand, Der Spiegel reported. A key cause of lagging U.S. job growth is higher productivity which is ultimately good and raises living standards in the long-run, said Washington Post columnist Robert Samuelson. Hurricane Frances was edging into the southeastern Bahamas today with winds of 140 mph and is poised to strike the Florida coast early Saturday, according to the National Hurricane Center. About 20 armed men and women wearing explosives seized a school in southern Russia and are holding at least 120 children hostage, the country's fourth terrorist attack in the past eight days, Bloomberg reported. California Governor Schwarzenegger's address to the Republican Convention may have drawn more tv viewers than Senator Kerry's acceptance speech, helping to boost support for President Bush among undecided voters, Bloomberg reported. The summer travel season, which comes to a close this weekend for many Americans, was the busiest for companies that own theme parks, resorts and cruise ships since the 9/11 terrorist attacks, Bloomberg said. Crude oil futures are rising after plunging from $49.40/bbl. on Aug. 20 on an Energy Department report that showed U.S. oil supplies declined more than expected, Bloomberg reported. New York police raised the arrest tally to more than 1,000 from marches and rallies held yesterday against President Bush, with more protests planned for today, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day as my restaurant, alternative energy and technology longs are rising. I added a few new longs this morning, bringing the Portfolio's market exposure to 125% net long. One of my new longs is PSYS and I am using a $22.25 stop-loss on the position. Rising oil prices and terrorism fears are holding today's rally in check. The tone of the market is mostly positive and I expect stocks to trade modestly higher into the close as oil prices stabilize and terrorism fears subside.

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