Monday, August 01, 2005

Stocks Higher Mid-day, Shrugging Off Rising Energy Prices and Interest Rates

Indices
S&P 500 1,238.47 +.35%
DJIA 10,647.20 +.06%
NASDAQ 2,199.73 +.67%
Russell 2000 684.72 +.73%
DJ Wilshire 5000 12,379.65 +.38%
S&P Barra Growth 594.22 +.39%
S&P Barra Value 639.83 +.31%
Morgan Stanley Consumer 590.10 -.01%
Morgan Stanley Cyclical 762.82 +.19%
Morgan Stanley Technology 502.80 +.45%
Transports 3,814.12 +.40%
Utilities 393.72 -.90%
Put/Call 1.0 +13.64%
NYSE Arms .81 -42.51%
Volatility(VIX) 12.02 +3.89%
ISE Sentiment 207.00 +24.70%
US Dollar 88.77 -.66%
CRB 314.96 +.94%

Futures Spot Prices
Crude Oil 61.90 +2.20%
Unleaded Gasoline 176.80 +2.43%
Natural Gas 8.15 +3.49%
Heating Oil 172.00 +2.49%
Gold 437.70 -.02%
Base Metals 127.16 +.59%
Copper 166.10 unch.
10-year US Treasury Yield 4.32% +.93%

Leading Sectors
HMOs +1.86%
Oil Service +1.80%
Biotech +1.49%

Lagging Sectors
Tobacco -.42%
Oil Tankers -.89%
Utilities -.91%
BOTTOM LINE: The Portfolio is higher mid-day on gains in my Medical Information Systems, Medical and Biotechnology longs. I have not traded today, thus leaving the Portfolio 100% net long. The tone of the market is slightly positive as the advance/decline line is modestly higher, most sectors are higher and volume is below average. Measures of investor anxiety are mixed. Today’s overall market action is positive considering the rise in energy prices and interest rates. With 55% of the S&P 500 reporting, profits are rising 14% vs. estimates of a 6.6% increase just three weeks ago. I believe better-than-expected earnings and a P/E multiple expansion will continue to boost stocks through year-end. I expect stocks to rise modestly from current levels into the close on short-covering and stabilizing interest rates.

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