S&P 500 1,141.11 -.53%
NASDAQ 2,001.20 -.40%
Leading Sectors
Tobacco unch.
Foods unch.
Semis -.05%
Lagging Sectors
I-Banking -1.29%
Oil Service -1.80%
Networking -1.89%
Other
Crude Oil 36.60 +.08%
Natural Gas 5.42 +.41%
Gold 405.40 +1.12%
Base Metals 106.85 -1.96%
U.S. Dollar 88.01 +.11%
10-Yr. Long-Bond Yield 3.71% -1.49%
VIX 16.31 +3.29%
Put/Call 1.08 +35.0%
NYSE Arms 2.35 +37.43%
Market Movers
FDRY -9.0% on comments from CFO about 1Q.
LSTR +7.3% on comments made during conference call and multiple upgrades.
WYPT +10.0% on acquisition by SOV.
NDN +9.0% after SEC said it didn't need to restate previous quarters.
KIND -16.0% on disappointing 4Q earnings.
GI -14.0% on disappointing 4Q earnings.
Economic Data
None of Note
Recommendations
Goldman reiterating Outperform on KO, PEP, CCE, AMLN, GDT, MDT, PFE and SYMC. Citi Smith Barney says TQNT raising guidance bodes well for largest customer, MOT. Citi is reiterating its Buy ratings on FLEX and JBL. Citi is adding ETR and removing BLC from their recommended list. NOK raised to Overweight at Morgan Stanley. Lehman raised A to Overweight. VRSN raised to Outperform at Raymond James. Jim Cramer, of TheStreet.com says we are getting very close to a great buying opportunity in the market.
Mid-day News
U.S. stocks are down across the board on Tuesday. However, semiconductors, a source of weakness recently are outperforming on very positive comments by Texas Instruments after Monday's close. Sony Ericsson Mobile raised its mobile-phone market forecast, saying industry sales will grow "more than" 10%. Cymer's management said high levels of utilization show "no sign of slowing." Sovereign Bancorp said it agreed to buy Waypoint Financial for $980M. Argentina said it may miss a $3.1B loan payment to the IMF today in an attempt to force the lender to back the gov. stance on restructuring $99B of defaulted bonds. The U.S. economy is now expected to grow 4.5% in this year's first half, faster than the 4.2% predicted a month ago. Economists also expect 4%+ growth every quarter this year, something that hasn't happened since the early 80's.
BOTTOM LINE: With very high readings from the Arms Index and Put/call ratio, it is likely stocks will bounce this afternoon. The NASDAQ is holding 2000, an important technical level, and the SOX is outperforming today. I haven't made any trades and the Portfolio is still 50% net long. The Portfolio is up slightly on the day as a few of my long positions are up enough to offset losses elsewhere. If the NASDAQ holds 2000 and semis continue to improve I may add some tech exposure. However, if 2000 breaks convincingly and the overall market continues to weaken I will likely add some shorts.
Tuesday, March 09, 2004
Tuesday Watch
Earnings Announcements
Company/Estimate
ABS/.20
ANN/.65
FCEL/-.36
KR/.22
IPG/.12
Splits
PII 2-for-1
Economic Data
Redbook Retail Average and ICSC-UBS Weekly Chain Store Sales
Recommendations
None of Note
Late-Night News
A recent survey by TEC Intl. found that 66% of the CEO's of small to mid-sized businesses plan to hire more workers, while only 6% plan on decreasing payrolls. Motorola said it is closing two semi design units in Singapore and Taiwan as it moves work to China, Hong Kong, Australia and India. Some insurance prices have started falling for U.S. businesses after almost three years of rising premiums, the Wall Street Journal reported.
Late-Night Trading
Asian markets are mixed. China and India are the standouts, up 1.24% and down 1.2%, respectively.
S&P 500 indicated +.07%.
NASDAQ indicated +.10%.
BOTTOM LINE: Not much in the way of important business news tonight. I will closely monitor the tech sector's reaction to TXN's positive conference call. I suspect tech opens a little higher and weakens throughout the day. The Portfolio is 50% net long and I will look to add shorts on any significant bounce tomorrow morning.
Company/Estimate
ABS/.20
ANN/.65
FCEL/-.36
KR/.22
IPG/.12
Splits
PII 2-for-1
Economic Data
Redbook Retail Average and ICSC-UBS Weekly Chain Store Sales
Recommendations
None of Note
Late-Night News
A recent survey by TEC Intl. found that 66% of the CEO's of small to mid-sized businesses plan to hire more workers, while only 6% plan on decreasing payrolls. Motorola said it is closing two semi design units in Singapore and Taiwan as it moves work to China, Hong Kong, Australia and India. Some insurance prices have started falling for U.S. businesses after almost three years of rising premiums, the Wall Street Journal reported.
Late-Night Trading
Asian markets are mixed. China and India are the standouts, up 1.24% and down 1.2%, respectively.
S&P 500 indicated +.07%.
NASDAQ indicated +.10%.
BOTTOM LINE: Not much in the way of important business news tonight. I will closely monitor the tech sector's reaction to TXN's positive conference call. I suspect tech opens a little higher and weakens throughout the day. The Portfolio is 50% net long and I will look to add shorts on any significant bounce tomorrow morning.
Monday, March 08, 2004
Monday Close
S&P 500 1,147.21 -.83%
NASDAQ 2,008.78 -1.90%
Leading Sectors
Fashion +.39%
Gaming +.19%
Energy +.18%
Lagging Sectors
Networking -2.30%
Disk Drives -3.04%
Semis -3.76%
Other
Crude Oil 36.43 -.38%
Natural Gas 5.39 -.09%
Gold 402.30 +.35%
Base Metals 108.99 -.80%
U.S. Dollar 87.90 -.31%
10-Yr. Long-Bond Yield 3.77% -1.96%
VIX 15.79 +9.05%
Put/Call .80 +2.56%
NYSE Arms 1.71 +24.82%
After-hours Movers
CYMI +4.36% after boosting 1Q guidance.
TSRA +7.57% after boosting 1Q and 04 guidance and filing secondary.
DIGL +86.8% after announcing that Telecom Italia selected their Network Info. Computer for their Optical Transport Network deployment and testing.
CNXS -19.46% after cutting 4Q forecast.
Recommendations
Goldman Sachs said TRB is one of their top sector picks. GS said TRB's help-wanted revenues posted a gain in the mid-teens in Feb. vs. Jan.'s 4% Y/Y increase. This represents the company's best help-wanted performance in 4 years. GS reiterating Outperform on KO. Finally, Goldman reiterating Underperform on FRNT and cutting estimates. TheStreet.com is reporting that CSCO quarter tracking very well. The Street.com's Cramer says analysts will likely raise PFE numbers a lot on news that Liptor, taken in large doses, can prevent heart attacks. The Steet.com is also saying that SUNW is the big loser in the recent tech spending surveys.
After-hours News
U.S. stocks declined Monday as weakness in semiconductors spread to the rest of tech and then to the entire market. After the close, Texas Instruments(TXN) raised the mid-point of it 1Q sales guidance and boosted it earnings outlook, citing broad-based strength in its chip offerings. TXN's CEO Slaymaker said visibility seems to be improving with increasing backlog. He also said chip prices continue to firm. Slaymaker suggested there is a great deal of room for upside, given prices are still 50% lower than in 2000. Goldman Sachs says the manufacturing sector, which accounts for 14% of the demand for tech products, is forecasted to increase capex by 16% this year vs. a decline of 13% last year. Microsoft told the Justice Dept. that it has no immediate plans to compete with Oracle in selling business software, Reuters reported. Martha Stewart will leave MSO board and the company may change its name, CNN says. Mark McClellan, picked by President Bush to lead the biggest expansion in Medicare in 40 years, said he would help Congress craft a plan to allow Americans to buy cheaper medicines from other countries. Reliant Resources said it was notified that federal prosecutors will seek a criminal indictment against a subsidiary for shutting down Cali. power plants in 2000 to boost prices. AmSouth Bancorp said it is under investigation by the U.S. Attorney in Miss. because of an alleged "fraudulent note scheme," the company said in a regulatory filing.
BOTTOM LINE: The Portfolio was down today as my technology positions declined. I sold quite a few of these into the weaknesses, anticipating further declines in the sector. The Portfolio is now 50% net long. Specifically, the semiconductor index led the way on the down-side, breaking down again technically as well. It appears the SOX may test its 200 day m.a. As fundamentals continue to improve and valuations fall, this sub-sector of technology should provide tremendous profits later in the year.
NASDAQ 2,008.78 -1.90%
Leading Sectors
Fashion +.39%
Gaming +.19%
Energy +.18%
Lagging Sectors
Networking -2.30%
Disk Drives -3.04%
Semis -3.76%
Other
Crude Oil 36.43 -.38%
Natural Gas 5.39 -.09%
Gold 402.30 +.35%
Base Metals 108.99 -.80%
U.S. Dollar 87.90 -.31%
10-Yr. Long-Bond Yield 3.77% -1.96%
VIX 15.79 +9.05%
Put/Call .80 +2.56%
NYSE Arms 1.71 +24.82%
After-hours Movers
CYMI +4.36% after boosting 1Q guidance.
TSRA +7.57% after boosting 1Q and 04 guidance and filing secondary.
DIGL +86.8% after announcing that Telecom Italia selected their Network Info. Computer for their Optical Transport Network deployment and testing.
CNXS -19.46% after cutting 4Q forecast.
Recommendations
Goldman Sachs said TRB is one of their top sector picks. GS said TRB's help-wanted revenues posted a gain in the mid-teens in Feb. vs. Jan.'s 4% Y/Y increase. This represents the company's best help-wanted performance in 4 years. GS reiterating Outperform on KO. Finally, Goldman reiterating Underperform on FRNT and cutting estimates. TheStreet.com is reporting that CSCO quarter tracking very well. The Street.com's Cramer says analysts will likely raise PFE numbers a lot on news that Liptor, taken in large doses, can prevent heart attacks. The Steet.com is also saying that SUNW is the big loser in the recent tech spending surveys.
After-hours News
U.S. stocks declined Monday as weakness in semiconductors spread to the rest of tech and then to the entire market. After the close, Texas Instruments(TXN) raised the mid-point of it 1Q sales guidance and boosted it earnings outlook, citing broad-based strength in its chip offerings. TXN's CEO Slaymaker said visibility seems to be improving with increasing backlog. He also said chip prices continue to firm. Slaymaker suggested there is a great deal of room for upside, given prices are still 50% lower than in 2000. Goldman Sachs says the manufacturing sector, which accounts for 14% of the demand for tech products, is forecasted to increase capex by 16% this year vs. a decline of 13% last year. Microsoft told the Justice Dept. that it has no immediate plans to compete with Oracle in selling business software, Reuters reported. Martha Stewart will leave MSO board and the company may change its name, CNN says. Mark McClellan, picked by President Bush to lead the biggest expansion in Medicare in 40 years, said he would help Congress craft a plan to allow Americans to buy cheaper medicines from other countries. Reliant Resources said it was notified that federal prosecutors will seek a criminal indictment against a subsidiary for shutting down Cali. power plants in 2000 to boost prices. AmSouth Bancorp said it is under investigation by the U.S. Attorney in Miss. because of an alleged "fraudulent note scheme," the company said in a regulatory filing.
BOTTOM LINE: The Portfolio was down today as my technology positions declined. I sold quite a few of these into the weaknesses, anticipating further declines in the sector. The Portfolio is now 50% net long. Specifically, the semiconductor index led the way on the down-side, breaking down again technically as well. It appears the SOX may test its 200 day m.a. As fundamentals continue to improve and valuations fall, this sub-sector of technology should provide tremendous profits later in the year.
Mid-day Update
S&P 500 1,156.78 -.01%
NASDAQ 2,040.92 -.33%
Leading Sectors
Oil Service +.82%
Gaming +.77%
Iron/Steel +.72%
Lagging Sectors
Defense -.64%
Airlines -.78%
Semis -1.28%
Other
Crude Oil 37.15 -.30%
Natural Gas 5.47 +.4%
Gold 400.90 -.15%
Base Metals 108.99 -.80%
U.S. Dollar 88.19 +.03%
10-Yr. Long-Bond Yield 3.79% -1.47%
VIX 14.59 +.76%
Put/Call .74 -5.13%
NYSE Arms 1.07 -21.90%
Market Movers
MAMA +12.8% after significant pullback last 3 days.
TASR +17% after the company announced completion of a test for a new weapon that shoots charges at least 30 feet.
IMC +26% on purchase by Smucker.
ESA +23.2% on purchase by Blackstone Group.
EVOL -24.6% on disappointing 4Q and lowered guidance.
SGMA -21.6% on disappointing 3Q.
Economic Data
None of note.
Recommendations
SFA raised to Buy 2 at UBS. ACS raised to Buy at Deutshe Bank. STM raised to Buy at Legg Mason. CYTC raised to Outperform by Thomas Weisel. SYK raised to Buy at Bank of America. Morgan Stanley cut CNC to Underweight. Bank One raised to Outperform at Keefe, Bruyette. SAP raised to Overweight at Prudential. Goldman Sachs says their CIO survey points to accelerated spending by financial services, communications and manufacturing companies on tech equipment. GS also said CIOs are indicating long-term tech spending growth could stabilize at just below 6%, representing a jump of 110 basis points from the last survey, the largest positive survey-to-survey change they have seen. Citi Smith Barney says results from March's semi purchasing manager survey are most positive for NSM and TXN. Citi thinks semis will start moving up again soon. Citi also saying that recent strong retailing trends are less related to tax refunds than people think. Gary B. Smith, technical analyst for TheStreet.com thinks market will break to the up-side soon. Cramer, of TheStreet.com says JPM going higher and investors sticking with the old tech leaders will continue to underperform.
Mid-day News
U.S. stocks are quietly mixed mid-day as strength in energy-related stocks is being offset by continued weakness in semiconductors. Alcoa(AA) plans to double its alumina output at its refineries in Suriname and Jamaica to meet surging demand, Reuters reported. J.M. Smucker agreed to purchase Intl. Multifoods Corp. for $840M. Iraq's governing council today signed an interim constitution aimed at preparing the country for the planned handover of power by the U.S.-led coalition on June 30. Telefonica agreed to buy Bellsouth's wireless operations in Latin America for $5.85B.
BOTTOM LINE: The Portfolio is down slightly on the day. No changes have been made yet. I will likely switch around a few positions later in the day, maintaining 100% net long exposure. Semis continue to underperform. It looks like it may take next quarter's earnings reports and guidance to get them going again, both of which I expect to be very good.
NASDAQ 2,040.92 -.33%
Leading Sectors
Oil Service +.82%
Gaming +.77%
Iron/Steel +.72%
Lagging Sectors
Defense -.64%
Airlines -.78%
Semis -1.28%
Other
Crude Oil 37.15 -.30%
Natural Gas 5.47 +.4%
Gold 400.90 -.15%
Base Metals 108.99 -.80%
U.S. Dollar 88.19 +.03%
10-Yr. Long-Bond Yield 3.79% -1.47%
VIX 14.59 +.76%
Put/Call .74 -5.13%
NYSE Arms 1.07 -21.90%
Market Movers
MAMA +12.8% after significant pullback last 3 days.
TASR +17% after the company announced completion of a test for a new weapon that shoots charges at least 30 feet.
IMC +26% on purchase by Smucker.
ESA +23.2% on purchase by Blackstone Group.
EVOL -24.6% on disappointing 4Q and lowered guidance.
SGMA -21.6% on disappointing 3Q.
Economic Data
None of note.
Recommendations
SFA raised to Buy 2 at UBS. ACS raised to Buy at Deutshe Bank. STM raised to Buy at Legg Mason. CYTC raised to Outperform by Thomas Weisel. SYK raised to Buy at Bank of America. Morgan Stanley cut CNC to Underweight. Bank One raised to Outperform at Keefe, Bruyette. SAP raised to Overweight at Prudential. Goldman Sachs says their CIO survey points to accelerated spending by financial services, communications and manufacturing companies on tech equipment. GS also said CIOs are indicating long-term tech spending growth could stabilize at just below 6%, representing a jump of 110 basis points from the last survey, the largest positive survey-to-survey change they have seen. Citi Smith Barney says results from March's semi purchasing manager survey are most positive for NSM and TXN. Citi thinks semis will start moving up again soon. Citi also saying that recent strong retailing trends are less related to tax refunds than people think. Gary B. Smith, technical analyst for TheStreet.com thinks market will break to the up-side soon. Cramer, of TheStreet.com says JPM going higher and investors sticking with the old tech leaders will continue to underperform.
Mid-day News
U.S. stocks are quietly mixed mid-day as strength in energy-related stocks is being offset by continued weakness in semiconductors. Alcoa(AA) plans to double its alumina output at its refineries in Suriname and Jamaica to meet surging demand, Reuters reported. J.M. Smucker agreed to purchase Intl. Multifoods Corp. for $840M. Iraq's governing council today signed an interim constitution aimed at preparing the country for the planned handover of power by the U.S.-led coalition on June 30. Telefonica agreed to buy Bellsouth's wireless operations in Latin America for $5.85B.
BOTTOM LINE: The Portfolio is down slightly on the day. No changes have been made yet. I will likely switch around a few positions later in the day, maintaining 100% net long exposure. Semis continue to underperform. It looks like it may take next quarter's earnings reports and guidance to get them going again, both of which I expect to be very good.
Monday Watch
Earnings Announcements
Company/Estimates
BRK/A/867.00
EVOL/.09
JAS/1.21
Splits
SSNC 3-for-2
VAPH 3-for-1
WGO 2-for-1
Economic Data
None of note.
Weekend Recommendations
Barron's has positive articles on L, FIX and the U.S. dollar. It has a negative column on GRMN. Goldman Sachs says the Supreme Court's decision last week in favor of Class II gaming was a milestone for the slot industry and will propel industry growth for 3-4 years. Goldman's favorites are IGT and AGI. GS reiterates XOM as its favorite large-cap integrated oil play ahead of its annual analyst meeting March 10. Goldman also reiterated Outperform on ITT. Merrill Lynch named QLGC Focus 1 stock on Fri. TheStreet.com has a positive editorial on semis. XLNX, TXN, ADI, GNSS and OVTI are mentioned favorably. Warren Buffet reported 2 new positions in his annual letter to shareholders. He added HCA and PTR. He also trimmed HRB and added to WFC. Buffet also said he doesn't like the high-yield market right now. Louis Rukeyser's Wall Street had guests that were positive on COCO, FLEX, DRI, LMT, JNJ, MSFT, WY, APA, PBI, HSY and DELL. Forbes on Fox had guests that were positive on XOM. Wall Street Week had guests that were positive on RHAT, NOVL, ZBRA, AMAT, IP, MDT, JNPR and CMVT. Cashin' In had guests that were positive on real estate, ICF, TSN, UHCO and DG. Guests were mixed on ORCL and negative on RIMM.
Weekend News
The U.S. is preparing to apply sanctions against Syria, Agence France-Presse said. OPEC has scaled back plans to cut the group's daily output by 2.5M barrels on April 1. GE is planning to sell stock worth $5B in its Genworth mortgage and insurance business as early as April. Affluent homebuyers are camping out days in tents and under tarps to snatch up expensive new homes in the latest sign of the booming Washington-area real-estate market, the Washington Post reported. Michael Eisner may receive up to $374M if he is ousted from the company, the Sunday Times reported. Shares of SINA, SOHU and NTES may be poised to fall because of Chinese state control of the wireless industry, the NY Times said. A case of H7 avian flu was discovered on a commercial chicken farm in Maryland, the fourth state affected by the virus since last month. Total ticket sales for Gibson's The Passion of the Christ topped $212M over the weekend. Iraqi leaders are set to sign their constitution tomorrow, the NY Times reported. McData's CEO said there are going to be some big opportunities this year in storage and that spending is clearly up on all fronts. Corporate spending will rise 9.8% this year, more than 3 times higher than last year, according to the Blue Chip survey. IBM CEO Palmisano said he was more optimistic than he has been in a long time. Economists are currently projecting the economy to grow 4.6% this year, the fastest since the mid-80's.
Late-Night Trading
Asian indices are down on average about .5% with the exception of Hong Kong which is up 1.6%.
S&P 500 indicated -.07%.
NASDAQ indicated +.14%.
BOTTOM LINE: Not much in the way of market-moving news reported over the weekend. I expect a pretty decent week. The Portfolio is currently 100% net long.
Company/Estimates
BRK/A/867.00
EVOL/.09
JAS/1.21
Splits
SSNC 3-for-2
VAPH 3-for-1
WGO 2-for-1
Economic Data
None of note.
Weekend Recommendations
Barron's has positive articles on L, FIX and the U.S. dollar. It has a negative column on GRMN. Goldman Sachs says the Supreme Court's decision last week in favor of Class II gaming was a milestone for the slot industry and will propel industry growth for 3-4 years. Goldman's favorites are IGT and AGI. GS reiterates XOM as its favorite large-cap integrated oil play ahead of its annual analyst meeting March 10. Goldman also reiterated Outperform on ITT. Merrill Lynch named QLGC Focus 1 stock on Fri. TheStreet.com has a positive editorial on semis. XLNX, TXN, ADI, GNSS and OVTI are mentioned favorably. Warren Buffet reported 2 new positions in his annual letter to shareholders. He added HCA and PTR. He also trimmed HRB and added to WFC. Buffet also said he doesn't like the high-yield market right now. Louis Rukeyser's Wall Street had guests that were positive on COCO, FLEX, DRI, LMT, JNJ, MSFT, WY, APA, PBI, HSY and DELL. Forbes on Fox had guests that were positive on XOM. Wall Street Week had guests that were positive on RHAT, NOVL, ZBRA, AMAT, IP, MDT, JNPR and CMVT. Cashin' In had guests that were positive on real estate, ICF, TSN, UHCO and DG. Guests were mixed on ORCL and negative on RIMM.
Weekend News
The U.S. is preparing to apply sanctions against Syria, Agence France-Presse said. OPEC has scaled back plans to cut the group's daily output by 2.5M barrels on April 1. GE is planning to sell stock worth $5B in its Genworth mortgage and insurance business as early as April. Affluent homebuyers are camping out days in tents and under tarps to snatch up expensive new homes in the latest sign of the booming Washington-area real-estate market, the Washington Post reported. Michael Eisner may receive up to $374M if he is ousted from the company, the Sunday Times reported. Shares of SINA, SOHU and NTES may be poised to fall because of Chinese state control of the wireless industry, the NY Times said. A case of H7 avian flu was discovered on a commercial chicken farm in Maryland, the fourth state affected by the virus since last month. Total ticket sales for Gibson's The Passion of the Christ topped $212M over the weekend. Iraqi leaders are set to sign their constitution tomorrow, the NY Times reported. McData's CEO said there are going to be some big opportunities this year in storage and that spending is clearly up on all fronts. Corporate spending will rise 9.8% this year, more than 3 times higher than last year, according to the Blue Chip survey. IBM CEO Palmisano said he was more optimistic than he has been in a long time. Economists are currently projecting the economy to grow 4.6% this year, the fastest since the mid-80's.
Late-Night Trading
Asian indices are down on average about .5% with the exception of Hong Kong which is up 1.6%.
S&P 500 indicated -.07%.
NASDAQ indicated +.14%.
BOTTOM LINE: Not much in the way of market-moving news reported over the weekend. I expect a pretty decent week. The Portfolio is currently 100% net long.
Sunday, March 07, 2004
Chart of the Week
NASDAQ Biotechnology Index 1-Year Candlestick Chart
BOTTOM LINE: The NASDAQ Biotech Index has been in a trading range for 10 months. My short-term trading indicators generated buy signals on this index early last week. It proceeded to break through the 800 resistance level on Thursday, with a confirmation of the break on Friday. Partnerships with major pharmaceutical companies, FDA approvals and low interests rates should propel this sector higher in the intermediate-term.
BOTTOM LINE: The NASDAQ Biotech Index has been in a trading range for 10 months. My short-term trading indicators generated buy signals on this index early last week. It proceeded to break through the 800 resistance level on Thursday, with a confirmation of the break on Friday. Partnerships with major pharmaceutical companies, FDA approvals and low interests rates should propel this sector higher in the intermediate-term.
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