Thursday Close

Indices
S&P 500 1,190.21 +.18%
Dow 10,626.35 -.06%
NASDAQ 2,016.42 +.03%
Russell 2000 625.46 +.41%
DJ Wilshire 5000 11,738.62 +.22%
S&P Barra Growth 571.72 +.19%
S&P Barra Value 614.22 +.17%
Morgan Stanley Consumer 576.46 -.11%
Morgan Stanley Cyclical 768.39 +.34%
Morgan Stanley Technology 462.09 +.28%
Transports 3,777.59 +.53%
Utilities 359.86 +.92%
Put/Call 1.11 +6.73%
NYSE Arms .94 -9.69%
Volatility(VIX) 13.29 -1.48%
ISE Sentiment 139.00 +2.21%
US Dollar 81.78 +.23%
CRB 321.15 -.39%

Futures Spot Prices
Crude Oil 56.00 -.71%
Unleaded Gasoline 155.00 -.74%
Natural Gas 7.15 -1.22%
Heating Oil 157.37 -1.11%
Gold 439.40 +.07%
Base Metals 130.00 -1.13%
Copper 150.45 unch.
10-year US Treasury Yield 4.46% -.94%

Leading Sectors
Iron/Steel +2.30%
Energy +1.69%
Commodity +.99%

Lagging Sectors
Disk Drives -1.05%
Homebuilders -1.16%
Insurance -1.23%

After-hours Movers
PLMO -15.18% after meeting 3Q estimates and lowering 4Q guidance.
CAMD -21.34% after lowering 4Q guidance.

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 JTX, AMLN, YUM and CEN.
- UBS: Rated LNET Buy, target $24. Rated SNDK Buy, target $40.

After-hours News
US stocks finished mixed today as lower long-term interest rates offset rising energy prices. After the close, Walt Disney may make a bid for DreamWorks Animation SKG under its next CEO, Robert Iger, Business Week reported, citing some studio insiders. US Acting Food and Drug Administration Commissioner Lester Crawford should approve an over-the-counter form of Barr Pharmaceutical's Plan B emergency contraceptive, three Democratic senators said at a hearing today, Bloomberg reported. The US House approved a $2.6 trillion budget for 2006 that makes deeper government spending cuts than President Bush requested, Bloomberg said. Adobe Systems announced a 2-for-1 split and said first-quarter profit rose 23% as sales reached a record on demand for updated versions of its Acrobat document technology, Bloomberg reported. Nike said third-quarter earnings rose 36%, spurred by demand for apparel and the Shox line of sneakers in the US and Asia, Bloomberg reported. DreamWorks Animation SKG posted a fourth-quarter profit of $192 million on home-video sales of Shrek 2, Bloomberg said.

BOTTOM LINE: The Portfolio finished unchanged today as gains in my Energy-related longs offset losses in my Networking shorts. I added a few new longs from various sectors in the afternoon, thus leaving the Portfolio 25% net long. One of my new longs is AKS and I am using a stop-loss of $12 on this new position. The tone of the market remained mixed into the afternoon as the advance/decline line finished down slightly, sector performance was mixed and volume fell. Commodity-related stocks outperformed throughout the day on a bounce from recent losses and Homebuilding shares underperformed on worries over fundamentals. Finally, measures of investor anxiety were mixed on the day. Overall, today’s market action was mildly negative, considering the market's oversold technical condition, falling long-term interest rates and recent merger activity. While more of a bounce could develop over the next few days, I continue to expect US shares to trade mixed-to-lower near-term on continuing worries over slowing global growth and higher energy prices.

Mid-day Report

Indices
S&P 500 1,191.08 +.25%
Dow 10,638.69 +.06%
NASDAQ 2,019.13 +.17%
Russell 2000 624.08 +.19%
DJ Wilshire 5000 11,744.06 +.26%
S&P Barra Growth 572.12 +.26%
S&P Barra Value 614.79 +.26%
Morgan Stanley Consumer 576.70 -.07%
Morgan Stanley Cyclical 769.51 +.48%
Morgan Stanley Technology 462.76 +.42%
Transports 3,780.43 +.62%
Utilities 359.39 +.79%
Put/Call 1.11 +6.73%
NYSE Arms .88 -15.39%
Volatility(VIX) 13.46 -.22%
ISE Sentiment 148.00 +8.82%
US Dollar 81.86 +.33%
CRB 320.75 -.52%

Futures Spot Prices
Crude Oil 57.00 +.96%
Unleaded Gasoline 157.30 +1.60%
Natural Gas 7.30 +1.57%
Heating Oil 159.80 +.41%
Gold 439.30 -1.10%
Base Metals 130.00 -1.13%
Copper 150.40 -.13%
10-year US Treasury Yield 4.44% -1.47%

Leading Sectors
Iron/Steel +2.19%
Energy +1.63%
Computer Hardware +1.12%

Lagging Sectors
Disk Drives -.77%
Insurance -.89%
Homebuilders -1.12%

Market Movers
TOY +5.4% after agreeing to be acquired for $6.6 billion by KKR, Bain Capital and Vornado Realty Trust.
RETK +10.84% after SAP AG raised its offer to buy Retek by 29% to $629 million, escalating a bidding war with Oracle.
SBLK +25.16% after Seacor Holdings agreed to buy it for about $532M in stock and cash.
DRIV +13.03% after saying 1Q sales and profit will be higher than it forecast in January.
NFI +10.2% after management reaffirmed forecast for 05 dividend.
ACI +4.77% on higher energy prices.
BID -11.73% on profit-taking after 4Q results.
DRL -14.0% on further weakness from Wachovia downgrade to Underperform.
WGO -7.77% after missing 2Q estimates substantially.
GTRC -5.39% after lowering 1Q forecast.

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
- Initial Jobless Claims for last week fell to 318K versus estimates of 315K and 328K the prior week.
- Continuing Claims fell to 2647K versus estimates of 2668K and 2695K prior.
- Leading Indicators for February rose .1% versus estimates of a .1% increase and a .3% decline in January.
- Philadelphia Fed. for March fell to 11.4 versus estimates of 20.0 and a reading of 23.9 in February.

Recommendations
- Goldman Sachs: Reiterated Outperform on FSL, INTC, AVP, BSX and MRVL. Reiterated Underperform on HRB. Said unrecognized Employee Stock Option expense represented only about 5% of S&P 500 operating EPS in 2004 versus almost 15% in 2001.
- Smith Barney: Said to Buy NRG on weakness, target $45. Said to Buy RRI on weakness, target $15. Reiterated Buy on AMLN, target $31. Reiterated Buy on VECO, target $26. Upgraded RIMM to Buy, target $96. Reiterated Buy on BIIB, target $49. Reiterated Buy on AMGN, target $90. Reiterated Buy on JPM, target $46.
- Legg Mason: Raised VIA/B to Buy, target $46.
- CSFB: Raised KRI to Outperform.
- Prudential: Raised OATS to Overweight, target $12.
- CIBC: Rated AXP Sector Outperform, target $69.
- Bear Stearns: Cut CF to Underperform.
- CIBC: Raised MDCO to Sector Outperform, target $30.
- Well Fargo: Raised ATYT to Buy, target $23.
- Lehman Brothers: Cut GM to Underweight, target $25.

Mid-day News
US stocks are mostly unchanged mid-day as falling interest rates are offsetting another rise in energy prices. The Syrian army completed the first stage of its withdrawal from Lebanon, a pullback of 8,000 soldiers to the east of the country, AFP reported. Midway Games will release a video game next week in which players can simulate taking drugs ranging from marijuana to crack, the NY Times reported. News Corp. plans to offer film clips of Paris Hilton’s reality tv series over Verizon Wireless cell phones to increase viewers, the Wall Street Journal reported. The armed Palestinian groups Hamas and Islamic Jihad rejected a complete stop of hostilities against Israel, shunning efforts by Palestinian Authority President Abbas to reach a lasting truce, Haaretz reported. The slide of GM bonds toward “junk” status may reflect GM’s specific troubles or signal that US companies in general have been paying unjustifiably low interest rates on their debt, the Wall Street Journal reported. Citigroup’s Citibank, HSBC Bank USA and Commerce Bank have extended opening hours at branches in the US to attract customers, the Wall Street Journal reported. Wal-Mart Stores and other US retailers are slashing prices for printing digital-photos in a bid to win market share from each other and from home-printer makers such as Hewlett-Packard, the Wall Street Journal reported. Napster’s “Napster to Go” offers a viable alternative to Apple’s iTunes online music-download store that now dominates that digital music market with 300 million songs sold, the Wall Street Journal said. Two California legislators seek to impose ethical and financial standards on the state’s new $3 billion stem-cell research institute, the Wall Street Journal reported. The FTC could begin regulating food advertisements aimed at children under a bill being introduced by Iowa Senator Tom Harkin, the NY Times reported. Equity Office Properties Trust purchased Verizon Communication’s 41-story building in NYC for more than $500 million, Dow Jones Newswires reported. Siemens AG plans to retreat from the US mobile-phone market as the company tries to cut costs at its unprofitable handset business, Manager Magazin reported. McDonald’s has amassed $115M worth of real estate assets in Russia, including restaurants, land and offices, the NY Times reported. OPEC may start talks next week on doubling yesterday’s 500,000 barrels-a-day increase in its production quota, seeking to halt a rally in prices to records and avoid slowing global economic growth, Bloomberg said. FedEx Corp. said third-quarter profit climbed 53% as shipments from Asia and Europe increased, Bloomberg said. Goldman Sachs said revenue from trading helped the firm beat analysts’ estimates and post a 17% rise in quarterly profit to the highest ever, Bloomberg reported. Crude oil is climbing to a record $57.50 a barrel in NY, and fuel prices touched records, amid speculation OPEC can’t produce enough to meet rising demand, Bloomberg said. US 10-year Treasury notes headed for their first two-day gain in more than a month as investors sought the safety of government debt amid declines in riskier investments such as emerging markets and corporate bonds, Bloomberg reported.

BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Energy-related longs are offsetting losses in my Networking and Chinese ADR shorts. I took profits in a few Technology shorts this morning, thus leaving the Portfolio’s market exposure Market Neutral. The tone of the market is mixed today as the advance/decline line is slightly lower, sector performance is mixed and volume is decent. Measures of investor anxiety are mostly higher. Today’s overall market action is negative, considering the fall in long-term interest rates and recent losses. The unexpected sharp decline in the Philly Fed likely foreshadows the “soft spot” I have been expecting in US economic growth. As a result, long-term interest rates have likely peaked for the intermediate-term. I expect US stocks to trade mixed-to-lower into the close on worries over slowing economic growth and higher energy prices.

Thursday Watch

Late-Night News
Asian indices are lower on rising worries that high energy prices will slow export growth in the region. A 6.9% stake in China's Huaxia Bank may be sold to a US bank, China Business News reported. Investigators discovered that Fannie Mae employees falsified accounting ledger signatures and improperly changed database records, the Wall Street Journal reported. PanAmSat Holding Corp., whose satellites help transmit the broadcasts of CNN and MTV, raised $900 million in an IPO less than a year after being sold to Kohlberg, Kravis Roberts, Bloomberg reported. Charlie Chen, who invests $1 billion in Chinese stocks for Fortis NV, is buying shares of companies that cater to consumers and selling those that benefited from a boom in construction spending, Bloomberg reported. Australian investors could sell as much as $2.5 billion worth of News Corp. shares as a further 25% of the media company is cut from the benchmark S&P/ASX 200 Index tomorrow, Bloomberg said. Microsoft Corp. said it has reached an agreement with several Chinese personal computer makers to launch computers with Windows XP installed as its default operating platform in an effort to fight piracy, Bloomberg reported. Toys "R" Us agreed to be acquired by KKR, Bain Capital and Vornado Realty Trust for about $6 billion, the NY Times reported. Eidos Plc, a UK video-game maker that's been seeking buyer since June, may receive an offer for the company from California-based buyout firm Francisco Partners LP, the London-based Times said.

Late Recommendations
- Goldman Sachs: Reiterated Outperform on DIS and ACS. Reiterated Underperform on THC.

Night Trading
- Asian Indices are -.75% to -.25% on average.
- S&P 500 indicated +.13%.
- NASDAQ 100 indicated +.17%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/Estimate
CTAS/.42
ADBE/.50
ANN/-.07
BKS/1.54
DG/.39
DWA/1.55
DISH/.19
FDX/.98
GS/2.25
JBL/.27
MWD/1.16
NKE/.99
PLMO/.21
TEK/.31
WGO/.52

Splits
DHI 4-for-3

Economic Data
- Initial Jobless Claims for last week are estimated to fall to 315K versus 327K the prior week.
- Continuing Claims for last week are estimated to fall to 2668K versus 2703K prior.
- Leading Indicators for February are estimated to rise .1% versus a .3% decline in January.
- Philadelphia Fed. for March is estimated to fall to 20.0 versus a reading of 23.9 in February.

BOTTOM LINE: I expect US equities to open modestly higher in the morning on a bounce after today's losses. However, stocks may trade mixed-to-lower later in the day on another rise in oil and interest rates. The Portfolio is 25% net short heading into tomorrow.

Wednesday Close

Indices
S&P 500 1,188.07 -.81%
Dow 10,633.07 -1.04%
NASDAQ 2,015.75 -.94%
Russell 2000 622.92 -.62%
DJ Wilshire 5000 11,713.37 -.84%
S&P Barra Growth 570.61%
S&P Barra Value 613.20 -.77%
Morgan Stanley Consumer 577.09 -.75%
Morgan Stanley Cyclical 765.80 -1.39%
Morgan Stanley Technology 460.82 -.91%
Transports 3,757.52 -1.54%
Utilities 356.57 -.69%
Put/Call 1.04 +25.30%
NYSE Arms 1.05 -22.98%
Volatility(VIX) 13.49 +2.59%
ISE Sentiment 136.00 -1.45%
US Dollar 81.61 +.01%
CRB 322.42 +.60%

Futures Spot Prices
Crude Oil 56.57 +.19%
Unleaded Gasoline 155.00 +.11%
Natural Gas 7.23 +.53%
Heating Oil 159.50 +.23%
Gold 443.90 -.07%
Base Metals 131.48 +.67%
Copper 150.50 -.07%
10-year US Treasury Yield 4.50% unch.

Leading Sectors
Wireless +.29%
Energy +.24%
Oil Service +.13%

Lagging Sectors
Defense -1.36%
Papers -1.71%
Iron Steel -1.79%

After-hours Movers
VIA/B +7.4% after Sumner Redstone said he may break up the company because investors aren’t placing a high enough value on the businesses.
NFI +4.2% after management reaffirmed forecast for 05 dividend.
AMLN +16.5% after saying US regulators approved its Symlin diabetes drug.
WWCA -7.7% after disappointing 4Q results.
CNCT -5.80% after announcing that it intends to raise approximately $125M through an offering of convertible senior notes through a Rule 144A offering.

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 AMLN and TAP.

After-hours News
US stocks finished lower today on worries over high energy prices, concerns over General Motors’ difficulties and technical deterioration. After the close, Eastman Kodak will restate results for the past two years because of errors in the accounting of income taxes, pensions and retirement benefits, Bloomberg reported. The US Senate rejected a proposal backed by Democrats and a few Republicans aimed at making it tougher to win congressional approval for new tax cuts, Bloomberg said. JP Morgan agreed to pay $2 billion to settle claims by investors that the lender should have known Worldcom’s books were fraudulent when it helped sell $5 billion in company bonds, Bloomberg reported. The US Senate voted to allow Exxon Mobil Corp. and other companies to tap into an estimated 6.3 billion barrels of oil in a small part of Alaska’s Arctic National Wildlife Refuge, Bloomberg said. Crude oil surged to an all-time high, as a promise of increased output from OPEC failed to ease concern that demand is rising faster than supply, Bloomberg reported. Harley-Davidson passed GM in stock market value for the first time today after GM forecast its largest quarterly loss since 1992, Bloomberg said. Qwest Communications plans to sweeten its takeover offer for MCI Inc. for a third time to pressure MCI to scrap an agreement to be bought by Verizon Communications, Bloomberg reported. Steven Leuthold, who oversees $1 billion for Leuthold Weeden Capital in Minneapolis, sees a three- or four-year bull market in US metals stocks, Bloomberg said.

BOTTOM LINE: The Portfolio finished higher today on gains in my Energy-related longs, Chinese ADR shorts, Networking shorts and Software shorts. I took profits in a few longs and shorts in the afternoon, thus leaving the Portfolio 25% net short. The tone of the market weakened further into the afternoon as the advance/decline line finished near its daily lows, almost every sector declined and volume rose. Energy-related stocks outperformed today and cyclical shares underperformed substantially on worries over higher energy prices and slowing global growth. Finally, most measures of investor anxiety rose, which is a positive. Overall, today’s market action was negative, considering good economic reports, recent losses and a fall in interest rates. While an oversold bounce could occur at any time, I continue to expect US stocks to trade mixed-to-lower until energy and interest rates stabilize. As well, measures of investor anxiety will likely need to rise further before a tradable bottom is in place. Economic reports over the next two days could spur further selling in bonds near-term.

Chart of Interest