Wednesday, March 30, 2005

Wednesday Close

S&P 500 1,181.41 +1.38%
DJIA 10,540.93 +1.30%
NASDAQ 2,005.67 +1.61%
Russell 2000 614.90 +1.70%
DJ Wilshire 5000 11,633.97 +1.37%
S&P Barra Growth 570.87 +1.39%
S&P Barra Value 606.13 +1.37%
Morgan Stanley Consumer 579.59 +1.16%
Morgan Stanley Cyclical 742.92 +1.31%
Morgan Stanley Technology 458.21 +1.91%
Transports 3,736.32 +1.71%
Utilities 354.47 +1.38%
Put/Call .83 -11.70%
NYSE Arms .57 -60.51%
Volatility(VIX) 13.64 -5.87%
ISE Sentiment 149.00 -10.24%
US Dollar 84.33 +.01%
CRB 311.02 +.68%

Futures Spot Prices
Crude Oil 54.11 -.22%
Unleaded Gasoline 159.80 +1.59%
Natural Gas 7.48 +1.12%
Heating Oil 160.20 +2.94%
Gold 428.70 -.19%
Base Metals 128.54 +.54%
Copper 149.00 -.13%
10-year US Treasury Yield 4.54% -.53%

Leading Sectors
Airlines +5.24%
Internet +2.49%
HMOs +2.32%

Lagging Sectors
Broadcasting +.45%
Homebuilders +.32%
Insurance +.19%

After-hours Movers
WDC +11.9% after boosting 3Q results substantially.
ODMO +6.56% after beating 4Q estimates.
MXO +4.82% on WDC news.
ELN -28.4%, BIIB -9.41% after announcing that their ongoing safety evaluation of TYSABRI has led to a previously diagnosed case of malignant astrocytoma being reassessed as progressive multifocal leukoencephalopathy, in a patient in an open label Crohn’s disease clinical trial.

Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on AMGN and MSFT.

Afternoon/Evening Headlines
- A buyout group led by Texas Pacific Group will invest $350 million in cash for a 12% stake in China’s Lenovo Group Ltd., which is acquiring IBM’s personal computer unit.
- Time Warner plans to test a service called Start Over that lets tv viewers begin a show at any time during its broadcast.
- Johnson & Johnson said today its DePuy Orthopaedics unit received a subpoena from the US Attorney’s Office in Newark, New Jersey, requesting documents on contracts with orthopedic surgeons.
- EBay named Omnicom Group’s BBDO as its ad agency, replacing Goodby, Silverstein & Partners.

- Former Morgan Stanley Chairman S. Parker Gilbert and retired President Robert Scott said they and other former executives might stage a proxy fight to oust CEO Philip Purcell.

Women’s Wear Daily:
- Saks Inc. seeks buyers for its regional department store unit and Belk Inc. is the primary suitor.

BOTTOM LINE: US stocks had their broadest, strongest rally of 2005 today as oil prices declined, long-term interest rates fell and quarter-end window dressing took hold. The Portfolio finished slightly higher as gains in my Internet longs and Networking longs more than offset losses in my Base Metal shorts. I added a few new longs from various sectors in the afternoon, thus leaving the Portfolio 75% net long. One of my new longs is PHM and I am using a $71 stop-loss on this position. The tone of the market strengthened further into the afternoon as the advance/decline line rose to its daily highs, every sector advanced and volume was decent. Small-caps and Tech outperformed and measures of investor anxiety were mostly lower. Overall, today’s market action was positive. I expect US stocks to rally further near-term as long-term interest rates decline over the next 2 days on weaker-than-expected economic data, thus quelling some speculation that the Fed will raise rates 50 basis points at the next meeting. An unexpected rise in long-term interest rates would likely cut any rally short. I also expect oil to remain in a trading range near-term. However, one more push higher in energy prices is possible over the next 6 weeks before steeper declines occur in the second-half of the year.

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