Mid-day Update

S&P 500 1,121.55 -.60%
NASDAQ 1,895.79 -1.02%

Leading Sectors
Oil Service +1.39%
HMO's +.78%
Broadcasting +.40%

Lagging Sectors
Telecom -1.70%
Networking -2.72%
Semis -3.15%

Other
Crude Oil 44.83 +.99%
Natural Gas 4.86 -1.38%
Gold 406.50 -.25%
Base Metals 108.78 +.58%
U.S. Dollar 89.24 +.88%
10-Yr. T-note Yield 4.15% +.70%
VIX 14.46 +6.64%
Put/Call 1.0 +26.58%
NYSE Arms 1.65 +96.43%

Market Movers
TASR +19.0% after U.K./Wales approval of its stun gun for police use and the availability on its web site of the consumer version.
KO -4.33% after lowering 2nd-Half forecast.
XLNX -6.06% after cutting 2Q forecast and Wachovia downgrade to Market Perform.
AMZ +37.3% after PacifiCare Health Systems(PHS) said it agreed to buy it for $502 million. PHS +5.3%.
CYBX +23.2% after Advanced Neuromodulation Systems(ANSI) said it is prepared to offer $520 million in cash and stock to buy the company.
BBY +5.09% after meeting 2Q estimates and re-affirming 05 outlook.
CLS -12.4% after cutting 3Q estimates and multiple downgrades.
BHE -8.56% on CLS news.

Economic Data
Empire Manufacturing for September rose to 28.34 versus estimates of 20.0 and a reading of 13.22 in August.
Business Inventories for July rose .9% versus estimates of a .8% increase and a 1.1% gain in June.
Industrial Production for August rose .1% versus estimates of a .5% gain and a .6% increase in July.
Capacity Utilization for August was 77.3% versus estimates of 77.4% and 77.3% in July.

Recommendations
Goldman Sachs reiterated Outperform on SYMC, DELL, EMC, DD, HD, YHOO, INTC, AMD, BBY, COH, LIZ, FCE, KO, KRB, GDT and IBM. Goldman reiterated Underperform on RAI, RNWK, FRX and PSS. Goldman lowered Computer Hardware and Software industries to Neutral from Attractive. Citi SmithBarney reiterated Buy on AFC, target $36. NVDA cut to Reduce at UBS, target $11. ADTN rated Buy at Deutsche Bank, target $30. FFIV rated Buy at Deutsche Bank, target $33. SONC rated Sector Outperform at CIBC, target $28. RFMD rated Underperform at CSFB, target $5.0. UTX raised to Overweight at JP Morgan. TSO raised to Overweight at Prudential, target $25. LABS rated Buy at Bank of America, target $35. PSUN raised to Buy at Bank of America, target $26. MIL rated Buy at Bank of America, target $57. Morgan Stanley lowered Auto and Auto Parts industries to Cautious from In-Line. STLD rated Buy at Merrill, target $45. KIND rated Buy at Merrill Lynch, target $31.

Mid-day News
U.S. stocks are lower mid-day as technology stocks give back some of their recent gains. CBS News, a unit of Viacom, may damage its credibility if documents it used in a report related to President Bush's National Guard service prove to be forgeries, the Wall Street Journal said. China's government will crack down harder on corruption and abuse of power among government officials, China Central tv said. Gander Mountain executives and directors have bought shares of the sporting-goods retailer following the company's IPO in April, the Wall Street Journal reported. Amazon.com is developing a search engine the company says will be more sophisticated than Google's, the NY Times reported. The number of Sudanese dying in the country's Darfur region from disease and violence is between 6,000 and 10,000 a month, the Washington Post reported. The median price of a home in Los Angeles County rose 20.4% from a year earlier, the LA Times reported. Tommy Hilfiger plans to snap up as many as five European brands to fuel growth in the region, Handelsblatt reported. A federal appeals court yesterday rejected a motion by the plaintiff in the Supreme Court's 1973 Roe v. Wade case to overturn the landmark ruling that legalized abortion in the U.S., the Dallas Morning News said. OPEC plans to boost quotas by 3.8% in a bid to lower near-record prices, said oil officials from Kuwait and Qatar, Bloomberg reported. Manufacturing in New York state grew at a faster-than-expected pace this month as rising orders and sales led to more hiring, Bloomberg reported. National Hockey League owners meet in New York today and may authorize a lockout of players if the parties fail to reach a new labor agreement before midnight, Bloomberg said. U.S. industrial production rose less-than-expected in August as the manufacture of business equipment slipped, mining output dropped, and utility production fell "significantly," Bloomberg reported. Jacob Goldfield, CIO for George Soros's flagship $8.3 billion hedge fund, resigned to start his own money management group, Bloomberg reported. The growth of Linux is being threatened by a $50 billion lawsuit against IBM, Bloomberg said. Six percent of adults with health insurance have bought low-cost drugs from Canada, according to a poll from the Civil Society Institute. Taser International said their weapons have been approved for use by police in England and Wales, Bloomberg reported. Martha Stewart asked a federal judge to let her begin serving her five-month prison term as soon as possible, while she appeals her conviction for obstructing justice, Bloomberg reported. Mobile, Alabama, residents made final preparations to face the most-powerful hurricane in 25 years as Hurricane Ivan takes aim at the city, Bloomberg said.

BOTTOM LINE: The Portfolio is higher mid-day as substantial gains in my security and internet longs and my declining consumer shorts are more than offsetting losses in other longs. I have not traded today and the Portfolio is still 100% net long. Measures of investor anxiety are climbing today which is a positive. While most stocks are lower, a number of market leaders are gaining. More bullish news for energy could not push prices substantially higher. I continue to believe oil will head towards $35/bbl. during the fourth quarter. U.S. stocks should trade mixed-to-higher into the afternoon on profit-taking and short-covering.