Mid-day Report

Indices
S&P 500 1,221.14 +.88%
Dow 10,926.73 +.87%
NASDAQ 2,071.44 +.63%
Russell 2000 643.88 +.88%
DJ Wilshire 5000 12,028.77 +.86%
S&P Barra Growth 587.67 +.77%
S&P Barra Value 629.33 +1.05%
Morgan Stanley Consumer 591.04 +.55%
Morgan Stanley Cyclical 783.90 +1.57%
Morgan Stanley Technology 474.85 +.45%
Transports 3,834.04 +1.96%
Utilities 361.50 +1.87%
Put/Call .81 -1.22%
NYSE Arms 1.07 -11.57%
Volatility(VIX) 12.36 -4.41%
ISE Sentiment 176.00 -6.88%
US Dollar 82.50 -.97%
CRB 308.40 +.29%

Futures Spot Prices
Crude Oil 53.25 -.60%
Unleaded Gasoline 149.80 -.63%
Natural Gas 6.73 +1.17%
Heating Oil 148.00 -.72%
Gold 435.60 +1.11%
Base Metals 130.28 +1.42%
Copper 149.40 +1.22%
10-year US Treasury Yield 4.31% -1.54%

Leading Sectors
Airlines +3.50%
Iron/Steel +3.26%
Papers +3.08%

Lagging Sectors
Networking -.05%
Gaming -.27%
Biotech -.86%

Market Movers
ELN - 7.5% after it and Biogen Idec confirmed that a second patient taking the MS drup Tysabri have developed a rare and usually fatal neurological condition.
SILI +25.3% after Vishay Intertechnology announced that it has today delivered to the board of directors a notice of its intention to commence a tender offer for all outstanding shares not owned already.
ASPV +22.7% on strong demand for IPO.
ABLE +23.59% on strong 2Q results.
CLSR +19.0% after Johnson and Johnson agreed to buy it for about $370 million.
YELL +6.11% on continuing optimism over US economic growth.
MON +6.2% after Brazil’s Congress approved a bill allowing farmers to plant modified soybeans.
BXG -33.4% after missing 4Q estimates and lowering 05 guidance.
TACT -29.45% on lower 05 guidance.
SONS -14.88% after missing 4Q revenue estimates and multiple downgrades.
MCRI -11.79% on no news.
CPS -3.8% after saying it plans to limit sales of social-security numbers and other personal information it collects on consumers.

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

Economic Data
- The Unemployment Rate for February rose to 5.4% versus estimates of 5.2% and 5.2% in January.
- Average Hourly Earnings for February were unchanged versus an estimate of a .2% increase and an upwardly revised .3% rise in January.
- The Change in Non-farm Payrolls for February was 262K versus estimates of 225K and 132K in February.
- The Change in Manufacturing Payrolls for February was 20K versus estimates of 7K and -20K in January.
- Average Weekly Hours for February were 33.7 versus estimates of 33.8 and 33.7 in January.
- The Final Univ. of Mich. Consumer Confidence reading for February fell to 94.1 versus estimates of 94.5 and a reading of 94.2 in January.
- Factory Orders for January rose .2% versus estimates of a .1% decline and an upwardly revised .5% increase in December.

Recommendations
- Goldman Sachs: Reiterated Outperform on DD, ADP, CEN and PAYX.
- Smith Barney: Reiterated Buy on HLT, target $26. Reiterated Buy on IGT, target $45. Reiterated Buy on MCD, target $37. Reiterated Buy on ROP, target $79. Reiterated Buy on AVO, target $49. Downgraded UCL to Sell, target $50. Reiterated Buy on SONS, target $7.10. Reiterated Buy on RRI, target $15. Reiterated Buy on PLAY, target $30.
- Deutsche Bank: Rated MBI Buy, target $66. Rated ABK Buy, target $90. Rated HHS Buy, target $32. Rated AD Buy, target $44. Rated VCI Buy, target $41.
- CSFB: Raised ECL to Outperform, target $38.
- Raymond James: Raised BJS to Strong Buy, target $61.

Mid-day News
US stocks are higher mid-day on optimism over US economic growth and falling long-term interest rates. OMI Corp., a US oil-tanker company, said its joint venture with Frontline might be hurt if Frontline should enter a partial integration with their rival General Maritime Corp., TradeWinds said. Hong Kong’s economy is in its best state since the 1997-98 Asian crisis, Chief Executive Tung Cheehwa said in Beijing. Sony Corp. is giving efforts to sell the PlayStation Portable video game console a boost from movies released by Lions Gate Entertainment in a format suitable for the device, the Wall Street Journal reported. Shares of many airlines have fallen 25% or more this year because of concern about rising fuel prices and fare-cuts by Delta Air, but some analysts say the decline has gone too far, the Wall Street Journal said. Yahoo! said it acquired Stadeon Inc. a maker of technology that connects game players on mobile phones and computers, for an undisclosed price, the Wall Street Journal reported. Mutual funds that concentrate on big-capitalization growth shares are starting to look like a good bet again, the Wall Street Journal said. The US government is seeking information from AIG in a probe of an insurance transaction between AIG and Berkshire Hathaway, the Wall Street Journal reported. Jones Apparel Group executive vice president of finance Anita Britt said Federated Department Stores’ acquisition of May Department Stores will help boost profit at the apparel and shoemaker, the Philadelphia Inquirer reported. Pennsylvania’s Gaming Control Board said yesterday the state’s first slot-machine licenses may be issued to horse racing tracks as soon as December, the AP reported. OPEC is producing enough oil is producing enough oil and doesn’t need to raise its quotas, Venezuelan President Hugo Chavez said. Biovail Corp., Canada’s biggest publicly traded drugmaker, said the SEC has begun a formal probe into the company’s accounting and financial-disclosure practices, Bloomberg reported. Delphi said CFO Alan Dawes resigned, Bloomberg reported. US employers added 262,000 workers in February, the most since October, suggesting companies have greater confidence in the economy, Bloomberg said. Carlos Slim, MCI Inc.’s biggest investor, said he opposes the company’s planned sale to Verizon Communications, adding to pressure on MCI CEO Capellas to negotiate a better deal, Bloomberg reported. Orders placed with US factories unexpectedly rose .2% in January on demand for paper, petroleum and electrical equipment, Bloomberg reported. Investors should buy stocks worldwide because sustainable economic growth in the US will spur gains, according to Fortis’, which manages $62 billion, chief global market strategist. President Bush urged Syria to withdraw all troops immediately from Lebanon, saying the global community is united in seeking an end to the occupation, Bloomberg reported. Blockbuster should be forced to delay its $883 million hostile bid to take over video-rental rival Hollywood Entertainment, the FTC said. GlaxoSmithKline Plc stopped distributing its Paxil CR antidepressant and Avandamet diabetes tablets after regulators seized the drugs, saying manufacturing practices failed US standards, Bloomberg reported.

BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my software, homebuilding, I-Banking and steel longs. I added a few new longs this morning, thus bringing the Portfolio’s market exposure to 125% net long. One of my new longs is ELN and I am using a $5.75 stop-loss on this position. The tone of the market is modestly positive as the advance/decline line is decent, almost every sector is higher and volume is ok. Measures of investor anxiety are mostly lower. As I anticipated a few days ago, the DJIA and S&P 500 are making new cycle highs and the Russell 2000 is breaking out of its recent trading range. However, the Nasdaq is lagging due to underperformance by tech shares. The current rally likely has further to run as there is still an unusual amount of skepticism by many investors. I expect US stocks to trade modestly higher from current levels into the close on optimism over US economic growth, short covering, falling long-term interest rates and bargain hunting.