Monday Close

Indices
S&P 500 1,174.28 +.24%
DJIA 10,485.65 +.41%
NASDAQ 1,992.52 +.07%
Russell 2000 615.12 -.02%
DJ Wilshire 5000 11,576.78 +.16%
S&P Barra Growth 576.53 +.29%
S&P Barra Value 602.36 +.20%
Morgan Stanley Consumer 574.89 +.17%
Morgan Stanley Cyclical 745.89 -.52%
Morgan Stanley Technology 453.07 -.07%
Transports 3,740.75 -.10%
Utilities 354.44 +.13%
Put/Call .66 +3.13%
NYSE Arms .85 -22.45%
Volatility(VIX) 13.75 +2.46%
ISE Sentiment 195.00 +12.72%
US Dollar 84.51 +.43%
CRB 307.36 +.16%

Futures Spot Prices
Crude Oil 53.85 -.37%
Unleaded Gasoline 156.70 -.36%
Natural Gas 7.00 +.01%
Heating Oil 154.00 -.49%
Gold 426.20 +.05%
Base Metals 127.52 -1.0%
Copper 145.45 unch.
10-year US Treasury Yield 4.64% +1.03%

Leading Sectors
Oil Service +1.31%
Insurance +1.29%
Retail +1.19%

Lagging Sectors
Broadcasting -1.13%
Biotech -1.33%
Iron/Steel -2.26%

After-hours Movers
HCA +7.96% after boosting 1Q guidance substantially.

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 HCA, WAG and MUR.

Afternoon/Evening Headlines
Bloomberg:
- DreamWorks Animation SKG said investors including Microsoft co-founder Paul Allen plan to sell $500 million of stock five months after the company issued shares to the public.
- Qwest Communications said MCI Inc. must make a decision on whether to accept its $8.45 billion takeover offer by April 5.
- Parker Hannifin lowered its fiscal third-quarter and full-year earnings forecasts because of weaker-than-expected sales to automakers.
- Richard Fuld Jr., chairman of the board of directors and CEO of Lehman Brothers, has been named a director of the Federal Reserve Bank of NY.
- Saks Inc. said the SEC opened a formal investigation into whether the company improperly collected as much as $21.5 million from vendors.
- Crude oil futures fell a second day on speculation rising production from OPEC will be sufficient to meet demand from refiners.
- US 10-yr T-notes fell on speculation that Friday’s employment report would exceed expectations.

NY Times:
- The Univ. of Colorado plans to review the record of Professor Ward Churchill to examine accusations of academic misconduct.

Business Week:
- Hewlett-Packard may name its new chief executive officer as early as tomorrow, less than 2 months after the high-profile ouster of Carleton Fiorina from the company.

Korea Times:
- South Korea will start terrestrial digital multimedia broadcasting, which would enable people to enjoy free tv programming through handsets.

Kyodo News:
- The number of births in Japan last year fell more than some had expected to the lowest since the end of WWII.

Nikkei English News:
- Canon Inc. is expanding into the pharmaceutical industry with production of DNA chips using inkjet technology used in its computer printers.

BOTTOM LINE: US stocks finished slightly higher today as declining energy prices and merger activity mostly offset worries over higher interest rates and slowing global growth. The Portfolio finished slightly higher as gains in my Homebuilding shorts more than offset losses in my Software longs. I added a few new shorts in the afternoon, thus leaving the Portfolio market neutral. One of my new shorts is EBAY and I am using a $38 stop-loss on this position. The tone of the market deteriorated modestly into the close as the advance/decline line dropped to its daily lows, sector performance was mixed and volume remained very light. Cyclicals underperformed throughout the day and measures of investor anxiety were mixed. Overall, today’s market action was modestly negative, considering recent losses, declining energy prices, merger activity and a firming US dollar.

Mid-day Scoreboard

Indices
S&P 500 1,178.27 +.58%
DJIA 10,510.27 +.65%
NASDAQ 2,002.13 +.56%
Russell 2000 615.96 +.11%
DJ Wilshire 5000 11,611.09 +.45%
S&P Barra Growth 569.30 +.60%
S&P Barra Value 604.22 +.51%
Morgan Stanley Consumer 575.73 +.31%
Morgan Stanley Cyclical 747.95 -.25%
Morgan Stanley Technology 455.51 +.47%
Transports 3,761.30 +.44%
Utilities 355.62 +.47%
Put/Call .84 +31.25%
NYSE Arms .76 -31.14%
Volatility(VIX) 13.53 +.89%
ISE Sentiment 180.00 +4.05%
US Dollar 84.59 +.51%
CRB 307.06 +.06%

Futures Spot Prices
Crude Oil 54.30 -.98%
Unleaded Gasoline 157.70 -1.39%
Natural Gas 6.97 -1.30%
Heating Oil 154.50 -.22%
Gold 426.00 +.24%
Base Metals 127.52 -1.0%
Copper 145.50 -.07%
10-year US Treasury Yield 4.62 +.72%

Leading Sectors
Oil Service +1.52%
Internet +1.23%
Retail +1.20%

Lagging Sectors
Biotech -.73%
Papers -1.02%
Iron/Steel -2.29%

Links of Interest
Market Internals
Movers & Shakers
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

BOTTOM LINE: US stocks are higher mid-day on a decline in energy prices and bargain-hunting. The Portfolio is higher on gains in my Homebuilding shorts, Chinese ADR shorts and Retail longs. I added a few new retail longs this morning, thus increasing the Portfolio’s market exposure to 25% net long. One of my new longs is DECK and I am using a $35 stop-loss on this position. The tone of the market is mixed as the advance/decline line is slightly lower, most sectors are higher and volume is very light. Small-caps and Cyclicals are underperforming and measures of investor anxiety are mostly lower. Today’s overall market action is neutral considering recent losses, the decline in energy prices and stronger US dollar. I continue to believe one more push lower is necessary to put in place a more durable bottom. I expect US stocks to trade mixed into the close as a decline in energy prices and bargain hunting offsets concerns over higher interest rates and worries over slowing global growth.

Today's Headlines

Bloomberg:
- Seven of the largest US buyout firms, led by Silver Lake Partners, agreed to acquire software maker SunGard Data Systems for $11.3 billion, collaborating in the biggest leveraged buyout since 1989.
- AmerisourceBergen Corp. cut its fiscal 2005 forecast for earnings per share from continuing operations to $3.10 to $3.50 from $4.00 to $4.10.
- AIG used private, offshore companies for six times more reinsurance than any of its nine biggest US competitors.
- Sprint Corp., Comcast and Time Warner are among companies whose borrowing costs may fall relative to government securities as investors buy their bonds rather than General Motors’ debt.
- An earthquake measured at a preliminary magnitude of 8.2 struck off the northwestern coast of Indonesia, possibly triggering a tsunami in the same area where a temblor caused widespread death and destruction in December.
- The US dollar is climbing to a five-month high against the yen and gained versus the euro on speculation reports this week will show US economic growth is outpacing Germany and Japan.
- Crude oil futures in NY are falling, extending last week’s decline from a record, on speculation of ample supplies when global consumption peaks in the third and fourth quarters.

The Wall Street Journal:
- The SEC is assuring companies they will not be forced into a one-size-fits-all approach to valuing employee stock options when it announces new accounting rules.
- Microsoft is adding features to the next versions of the Windows operating system and Internet Explorer browser to help prevent rogue Web sites from obtaining personal information.
- Professional short-sellers are increasingly betting against real-estate investment trusts, citing a Banc of America report.
- The SEC has sent subpoenas to 12 senior executives at AIG as investigations continue into transactions that may have been used to bolster its financial position.
- Television networks are planning shows with religious themes for next season as the success of “The Passion of the Christ” and “The Da Vinci Code” indicate there is a market for spiritual themes in popular culture.

The New York Times:
- New FCC Chairman Martin will try to broaden broadcasting indecency rules and increase fines for violations.
- A unit of billionaire investor Warren Buffet’s Berkshire Hathaway is being examined by investigators from the SEC, NY Attorney General Spitzer, the US Justice Department and regulators in Ireland, Britain and Australia.

AP
- EBay sales may be considered taxable income under IRS instructions.

Winston-Salem Journal:
- Krispy Kreme Doughnuts Inc. is expected to receive a $225 million loan from CSFB and hedge fund Silver Point Capital.

Daily News:
- Dog-treat dispensers, for owners and their pets who are on the go, are popping up on the streets of New York.

Economic Releases

None of note

Morning Buy/Sell Recommendations

Goldman Sachs:
- Reiterated Outperform on ADP, FSL and MRVL.
- Reiterated Underperform on MU.

Smith Barney:
- Upgraded ISIL to Buy, target $22.
- Reiterated Buy on HAL, target $56.
- Said interest rate worries seem overblown, as do inflation worries, given that labor costs are under control and commodity prices are a tiny share of total costs.
- Reiterated Buy on WMT, target $65.
- Reiterated Buy on Semi Equipment stocks, favorites are AMAT, WFR, MYK and LRCX.
- Said total semi short interest ratio for over 60 US traded semi companies increased .4 days or 17% m/m to 3.1 days in March from 2.6 days in February.

Banc of America:
- Upgraded TOL to Buy.

Bear Stearns:
- Reiterated Outperform on ITW, target $101.

Lehman Brothers:
- Raised IVX to Outperform, target $26.
- Reiterated Overweight on MOVI, target $30.

Merrill Lynch:
- Reiterated Buy on CMVT, target $30.

Morgan Stanley:
- Rated ANR Overweight, target $36.

JP Morgan:
- Rated ICGN Overweight.
- Rated WXS Overweight.

CSFB:
- Raised AMTD to Outperform, target $14.
- Rated WXS Outperform, target $22.
- Raised TAP to Outperform, target $100.

Deutsche Bank:
- Rated BGFV Outperform, target $30.
- Rated TSA Buy, target $31.
- Raised CELL to Buy, target $24.

UBS:
- Downgraded GM to Reduce, target $20.
- Reiterated Buy on LTM, target $38.
- Reiterated Buy on TLWT, target $21.
- Reiterated Buy on SLR, target $5.5.
- Reiterated Buy on GR, target $47.

Jeffries:
- Raised ORB to Buy, target $12.

Piper Jaffray:
- Raised GME to Outperform, target $30.
- Raised ELBO to Outperform, target $50.