Mid-day Report

Indices
S&P 500 1,172.75 +.37%
Dow 10,497.18 +.34%
NASDAQ 2,034.01 +.70%
Russell 2000 610.31 +.63%
DJ Wilshire 5000 11,516.65 +.37%
S&P Barra Growth 564.96 +.38%
S&P Barra Value 603.87 +.43%
Morgan Stanley Consumer 582.99 +.05%
Morgan Stanley Cyclical 745.03 -.05%
Morgan Stanley Technology 465.25 +1.40%
Transports 3,524.67 -.15%
Utilities 336.20 +1.33%
Put/Call .87 +8.75%
NYSE Arms 1.16 +38.10%
Volatility(VIX) 13.45 -4.34%
ISE Sentiment 204.00 +59.38%
US Dollar 83.13 -1.02%
CRB 288.03 +.52%

Futures Spot Prices
Crude Oil 49.00 -1.19%
Unleaded Gasoline 135.35 +.67%
Natural Gas 6.42 +.27%
Heating Oil 141.80 -.34%
Gold 427.20 +1.21%
Base Metals 121.04 +1.30%
Copper 143.50 +.42%
10-year US Treasury Yield 4.17% -.33%

Leading Sectors
Semis +1.77%
Software +1.75%
Biotech +1.58%

Lagging Sectors
Iron/Steel -.17%
Oil Service -.67%
Boxmakers -.84%

Market Movers
FLEX +9.2% after beating 3Q estimates, raising 4Q/05 guidance and Southwest Securities upgrade to Long-Term Buy.
TXN +5.2% after beating 4Q estimates, raising 1Q guidance and raising stock buyback by $2B.
MHR +10.6% after Cimarex Energy said it agreed to acquire it for $1.5 billion in stock.
CPWR +20.8% after substantially beating 3Q estimates.
GFIG +20.7% on strong demand for IPO.
SGTL +16.1% after reporting strong 4Q results and giving positive 1Q guidance.
INSP +19.53% after beating 4Q estimates and raising 1Q/05 guidance.
PLB +19.33% after beating 1Q estimates and raising 05 guidance.
TSAI +17.18% after beating 1Q estimates and raising 05 forecast.
HOLX +17.53% after beating 1Q estimates.
SSNC +10.83% after beating 4Q estimates and raising 1Q/05 guidance.
IFIN +8.15% after beating 4Q estimates, making positive comments on 05 and raising dividend.
APPB +8.74% after better-than-expected January same-store-sales and Morgan Keegan upgrade to Outperform.
XEC -11.1% on MHR acquisition.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
None of note.

Recommendations
-Goldman Sachs: Reiterated Outperform on SYK, MO, HEP, AIG, ALL, ENH, RE, BBBY, ACS, BE and SBC. Reiterated Underperform on ASH, UIS and INFA. Upgraded GNW to Outperform.
-CIBC: Downgraded IDR to Sector Underperform, target $21.
-JP Morgan: Cut FBN, LEXR to Underweight.
-Morgan Stanley: Cut PPP to Underweight.
-UBS: Raised THE to Buy, target $25.50.
-Bear Stearns: Rated GE Outperform, target $40.
-Merrill Lynch: Named DNA Focus 1 stock of the week. Raised EMC to Buy, target $15.50. Rated XRTX Buy, target $20.
-Prudential: Downgraded PPP to Underweight. Rated MCHP Overweight, target $29.
-CSFB: Raised COT to Outperform, target $31.
-Raymond James: Raised EAT to Strong Buy, target $46.50.

Mid-day News
US stocks are higher mid-day on strength in technology shares as a result of positive earnings reports. Insiders at Commercial Metals, a steelmaker and recycler, sold almost $28 million worth of stock since mid-December, the Wall Street Journal said. Research in Motion has seen its subscribers double in the past year, to more than two million, and some observers say the best times might still lie ahead, the Wall Street Journal reported. Wholesale electricity prices in some US Eastern states have dropped since four big Midwestern utilities joined a regional power market, the Wall Street Journal reported. Delta Air Lines’ move to cut fares has spread to business fares, lowering them by a third, even on routes that Delta doesn’t directly compete with other airlines, the Wall Street Journal reported. Bacardi will begin selling in April a flavored rum that it says has half the calories of regular rum or vodka, the NY Times reported. Real estate investment trust executives such as Vornado Realty Trust’s Roth are selling more shares as many stocks have reached or neared 52-week highs in the past three months, the Wall Street Journal reported. XM Satellite Radio and Sirius Satellite Radio are holding talks over a possible merger, the NY Post reported. IBM, Intel and six other companies agreed to back the use of a single technology standard to create a national health information network, the NY Times reported. NY Senator Clinton is taking centrist positions on issues such as religion and abortion, in what Republicans see as an effort to moderate her liberal image ahead of a possible presidential campaign in 2008, the Washington Times reported. Tyco International CEO Breen expects to make acquisitions toward the end of this year and double research and development for the company’s health-care unit, CNBC reported. Janus Capital Group plans to link the pay of its portfolio managers and other executives to the performance of the company’s mutual funds, the Rocky Mountain New reported. The Fed will stop raising its target interest rate between 2.5% and 3% to avoid slowing the economy, said Paul McCulley of PIMCO. Google added a Firefox Web browser programmer to its staff, raising speculation that the search-engine company may be building a browser to rival Internet Explorer, the LA Times reported. Oracle said profit will rise more than analysts expected next fiscal hear, helped by its $10.3 billion purchase of PeopleSoft, Bloomberg reported. The US Senate confirmed President Bush’s choice of Condoleezza Rice as secretary of state, Bloomberg said. A helicopter crash in western Iraq possibly caused by adverse weather killed 31 Marines, in the single deadliest incident suffered by the US military since the 2003 liberation of Iraq, Bloomberg reported.

Bottom Line: The Portfolio is slightly lower mid-day on losses in my software and semiconductor shorts. I exited a few shorts as they hit stop-losses and added a few new longs this morning, bringing the Portfolio to 75% net long. The tone of the market is better today and improving. The fact that oil is falling ahead of the possibility of extreme violence in Iraq is also a positive. It appears as though the tradable rally in the major indices has begun, barring an unforeseen catastrophic event in Iraq over the weekend. I expect US stocks to trade modestly higher into the close on short-covering, falling energy prices and optimism over earnings.