Tuesday, March 15, 2005

Mid-day Report

S&P 500 1,202.55 -.36%
Dow 10,784.85 -.19%
NASDAQ 2,040.18 -.53%
Russell 2000 626.87 -.23%
DJ Wilshire 5000 11,852.66 -.35%
S&P Barra Growth 577.78 -.36%
S&P Barra Value 620.00 -.43%
Morgan Stanley Consumer 583.31 -.58%
Morgan Stanley Cyclical 779.14 -.08%
Morgan Stanley Technology 466.41 -.84%
Transports 3,838.22 -.43%
Utilities 360.98 +.04%
Put/Call .80 -20.79%
NYSE Arms 1.23 +150.00%
Volatility(VIX) 12.88 +3.95%
ISE Sentiment 136.00 -4.23%
US Dollar 82.11 +.17%
CRB 320.28 +.96%

Futures Spot Prices
Crude Oil 55.20 +.45%
Unleaded Gasoline 150.00 -.43%
Natural Gas 7.20 +.87%
Heating Oil 155.60 +1.30%
Gold 441.40 -.05%
Base Metals 130.61 +.68%
Copper 149.05 +1.36%
10-year US Treasury Yield 4.53% +.63%

Leading Sectors
Gaming +3.13%
Iron/Steel +.77%
HMOs +.50%

Lagging Sectors
Telecom -1.28%
Biotech -1.81%
Semiconductors -1.81%

Market Movers
TIVO +49.86% after announcing a strategic partnership with Comcast making the TiVo service and advertising capability widely available to Comcast customers in the majority of its markets.
CMVT +8.24% after beating 4Q estimates and UBS upgrade to Buy.
IVX +14.1% after beating 4Q estimates substantially and widening 05 outlook.
MDKI +36.46% after Dialysis Corp. of America agreed to buy it for about $152M. DCAI -18.65%.
VIAC +18.49% after announcing a diabetes collaboration agreement with Genzyme.
CLHB +14.73% after beating 4Q results, raising 1Q outlook and restating prior results.
CPC +13.93% after saying it has retained Morgan Stanley to evaluate alternatives.
STN +9.03% after raising 1Q estimates and announcing the acceleration of the Phase II expansion of Red Rock Resort Spa and Casino.
ROV +10.2% after agreeing to buy Germany’s Tetra Holding GmbH for about $555.2 million to expand into the global pet supply market.
BYD +7.2% on STN news.
HANS +4.06% on continuing optimism over 4Q results.
CMTL +6.01% after announcing an integrated product with Savi Technology, a leading provider of RFID supply chain solutions, that continuously tracks and manages both transport vehicles and the cargo they carry while in-transit.
ARS +10.25% after beating 4Q estimates and raising 1Q guidance.
ULCM -19.0% after disappointing 4Q results.
WCC -10.05% after saying it filed a shelf registration statement with the SEC.
CIB -11.28% on concerns over a weakening peso.
OSIP -8.7% on Lehman downgrade to Equalweight.
GRMN -5.3% on no news.
MNST -6.25% after announcing the departure of CFO.
CEDC -12.57% on profit-taking after meeting 4Q estimates and raising 05 outlook.

Mid-day Overview
Market Internals
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Data
- Empire Manufacturing for March rose to 19.61 versus estimates of 19.90 and a reading of 19.19 in February.
- Advance Retail Sales for February rose .5% versus estimates of a .6% increase and an upwardly revised .3% rise in January.
- Retail Sales Less Autos for February rose .4% versus estimates of a .8% gain and an upwardly revised 1.0% rise in January.
- Net Foreign Security Purchases for January rose to $91.5B versus estimates of $58.5B and $60.7B in December.
- Business Inventories for January rose .9% versus estimates of a .9% increase and a .2% rise in December.

- Goldman Sachs: Reiterated Outperform on GCI, ADP, STN and AIG. Upgraded NFP to Outperform.
- Smith Barney: Said to Buy JBL ahead of quarter, target $35. Reiterated Buy on SSI, target $70. Reiterated Buy on DNA, target $87.50. Reiterated Buy on FIC, target $44. Reiterated Buy on RCL, target $60. Said if SONS is unable to get the 10-K filed by March 16, it will likely be immediately de-listed from NASDAQ. Reiterated Buy on GME, target $26. Reiterated Buy on NSM, target $28. Said February’s upward EPS estimates revisions as a percent of total revisions accelerated to 51% compared to January’s 38% and September’s 4% for the Semiconductor and Semi Equipment sub sector of the S&P 500, suggesting a bottom in September.
- JP Morgan: Rated EDR Overweight. Raised EL to Overweight.
- UBS: Raised TPX to Buy, target $27. Rated ICGN Buy, target $11.
- Piper Jaffray: Raised ZOLL to Outperform, target $32.
- CIBC Oppenheimer: Downgraded AGU to Sector Underperform, target $18.
- Merrill Lynch: Said the number of investors who judge the euro to be “overvalued” rose to its highest in three months, according to a survey of investors.

Mid-day News
US stocks are modestly lower mid-day on terrorism fears and continuing worries over higher interest rates and energy prices. China’s copper and steel demand will rise about 10% in the first half of this year from the last six months of 2004, keeping prices near records, as banks boost loans to industrial companies, said Macquarie Bank, Australia’s largest publicly traded investment bank. New York lobbyists were paid $144 million last year, up from $39 million a decade earlier, by companies attempting to influence state political leaders, the NY Times said. RSA Security, PGP Corp. and other Internet-security companies are reviewing products they supply after a study showed a widely used Internet encryption technique could be breached, the Wall Street Journal reported. Dan Carp, Eastman Kodak’s CEO, said people may stop buying camera phones if manufacturers don’t improve quality, the Wall Street Journal reported. Sears, Roebuck is looking for buyers for its Lands’ End business, Women’s Wear Daily said. Pier 1 Imports is shifting its marketing focus with a new advertising campaign that focuses on the retailer’s home furnishings and accessories rather than on celebrity endorsements, the Wall Street Journal reported. The US National Highway Traffic Safety Administration plans to curb speeding by going after the worst offenders and using camera systems that send tickets automatically to speeders, the Wall Street Journal reported. Syria may offer business to France to improve relations, as the Middle Eastern country comes under pressure to speed its withdrawal from Lebanon, the Wall Street Journal reported. Duke Energy’s Duke Power unit and the Nuclear Regulatory Commission met to discuss the costs and schedule for seeking permission to build a nuclear power plant, the NY Times reported. Sex-themed stores are slowly making their way back into the vicinity of NY’s Times Square, 10 years after former Mayor Rudolph Giuliani worked to remove them from the area, the NY Times reported. New Jersey lawmakers voted in favor of increasing the state’s hourly minimum wage to $7.15 from $5.15 within the next 18 months, the Star-Ledger reported. Syria’s military intelligence operation began clearing out of it headquarters in Beirut today amid international demands to leave Lebanon, the AP reported. A Washington post office used to process US government mail has been closed to test for anthrax after the bacteria was detected at a Pentagon mailing center, Bloomberg reported. Microsoft, Time Warner and Thomson SA bought ContentGuard, a US maker of anti-piracy software for Internet music and film distribution, after European regulators said the deal no longer raises antitrust concerns, Bloomberg reported. Iraq’s National Assembly may meet tomorrow for the first time since parliamentary elections in January, and appoint a president and prime minister, Bloomberg reported. The AFL-CIO plans public protests against Charles Schwab and Wachovia because the companies back President Bush’s plan to privatize a small-portion of Social Security, Bloomberg reported. International investors accumulated US assets in January at the fastest pace in almost 2 years, Bloomberg said. Money managers’ optimism about stocks worldwide rose in March to the highest level in at least six years as they became more confident that economies will expand, a Merrill Lynch survey showed. Former Worldcom Chairman Ebbers was convicted of directing an $11 billion fraud that triggered the largest bankruptcy in US history, Bloomberg said. Crude oil is advancing on speculation that OPEC won’t increase production enough to meet rising demand as refiners prepare for the peak gasoline-use season, Bloomberg reported.

BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my Energy-related and Biotech longs. I exited a few longs this morning as they hit stop-losses, thus leaving the Portfolio’s market exposure 25% net short. The tone of the market is negative today as the advance/decline line is lower, most sectors are lower and volume is light. Measures of investor anxiety are mostly higher. Today’s overall market action is negative, considering the very positive report on foreign investors’ demand for US assets and other good economic reports. A move in crude towards $60/bbl. will likely continue to pressure stocks near-term. I expect US stocks to trade mixed-to-lower from current levels into the close on worries over rising energy prices, terrorism fears and technical deterioration.

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