S&P 500 1,168.36 -.53%
Dow 10,410.22 -.54%
NASDAQ 2,031.46 -.79%
Russell 2000 612.26 -.75%
DJ Wilshire 5000 11,494.34 -.49%
S&P Barra Growth 562.88 -.45%
S&P Barra Value 601.83 -.50%
Morgan Stanley Consumer 581.77 -.20%
Morgan Stanley Cyclical 744.59 -.44%
Morgan Stanley Technology 465.75 -.91%
Transports 3,529.12 -.71%
Utilities 337.62 -.54%
Put/Call .72 -14.29%
NYSE Arms 1.55 +68.48%
Volatility(VIX) 13.37 +.98%
ISE Sentiment 183.00 -.54%
US Dollar 83.55 +.14%
CRB 283.86 -.57%
Futures Spot Prices
Crude Oil 47.32 -3.05%
Unleaded Gasoline 131.40 -2.80%
Natural Gas 6.24 -1.84%
Heating Oil 134.50 -3.72%
Gold 426.90 -.35%
Base Metals 122.54 +1.21%
Copper 143.85 +.81%
10-year US Treasury Yield 4.13% -1.95%
Leading Sectors
Airlines +1.05%
Homebuilders +.76%
Disk Drives +.50%
Lagging Sectors
Semis -1.57%
Software -1.57%
Oil Service -1.85%
Market Movers
G +11.98% after Procter & Gamble agreed to buy it for $57 billion. PG -2.87%
SNDK +11.82% after beating 4Q estimates.
LAVA +17.05% after JP Morgan added it to Focus List, target $16.
MSTR +15.29% after beating 4Q estimates and multiple upgrades.
DV +13.85% after missing 2Q estimates, but Merrill Lynch upgrade to Neutral.
NATL +13.85% on strong demand for IPO.
ORCT +10.0% on continuing optimism over 4Q results.
KRON +7.4% after beating 1Q estimates and raising 2Q/05 estimates.
MCK +9.13% after beating 3Q estimates, reiterating forecast and Raymond James upgrade to Outperform.
OSTK -15.25% on profit-margin worries after beating 4Q estimates.
OSIS -12.95% after beating 2Q estimates and lowering 3Q/4Q outlook.
OVNT -12.83% after meeting 4Q estimates and lowering 1Q/05 guidance.
MIL -7.0% after missing 4Q estimates and Robert Baird downgrade to Neutral.
MRK -9.85% after am appeals court invalidated the patent on a version of the company’s osteoporosis drug Fosamax and US regulators opened an informal probe into the Vioxx recall.
Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Economic Data
-Advance 4Q GDP rose 3.1% versus estimates of a 3.5% gain and a 4.0% increase in 3Q.
-Advance 4Q Personal Consumption rose 4.6% versus estimates of a 4.3% gain and a 5.1% increase in 3Q.
-4Q Employment Cost Index rose .7% versus estimates of a .8% increase and a .9% gain in 3Q.
Recommendations
-Goldman Sachs: Reiterated Outperform on CL, SII, WYNN, ADP, TPX, BC, PXD, KSS, MSFT and MUR. Reiterated Underperform on EW, TRB and MKL. Cut KEA to Underperform.
-Citi Smith Barney: Upgraded LMT to Buy, target $66. Upgraded TSM to Buy, target $10.60. Said to Buy UNFI ahead of quarter. Reiterated Buy on UPS, target $90. Reiterated Buy on CSCO, target $30. Reiterated Buy on IRF, target $50. Reiterated Sell on SNDK, target $22. Reiterated Buy on MRO, target $45. Reiterated Buy on AMGN, target $90. Reiterated Buy on INTU, target $54. Reiterated Buy on BC, target $54. Reiterated Buy on DOW, target $60. Reiterated Sell on GNTX, target $30. Reiterated Buy on TXT, target $85. Reiterated Buy on WFR, target $15. Reiterated Buy on MSFT, target $31. Citi reiterated Buy on FDRY, target $14. Reiterated Buy on SEBL, target $12. Reiterated Buy on FSLB, target $22.50. Reiterated Buy on SANM, target $9.50.
-JP Morgan: Rated SOLD Overweight.
-CSFB: Rated SOLD Outperform, target $18. Rated POM Outperform, target $23. Rated BBG Outperform, target $36. Reiterated Outperform on YELL.
-Legg Mason: Raised SRZ to Buy, target $54.
-Bear Stearns: Raised IBM to Outperform.
-Merrill Lunch: Raised BXP to Buy, target $64. Raised PKI to Buy, target $26. Removed PG from Focus 1 List.
-Prudential: Raised DWA to Overweight, target $41.
-Morgan Stanley: Raised PG to Overweight, target $64.
-CIBC: Cut MEOH to Sector Underperform, target $17.50.
Mid-day News
US stocks are lower mid-day on worries over slowing growth and violence in Iraq ahead of elections. Chief executives are declining offers to sit on boards of public companies because they see such positions as “too risky” and time consuming, the Wall Street Journal reported. Icelandic clothing brand 66 Degrees North has found success in the US retail market, since its launch in September by a Connecticut woman with no background in fashion, the Wall Street Journal reported. The UN Security Council should not delay on forcing Iran to stop violating international agreements on nuclear safeguards, said Jackie Sanders, President Bush’s envoy for nuclear non-proliferation. US mosques contain books and pamphlets that call non-Muslims “infidels” and encourage intolerance against Western culture, the Wall Street Journal reported, citing a study by human rights group Freedom Watch. The NASD says arbitration awards to investors jumped 20% last year to a high of $194 million, the Wall Street Journal reported. US membership in unions fell in 2004 to its lowest point in more than 60 years, the NY Times reported. Four labor unions have filed suit to prevent the Bush administration from implementing new rules at the Dept. of Homeland Security that would give managers more power to promote and give raises based on employee performance, the NY Times reported. Cendant may sell its Wright Express Corp. unit for $1.2 billion instead of spinning off the auto-fleet charge-card business in an IPO, the NY Post said. Canada’s Bank of Montreal is considering spending as much as $1.6 billion on acquisitions in the US, the Globe and Mail reported. Logan Airport’s airfares dropped 11.6% in the third quarter of 2004 from a year earlier, and are lower than they were in 1995, the Boston Globe reported. NYSE CEO John Thain said the exchange may open trading at 8:30 am, Bloomberg reported. San Francisco-are planning officials predict modest job growth through next year as the region recovers from losses related to the bursting of the technology bubble in 2000, the Chronicle reported. Libya tomorrow will pick the winners in its first drilling rights auction in 40 years, part of a plan to attract $30 billion of investments to double oil production this decade, Bloomberg said. Lehman Brothers said investors should exit bets on a US dollar drop against the euro in advance of an expected increase in the Fed’s benchmark rate next week, Bloomberg said. The US will become the world’s largest wine market by 2008, overtaking France, Germany and Italy in terms of the amount of wine sold, Bloomberg reported. Shareholders of Molson voted in favor of a $3.4 billion merger with Adolph Coors after the companies sweetened the offer twice to thwart investor opposition to the deal, Bloomberg said. Unilever, the European consumer products maker that cut annual forecasts for the first time last year, will fall farther behind Procter & Gamble after the US company buys more profitable Gillette for $57 billion, Bloomberg said. Merck said today that the US SEC has started a formal probe into the company’s recall of its Vioxx painkiller, Bloomberg reported. Merck’s patent for a once-a-week version of the osteoporosis drug Fosamax was invalidated by a US appeals court, opening the door to generic competition beginning in 2008, Bloomberg said. Crude oil is falling on signs OPEC will postpone additional production cuts, Bloomberg said. US 10-year T-notes are rising the most in seven weeks after a government report showed GDP slowed and inflation rose less than expected, Bloomberg said.
Bottom Line: The Portfolio is unchanged mid-day as gains in my internet longs and oil service shorts are offsetting losses in my networking and retail longs. I have not traded today and the Portfolio remains 100% net long. The tone of the market is weaker today as most sectors are falling, the advance/decline line is poor and volume is decent. On the positive side, energy prices are falling ahead of the possibility of extreme violence in Iraq, long-term interest rates are dropping, the ARMS index is spiking and I-Banks and homebuilders are outperforming. I continue to believe the major indices will rally further next week on an end to the uncertainty over the elections in Iraq, falling energy prices, low long-term interest rates, the Fed rate hike and comments, good earnings reports, a stabilizing US dollar, merger activity and an optimistic State of the Union address. I expect US stocks to rise from current levels into the close as shorts that have had exceptional months begin to cover ahead of the numerous market-moving events next week.
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