Earnings Announcements
Company/Estimate
ARO/.69
BGP/1.51
DKS/.99
DISH/.10
ELBO/1.41
NSM/.41
ORCL/.12
URBN/.42
Splits
FIC 3-for-2
Economic Data
Advance Retail Sales for Feb. estimated up .6% vs. -.3% in Jan.
Retail Sales Less Autos estimated up .5% in Feb. vs. +.9% in Jan.
Initial Jobless Claims for last week estimated at 343K vs. 345K the prior week.
Continuing Claims estimated at 3075K vs. 3091K the prior week.
Recommendations
Goldman Sachs reiterates Outperform on FDC. GS reiterating Outperform on AG after an end to SEC investigation into its revenue recognition practices. GS reiterates Outperform on DNA based on momentum from launch of Avastin and a robust pipeline. GS reiterated Outperform on DHR and raised estimates. Finally, Goldman is saying the recent weakness in base metal prices/stocks is a great buying opportunity. Their favorites are N, AL and AA.
Late-Night News
General Motors will start selling one-ton pickup trucks in Thailand for the first time to boost sales in Southeast Asia's biggest automobile market. China will begin operating the first nuclear power plant designed and built in the country, needed to ease power shortages along the east coast, China Daily reported. The U.S. Senate approved a plan by Democrats that will make it tougher to make President Bush's tax cuts permanent or to extend tax cuts that expire this year, Bloomberg reported. Terrorist groups trying to establish bases in Western Iraq are in total disarray, Major General Charles Swannack said. Shares of TOM Online, a Chinese Internet company controlled by Asia's richest business man, fell as much as 11% on the company's Hong Kong debut. The yen gained against the euro and the dollar in Asia after the Ministry of Finance said overseas investors bought the most Japanese shares last week in over 3 years, Bloomberg reported. As well, the euro dropped against the dollar for a third day in Asia on speculation the European economic expansion is falling further behind that of America. Martha Stewart may start serving a 10-16 month sentence in June as it is unlikely that she will remain free pending her planned appeal, Bloomberg reported.
Late-Night Trading
Asian markets are mostly lower, ranging from unch. to down 1.4%. China is the exception, rising 1.17%.
S&P 500 indicated +.05%.
NASDAQ indicated +.11%.
BOTTOM LINE: I think a few main things are currently troubling the U.S. equity markets. High energy prices, politics, profit-taking and investor complacency. I believe energy prices are very close to a short-term top. The tone of political rhetoric is especially nasty with the election still 9 months away. Hopefully, this will create a backlash and the candidates will turn it down a notch. I doubt it, but it is possible. The markets had an exceptional run over the last 12 months without so much as a 5% correction. Corrections are normal and healthy in bull markets. Finally, the volatility indices and investor bullish % surveys were both showing a large amount of complacency. I do not view any of these reasons as sufficiently large enough problems to derail the current bull. The NASDAQ is down about 9% from its recent high. I expect that it is nearing a bottom. At the very worst it may test 1900, which is around the 200 day m.a. and another 3% drop from here. I don't think the S&P will fall as much in total. I expect it to find support around 1,100 which is also down another 3% from current levels. The market is a discounting mechanism and one of the problems I have mentioned in the last couple of days may continue to worsen and justify the current fall. However, as of now I believe this is a healthy correction within the confines of a bull market and I would view extreme weakness in favorite stocks as a buying opportunity.
Thursday, March 11, 2004
Wednesday, March 10, 2004
Wednesday Close
S&P 500 1,123.89 -1.46%
NASDAQ 1,964.15 -1.55%
Leading Sectors
Tobacco -.32%
Fashion -.33%
Foods -.46%
Lagging Sectors
Papers -2.92%
Oil Service -3.13%
Iron/Steel -3.21%
Other
Crude Oil 36.14 +.11%
Natural Gas 5.40 +.06%
Gold 400.50 +.05%
Base Metals 107.40 +.67%
U.S. Dollar 88.95 +.59%
10-Yr. Long-Bond Yield 3.73% +.25%
VIX 18.67 +12.47%
Put/Call .85 -13.27%
NYSE Arms 2.42 -11.68%
After-hours Movers
AMSY +24.19% after $415M purchase of their Defense and Intelligence Group by CAI.
ZQK +6.74% after significantly beating 1Q estimates and raising 04 forecast.
YELL +6.32% after boosting 1Q forecast at mid-quarter update.
LF -31.54% after significantly lowering 1Q forecast.
MATK -5.37% after slightly missing 1Q estimates.
Recommendations
Goldman Sachs reiterates positive view on capital goods stocks. TheStreet.com is saying that AFCI is down on the possibility of losing the Verizon FTTP contract. Jim Cramer, of TheStreet.com, thinks panic selling has begun and it is necessary to put in a good sustainable bottom.
After-hours News
U.S. stocks dropped Wednesday as investors fear the economy may be slowing and the NASDAQ broke through a key support level. Cyclicals and pharmaceuticals bore the brunt of the selling. After the close, the Financial Times said NATO may announce plans to take over full control of Afghanistan to guarantee security. Intel, which spent $300M promoting its Centrino chip package last year, will stop selling the chipset in China after balking at the government's demands to alter the product to meet its new standards. Target may sell its Mervyn's and Marshall Field's stores, Bloomberg reported.
BOTTOM LINE: Today was a very bad day for the bulls. Almost all sectors participated in the decline. Cyclicals dropped significantly on expectations the economy is slowing and profit-taking. I think profit-taking is healthy, but I do not agree that the economy is slowing. However, it is possible that enough negative talk and reporting could lead to a self-fulfilling prophecy. If enough people believe all the negative news being reported right now, they won't spend as much and that would hurt the economy. Retail spending is very strong right now, but I will closely monitor this area for any signs of weakness resulting from a continued decline in confidence. The accelerating rate of attacks on the pharmaceutical industry is finally taking its toll, as these stocks broke down technically today. I expect drug stocks to remain in a trading range until the political attacks subside towards the end of the year. The Portfolio ended the day modestly down as the selling spread throughout most sectors. I added a few shorts in the oil service and technology sectors, bringing net market exposure to 0% or market neutral.
NASDAQ 1,964.15 -1.55%
Leading Sectors
Tobacco -.32%
Fashion -.33%
Foods -.46%
Lagging Sectors
Papers -2.92%
Oil Service -3.13%
Iron/Steel -3.21%
Other
Crude Oil 36.14 +.11%
Natural Gas 5.40 +.06%
Gold 400.50 +.05%
Base Metals 107.40 +.67%
U.S. Dollar 88.95 +.59%
10-Yr. Long-Bond Yield 3.73% +.25%
VIX 18.67 +12.47%
Put/Call .85 -13.27%
NYSE Arms 2.42 -11.68%
After-hours Movers
AMSY +24.19% after $415M purchase of their Defense and Intelligence Group by CAI.
ZQK +6.74% after significantly beating 1Q estimates and raising 04 forecast.
YELL +6.32% after boosting 1Q forecast at mid-quarter update.
LF -31.54% after significantly lowering 1Q forecast.
MATK -5.37% after slightly missing 1Q estimates.
Recommendations
Goldman Sachs reiterates positive view on capital goods stocks. TheStreet.com is saying that AFCI is down on the possibility of losing the Verizon FTTP contract. Jim Cramer, of TheStreet.com, thinks panic selling has begun and it is necessary to put in a good sustainable bottom.
After-hours News
U.S. stocks dropped Wednesday as investors fear the economy may be slowing and the NASDAQ broke through a key support level. Cyclicals and pharmaceuticals bore the brunt of the selling. After the close, the Financial Times said NATO may announce plans to take over full control of Afghanistan to guarantee security. Intel, which spent $300M promoting its Centrino chip package last year, will stop selling the chipset in China after balking at the government's demands to alter the product to meet its new standards. Target may sell its Mervyn's and Marshall Field's stores, Bloomberg reported.
BOTTOM LINE: Today was a very bad day for the bulls. Almost all sectors participated in the decline. Cyclicals dropped significantly on expectations the economy is slowing and profit-taking. I think profit-taking is healthy, but I do not agree that the economy is slowing. However, it is possible that enough negative talk and reporting could lead to a self-fulfilling prophecy. If enough people believe all the negative news being reported right now, they won't spend as much and that would hurt the economy. Retail spending is very strong right now, but I will closely monitor this area for any signs of weakness resulting from a continued decline in confidence. The accelerating rate of attacks on the pharmaceutical industry is finally taking its toll, as these stocks broke down technically today. I expect drug stocks to remain in a trading range until the political attacks subside towards the end of the year. The Portfolio ended the day modestly down as the selling spread throughout most sectors. I added a few shorts in the oil service and technology sectors, bringing net market exposure to 0% or market neutral.
Mid-day Update
S&P 500 1,134.25 -.55%
NASDAQ 1985.73 -.47%
Leading Sectors
Computer Boxmakers +.28%
Gaming +.17%
Homebuilders +.11%
Lagging Sectors
Drugs -1.57%
Telecom -1.73%
Oil Service -2.13%
Other
Crude Oil 35.75 -1.41%
Natural Gas 5.39 -.79%
Gold 401.20 -.82%
Base Metals 107.40 +.67%
U.S. Dollar 88.90 +.53%
10-Yr. Long-Bond Yield 3.71% -.20%
VIX 16.86 +1.57%
Put/Call .77 -21.43%
NYSE Arms 1.66 -41.61%
Market Movers
THC -12.2% on cash crunch concerns.
PG +4.4% after raising 3Q estimates, raising 04 guidance and announcing 2-for-1 split.
ROK +6.3% after raising 2Q estimates.
KKD -7.8% after meeting 4Q estimates and lowering 1Q guidance. Will have sugar-free doughnut by year-end.
INTV +9.7% after Wedbush Morgan analyst made positive comments and added to recommended list.
MMSI +7.8% after announcing it will be added to the S&P 600 index.
IDCC -19.6% after missing 4Q estimates and lowering 1Q guidance.
Economic Data
Trade Balance came in at -$43.1B in Jan. vs. expectations of -$42.0B.
Wholesale Inventories rose .1% in Jan. vs. expectations of a .4% rise.
Recommendations
MDT raised to Overweight at Morgan Stanley, target $60. CDN raised to Buy at Merrill, target $20. Goldman Sachs reiterating Outperform on GDT. Goldman saying there are a lot of misconceptions right now about pre-clinical service providers and that they are very bullish on the group for 04. GS is raising estimates for ICLR, likes CVD and IRGI best. GS reiterating Outperform on PG, raising estimates. GS thinks DOW is a great buy at current levels. Citi Smith Barney initiating DISH with Buy 1H and $43 target. Citi reiterating Buy on FDRY, thinks market is overreacting. Citi says CSCO is clearly seeing a dramatic increase in enterprise activity around converged IP networks. Jim Cramer, of TheStreet.com, is starting to buy right now, saying investors are too focused on the negative, which is wrong. He likes cyclicals a lot and the NASDAQ over the S&P.
Mid-day News
U.S. stocks are falling mid-day as cyclical and pharmaceutical shares fall on concerns the economy is slowing and constant attacks by government, respectively. The SEC plans to propose rules tomorrow that would require mutual fund managers to disclose compensation and their holdings in the funds they control, the Wall Street Journal reported. Harrah's will beat out its competitors for a Chicago-area casino license with a $375M bid, CEO Loveman told CNBC. Microsoft claimed 11% of the business-management software market less than 5 years after beginning to sell the products, SAP said. Nokia and Motorola lost handset market share in the 4th Q to competitors such as Siemens and Samsung, researcher Gartner said. S&P raised Lucent's credit rating to B as telecom industry revenues stabilize. El Paso may restate earnings because part of last month's 41% cut to its assessment of oil and natural gas reserves may be applied to past years. Pennsylvania Attorney General said he will sue several pharmaceutical companies on grounds that they unlawfully inflated prices to capture market share. Pfizer said the Justice Dept. is investigating the company's marketing and sale of its Genotropin and Bextra drugs and some managed-care payments.
BOTTOM LINE: The correction that began with semis and spread throughout the whole tech sector is now engulfing the entire market. The NASDAQ appears to be breaking support in a convincing manner. The Portfolio is flat for the day, however I sold a few longs in the last hour bringing the Portfolio's market exposure down to 25% net long. If weakness persists this afternoon, I will look to add short positions in energy-related stocks as I think Oil has made an intermediate-term top. This should bring the Portfolio to near market neutral. I am not ruling out a late-day reversal to the up-side as I believe this correction is close to running its course.
NASDAQ 1985.73 -.47%
Leading Sectors
Computer Boxmakers +.28%
Gaming +.17%
Homebuilders +.11%
Lagging Sectors
Drugs -1.57%
Telecom -1.73%
Oil Service -2.13%
Other
Crude Oil 35.75 -1.41%
Natural Gas 5.39 -.79%
Gold 401.20 -.82%
Base Metals 107.40 +.67%
U.S. Dollar 88.90 +.53%
10-Yr. Long-Bond Yield 3.71% -.20%
VIX 16.86 +1.57%
Put/Call .77 -21.43%
NYSE Arms 1.66 -41.61%
Market Movers
THC -12.2% on cash crunch concerns.
PG +4.4% after raising 3Q estimates, raising 04 guidance and announcing 2-for-1 split.
ROK +6.3% after raising 2Q estimates.
KKD -7.8% after meeting 4Q estimates and lowering 1Q guidance. Will have sugar-free doughnut by year-end.
INTV +9.7% after Wedbush Morgan analyst made positive comments and added to recommended list.
MMSI +7.8% after announcing it will be added to the S&P 600 index.
IDCC -19.6% after missing 4Q estimates and lowering 1Q guidance.
Economic Data
Trade Balance came in at -$43.1B in Jan. vs. expectations of -$42.0B.
Wholesale Inventories rose .1% in Jan. vs. expectations of a .4% rise.
Recommendations
MDT raised to Overweight at Morgan Stanley, target $60. CDN raised to Buy at Merrill, target $20. Goldman Sachs reiterating Outperform on GDT. Goldman saying there are a lot of misconceptions right now about pre-clinical service providers and that they are very bullish on the group for 04. GS is raising estimates for ICLR, likes CVD and IRGI best. GS reiterating Outperform on PG, raising estimates. GS thinks DOW is a great buy at current levels. Citi Smith Barney initiating DISH with Buy 1H and $43 target. Citi reiterating Buy on FDRY, thinks market is overreacting. Citi says CSCO is clearly seeing a dramatic increase in enterprise activity around converged IP networks. Jim Cramer, of TheStreet.com, is starting to buy right now, saying investors are too focused on the negative, which is wrong. He likes cyclicals a lot and the NASDAQ over the S&P.
Mid-day News
U.S. stocks are falling mid-day as cyclical and pharmaceutical shares fall on concerns the economy is slowing and constant attacks by government, respectively. The SEC plans to propose rules tomorrow that would require mutual fund managers to disclose compensation and their holdings in the funds they control, the Wall Street Journal reported. Harrah's will beat out its competitors for a Chicago-area casino license with a $375M bid, CEO Loveman told CNBC. Microsoft claimed 11% of the business-management software market less than 5 years after beginning to sell the products, SAP said. Nokia and Motorola lost handset market share in the 4th Q to competitors such as Siemens and Samsung, researcher Gartner said. S&P raised Lucent's credit rating to B as telecom industry revenues stabilize. El Paso may restate earnings because part of last month's 41% cut to its assessment of oil and natural gas reserves may be applied to past years. Pennsylvania Attorney General said he will sue several pharmaceutical companies on grounds that they unlawfully inflated prices to capture market share. Pfizer said the Justice Dept. is investigating the company's marketing and sale of its Genotropin and Bextra drugs and some managed-care payments.
BOTTOM LINE: The correction that began with semis and spread throughout the whole tech sector is now engulfing the entire market. The NASDAQ appears to be breaking support in a convincing manner. The Portfolio is flat for the day, however I sold a few longs in the last hour bringing the Portfolio's market exposure down to 25% net long. If weakness persists this afternoon, I will look to add short positions in energy-related stocks as I think Oil has made an intermediate-term top. This should bring the Portfolio to near market neutral. I am not ruling out a late-day reversal to the up-side as I believe this correction is close to running its course.
Wednesday Watch
Earnings Announcements
Company/Estimate
CWTR/.21
CMTL/.31
CMVT/.01
HIBB/.39
KKD/.26
PERY/1.11
PSYS/.19
ZQK/.15
TLB/.40
TECD/.54
Splits
None of note.
Economic Data
Trade Balance estimated at -$42.0B in January vs. -$42.5B in December.
Wholesale Inventories estimated up .4% in January vs. .5% in December.
Recommendations
Goldman Sachs is recommending positions in the Electronic Manufacturing Service stocks at current levels. Their favorites are SLR and CLS, saying they have 30%+ upside potential. GS believes that ORCL will meet estimates Thur. and may guide higher for March Q as they see growing evidence that larger deals are back in the pipeline. GS also said COF's managed data showed healthy improvements in both charge-offs and delinquencies and modest loan growth. Goldman thinks HAL represents good trading opportunity as the risk of material adverse impact from Iraq problems is remote. Finally, Goldman is reducing estimates on EP ahead of report on 3/11.
Late-Night News
The prices of H-beam steel used in construction have risen to a 17-year high in Japan on Chinese demand, Nihon Keizai reported. Fannie Mae, the biggest buyer of U.S. mortgages, paid a net $25.1B on derivative transactions in less than 4 years, most of which may represent losses that can't be recovered and may hurt future earnings, the Financial Times reported. Fannie Mae denies the report. Viacom Chairman Redstone indicated that the company might buy cable systems and that it will invest more money in creative businesses such as film and television, the Wall Street Journal reported. China's Industrial Production grew 17% from year ago levels, according to Mainland Marketing Research Co. Iraqis will have the lead role in bringing Saddam Hussein to trial, said a spokesman for the U.S.-led administration in Iraq. Carlyle Group is negotiating with a partner to buy a stake in China Pacific Life Insurance, the nation's third largest insurer, for $400M.
Late-Night Trading
Asian markets are down with the exception of China(+1.4%). Losses range from -1.0% to -1.5%.
S&P 500 indicated -.25%.
NASDAQ indicated -.35%.
BOTTOM LINE: Weakness in Asia will likely result in a weaker opening for U.S. shares. I expect a volatile day tomorrow. Either the major indies will drop on a clear technical break-down of the NASDAQ or hold in the morning leading to a short-covering rally later in the day. The Portfolio is 50% net long and I will look to trade as I get a better read on the market's short-term direction.
Company/Estimate
CWTR/.21
CMTL/.31
CMVT/.01
HIBB/.39
KKD/.26
PERY/1.11
PSYS/.19
ZQK/.15
TLB/.40
TECD/.54
Splits
None of note.
Economic Data
Trade Balance estimated at -$42.0B in January vs. -$42.5B in December.
Wholesale Inventories estimated up .4% in January vs. .5% in December.
Recommendations
Goldman Sachs is recommending positions in the Electronic Manufacturing Service stocks at current levels. Their favorites are SLR and CLS, saying they have 30%+ upside potential. GS believes that ORCL will meet estimates Thur. and may guide higher for March Q as they see growing evidence that larger deals are back in the pipeline. GS also said COF's managed data showed healthy improvements in both charge-offs and delinquencies and modest loan growth. Goldman thinks HAL represents good trading opportunity as the risk of material adverse impact from Iraq problems is remote. Finally, Goldman is reducing estimates on EP ahead of report on 3/11.
Late-Night News
The prices of H-beam steel used in construction have risen to a 17-year high in Japan on Chinese demand, Nihon Keizai reported. Fannie Mae, the biggest buyer of U.S. mortgages, paid a net $25.1B on derivative transactions in less than 4 years, most of which may represent losses that can't be recovered and may hurt future earnings, the Financial Times reported. Fannie Mae denies the report. Viacom Chairman Redstone indicated that the company might buy cable systems and that it will invest more money in creative businesses such as film and television, the Wall Street Journal reported. China's Industrial Production grew 17% from year ago levels, according to Mainland Marketing Research Co. Iraqis will have the lead role in bringing Saddam Hussein to trial, said a spokesman for the U.S.-led administration in Iraq. Carlyle Group is negotiating with a partner to buy a stake in China Pacific Life Insurance, the nation's third largest insurer, for $400M.
Late-Night Trading
Asian markets are down with the exception of China(+1.4%). Losses range from -1.0% to -1.5%.
S&P 500 indicated -.25%.
NASDAQ indicated -.35%.
BOTTOM LINE: Weakness in Asia will likely result in a weaker opening for U.S. shares. I expect a volatile day tomorrow. Either the major indies will drop on a clear technical break-down of the NASDAQ or hold in the morning leading to a short-covering rally later in the day. The Portfolio is 50% net long and I will look to trade as I get a better read on the market's short-term direction.
Tuesday, March 09, 2004
Tuesday Close
S&P 500 1,140.58 -.58%
NASDAQ 1,995.16 -.68%
Leading Sectors
Foods +.30
Semis +.23%
Telecom -.07%
Lagging Sectors
Papers -1.80%
Airlines -2.73%
Networking -3.60%
Other
Crude Oil 36.36 +.22%
Natural Gas 5.46 +.40%
Gold 403.00 -.37%
Base Metals 106.68 -2.12%
U.S. Dollar 88.43 +.60%
10-Yr. Long-Bond Yield 3.72% -1.25%
VIX 16.60 +5.13%
Put/Call .98 +22.50%
NYSE Arms 2.74 +60.23%
After-hours Movers
RCKY +14.4% after announcing that it will produce 200,000 pairs of combat boots for U.S. Army.
MMSI +5.93% after announcing it will be added to the S&P 600.
Recommendations
Goldman Sachs reiterating Outperform on ADP after NY analyst meeting today. GS initiating coverage on NOC with an Outperform. GS lowering estimates on RTN and lowering rating to Underperform. GS reiterating Outperform on NKE and raising estimates. TheStreet.com says TKLC is a sensible way to play the booming VoIP business.
After-hours News
U.S. stocks fell Tuesday in a wide variety of sectors as investors continue to seek profit-taking opportunities on the heels of the last 12 month's rally. After the close, Procter & Gamble(PG) raised 3Q guidance, raised its dividend and announced a 2-for-1 stock split. Comcast, spurned once in its takeover bid for Disney, will return with a higher offer, President Bob Iger predicted. The war against al-Qaeda and Taliban fighters in Afghanistan is almost over and three-quarters of the country is secure, Reuters said. IBM may lose all or some of its $5B contract with JP Morgan after the bank completes its acquisition of Bank One, Bloomberg reported. Eastman Kodak filed a lawsuit accusing Sony of using its patented technology for digital cameras without permission, Bloomberg reported. U.S. health officials said a Wisconsin state Web site that helps residents order cheap mail-order drugs from Canada is illegal and puts the state at risk for patients' lawsuits. The U.S. Senate defeated an attempt by Democrats to make it tougher to make President Bush's $1.7 trillion tax cut permanent. Eli Lilly said a government probe of its marketing may widen to include its best selling drug, Zyprexa.
BOTTOM LINE: The Portfolio finished the day unchanged, as broad market weakness persisted throughout the day. While the NASDAQ did break the 2000 support level, it was not a convincing break and the relative strength in semis may provide the catalyst for a near-term rally. I took profits in one of my consumer cyclicals and added a semi equipment long on the close, leaving the Portfolio 50% net long. My indicators and analysis are giving conflicting signals, thus I will remain conservatively positioned, with a bias to the long-side, until a more clear resolution to the market's direction is apparent.
NASDAQ 1,995.16 -.68%
Leading Sectors
Foods +.30
Semis +.23%
Telecom -.07%
Lagging Sectors
Papers -1.80%
Airlines -2.73%
Networking -3.60%
Other
Crude Oil 36.36 +.22%
Natural Gas 5.46 +.40%
Gold 403.00 -.37%
Base Metals 106.68 -2.12%
U.S. Dollar 88.43 +.60%
10-Yr. Long-Bond Yield 3.72% -1.25%
VIX 16.60 +5.13%
Put/Call .98 +22.50%
NYSE Arms 2.74 +60.23%
After-hours Movers
RCKY +14.4% after announcing that it will produce 200,000 pairs of combat boots for U.S. Army.
MMSI +5.93% after announcing it will be added to the S&P 600.
Recommendations
Goldman Sachs reiterating Outperform on ADP after NY analyst meeting today. GS initiating coverage on NOC with an Outperform. GS lowering estimates on RTN and lowering rating to Underperform. GS reiterating Outperform on NKE and raising estimates. TheStreet.com says TKLC is a sensible way to play the booming VoIP business.
After-hours News
U.S. stocks fell Tuesday in a wide variety of sectors as investors continue to seek profit-taking opportunities on the heels of the last 12 month's rally. After the close, Procter & Gamble(PG) raised 3Q guidance, raised its dividend and announced a 2-for-1 stock split. Comcast, spurned once in its takeover bid for Disney, will return with a higher offer, President Bob Iger predicted. The war against al-Qaeda and Taliban fighters in Afghanistan is almost over and three-quarters of the country is secure, Reuters said. IBM may lose all or some of its $5B contract with JP Morgan after the bank completes its acquisition of Bank One, Bloomberg reported. Eastman Kodak filed a lawsuit accusing Sony of using its patented technology for digital cameras without permission, Bloomberg reported. U.S. health officials said a Wisconsin state Web site that helps residents order cheap mail-order drugs from Canada is illegal and puts the state at risk for patients' lawsuits. The U.S. Senate defeated an attempt by Democrats to make it tougher to make President Bush's $1.7 trillion tax cut permanent. Eli Lilly said a government probe of its marketing may widen to include its best selling drug, Zyprexa.
BOTTOM LINE: The Portfolio finished the day unchanged, as broad market weakness persisted throughout the day. While the NASDAQ did break the 2000 support level, it was not a convincing break and the relative strength in semis may provide the catalyst for a near-term rally. I took profits in one of my consumer cyclicals and added a semi equipment long on the close, leaving the Portfolio 50% net long. My indicators and analysis are giving conflicting signals, thus I will remain conservatively positioned, with a bias to the long-side, until a more clear resolution to the market's direction is apparent.
Mid-day Update
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.
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.
Subscribe to:
Posts (Atom)