S&P 500 1,108.06 -.10%
NASDAQ 1,960.02 -.36%
Leading Sectors
Airlines +2.42%
Iron/Steel +1.96%
I-Banks +1.37%
Lagging Sectors
Restaurants -1.09%
Wireless -1.19%
Semis -1.25%
Other
Crude Oil 35.73 +.62%
Natural Gas 5.39 +1.11%
Gold 422.20 +1.27%
Base Metals 112.11 +1.52%
U.S. Dollar 88.89 -.01%
10-Yr. Long-Bond Yield 3.83% +2.47%
VIX 17.33 -3.08%
Put/Call .77 +11.59%
NYSE Arms .88 +100.0%
After-hours Movers
RIMM +4.7% after saying it will receive a payment for an undisclosed amount from Good Technology to settle a series of lawsuits between companies.
OSUR +6.6% on a continued rise after winning U.S. approval to sell the first kit for rapid detection of the virus that causes AIDS in saliva.
Recommendations
TheStreet.com has a positive article on gold stocks, guests' favorites are PDG, EGO, CBJ, RIC and GSS.
After-hours News
U.S. stocks finished slightly lower on late-day profit-taking before the weekend, sending the S&P 500 to its third straight weekly loss. U.S. Treasury Notes had their biggest decline in two months after measures of personal income and consumer confidence were better-than-expected.
BOTTOM LINE: The Portfolio had a good day today as several longs rose substantially, offsetting minor losses in my short positions. The late-day sell-off led by semis was to be expected as many stocks had risen 8-12% in a very short period of time. I didn't trade today and the Portfolio is still 125% net long.
Portfolio Manager's Commentary on Investing and Trading in the U.S. Financial Markets
Friday, March 26, 2004
Mid-day Update
S&P 500 1,112.37 +.29%
NASDAQ 1,970.44 +.17%
Leading Sectors
Airlines +2.95%
I-Banks +1.46%
Oil Service +1.42%
Lagging Sectors
Restaurants -.45%
Hospitals -.50%
Wireless -.70%
Other
Crude Oil 35.33 -.51%
Natural Gas 5.35 +.07%
Gold 420.80 +.91%
Base Metals 112.11 +1.52%
U.S. Dollar 89.00 +.11%
10-Yr. Long-Bond Yield 3.81% +1.97%
VIX 16.85 -5.76%
Put/Call .77 +11.59%
NYSE Arms .65 +45.45%
Market Movers
GE +3.2% on addition to Focus 1 list by Merrill Lynch.
SWBD +26.9% on $160M acquisition by INSP.
SINT +26.8% after announcing a contract renewal with the U.S. government for as much as $800M.
INSP +14.2% after saying acquisition of SWBD will add $10-14M revenues in 2H.
RECN +14.5% after upgrade to Outperform at JMP Securities.
ATRS +11.1% after Pacific Crest raised it to Strong Buy.
CAH +4.2% after Goldman upgrade to Outperform.
MYOG -39.2% after saying its experimental Enoximone drug failed to meet the main goal of an advanced study. Multiple downgrades.
Economic Data
Personal Income for February +.4% vs. +.3% expectations.
Personal Spending for February +.2% vs. +.4% expectations.
Univ. of Mich. Consumer Confidence final reading for March 95.8 vs. estimates of 93.7.
Recommendations
CAH and MCK upgraded to Outperform at Goldman Sachs. GS reiterates bullish view on newspaper stocks, favorites are GCI and TRB. GS reiterated Outperform on KRB, SPLS, YHOO and AMT. Citi Smith Barney upgraded BBY to Buy, $62 target. Citi reiterated Buy on LPX and EEFT. Citi would Buy SEBL ahead of quarterly report on recent weakness. Citi made positive comments on UTSI and MOT after CTIA conference. Citi would Buy VZ and BLS at current levels. HLT and TV raised to Overweight at Morgan Stanley. MSPD rated Outperform at Thomas Weisel. GE added to Focus 1 list at Merrill Lynch. DRL rated Buy at Merrill. DUK rated Sector Outperform at CIBC. ET, NITE and AMTD raised to Strong Buy at Raymond James. NWL raised to Overweight at JP Morgan. TheStreet.com had a guest that was positive on ADI and TXN. TSC also has a positive column on UTX.
Mid-day News
U.S. stocks are modestly higher mid-day on continued strength in airlines and an upgrade of GE by Merrill Lynch. Russian President Putin said it was unacceptable that terrorists believed their bombings in Madrid defeated Spain's ruling party, and he urged the international community to unite, Interfax reported. Twaiwan's parliament failed to agree on a recount in the disputed presidential election and riot police clashed with protesters trying to block final certification of President Chen Shui-bian's victory. Continental Air raised fares for the second time in a month to help cover rising fuel costs, Bloomberg reported. A stretch of I-95 near Bridgeport, Connecticut may be closed for as long as 2 weeks because of structural damage caused by an oil tanker truck that collided with a car and caught fire last night. El Paso Corp. said it has been notified that the SEC is conducting a formal investigation of the 41% reduction in the company's oil and gas reserves, Bloomberg reported. U.S. personal spending rose .2% in February and consumer confidence unexpectedly climbed this month, suggesting the economy is maintaining strength, Bloomberg reported.
BOTTOM LINE: The Portfolio is up today as strength in my airline and select technology positions offset rising shorts. I have not traded today and the Portfolio is still 125% net long. I expect the market will either maintain current levels or sell-off a bit later in the day on rising interest rates, weekend terror fears and profit-taking. However, I expect the rally to regain momentum early next week.
NASDAQ 1,970.44 +.17%
Leading Sectors
Airlines +2.95%
I-Banks +1.46%
Oil Service +1.42%
Lagging Sectors
Restaurants -.45%
Hospitals -.50%
Wireless -.70%
Other
Crude Oil 35.33 -.51%
Natural Gas 5.35 +.07%
Gold 420.80 +.91%
Base Metals 112.11 +1.52%
U.S. Dollar 89.00 +.11%
10-Yr. Long-Bond Yield 3.81% +1.97%
VIX 16.85 -5.76%
Put/Call .77 +11.59%
NYSE Arms .65 +45.45%
Market Movers
GE +3.2% on addition to Focus 1 list by Merrill Lynch.
SWBD +26.9% on $160M acquisition by INSP.
SINT +26.8% after announcing a contract renewal with the U.S. government for as much as $800M.
INSP +14.2% after saying acquisition of SWBD will add $10-14M revenues in 2H.
RECN +14.5% after upgrade to Outperform at JMP Securities.
ATRS +11.1% after Pacific Crest raised it to Strong Buy.
CAH +4.2% after Goldman upgrade to Outperform.
MYOG -39.2% after saying its experimental Enoximone drug failed to meet the main goal of an advanced study. Multiple downgrades.
Economic Data
Personal Income for February +.4% vs. +.3% expectations.
Personal Spending for February +.2% vs. +.4% expectations.
Univ. of Mich. Consumer Confidence final reading for March 95.8 vs. estimates of 93.7.
Recommendations
CAH and MCK upgraded to Outperform at Goldman Sachs. GS reiterates bullish view on newspaper stocks, favorites are GCI and TRB. GS reiterated Outperform on KRB, SPLS, YHOO and AMT. Citi Smith Barney upgraded BBY to Buy, $62 target. Citi reiterated Buy on LPX and EEFT. Citi would Buy SEBL ahead of quarterly report on recent weakness. Citi made positive comments on UTSI and MOT after CTIA conference. Citi would Buy VZ and BLS at current levels. HLT and TV raised to Overweight at Morgan Stanley. MSPD rated Outperform at Thomas Weisel. GE added to Focus 1 list at Merrill Lynch. DRL rated Buy at Merrill. DUK rated Sector Outperform at CIBC. ET, NITE and AMTD raised to Strong Buy at Raymond James. NWL raised to Overweight at JP Morgan. TheStreet.com had a guest that was positive on ADI and TXN. TSC also has a positive column on UTX.
Mid-day News
U.S. stocks are modestly higher mid-day on continued strength in airlines and an upgrade of GE by Merrill Lynch. Russian President Putin said it was unacceptable that terrorists believed their bombings in Madrid defeated Spain's ruling party, and he urged the international community to unite, Interfax reported. Twaiwan's parliament failed to agree on a recount in the disputed presidential election and riot police clashed with protesters trying to block final certification of President Chen Shui-bian's victory. Continental Air raised fares for the second time in a month to help cover rising fuel costs, Bloomberg reported. A stretch of I-95 near Bridgeport, Connecticut may be closed for as long as 2 weeks because of structural damage caused by an oil tanker truck that collided with a car and caught fire last night. El Paso Corp. said it has been notified that the SEC is conducting a formal investigation of the 41% reduction in the company's oil and gas reserves, Bloomberg reported. U.S. personal spending rose .2% in February and consumer confidence unexpectedly climbed this month, suggesting the economy is maintaining strength, Bloomberg reported.
BOTTOM LINE: The Portfolio is up today as strength in my airline and select technology positions offset rising shorts. I have not traded today and the Portfolio is still 125% net long. I expect the market will either maintain current levels or sell-off a bit later in the day on rising interest rates, weekend terror fears and profit-taking. However, I expect the rally to regain momentum early next week.
Friday Watch
Earnings Announcements
Company/Estimate
DLP/.24
DISH/.09
MEDQ/.20
BREL/.42
Splits
SCHN 3-for-2
Economic Data
Personal Income for February estimated +.3% vs. +.2% in January.
Personal Spending for February estimated +.4% vs. +.4% in January.
Final Univ. of Mich. Consumer Confidence for March estimated at 93.7 vs. 94.1 preliminary.
Recommendations
Oppenheimer raised AVP price target to $94. Goldman Sachs said their meetings earlier this week with tower company and carrier executives at the CTIA wireless conference confirm their bullish thesis for tower stocks. ASFI is undervalued compared to its peers according to Business Week. CPD may be bought by India's Sun Pharmaceutical Industries, reported Business Week.
Late-Night News
Asian stocks are mostly higher with Japan's Nikkei leading the way again. Japanese bonds plunged as the Nikkei surged 1.85% to it highest level since June 2002 after a report showed household spending rose twice as fast as expected. The winner of Taiwan's presidential election recount may find his initiatives to revive the economy and change the island's relationship with China thwarted by questions over his legitimacy, according to executives and analysts.
Late-Night Trading
Asian Indices +.25% to +1.75%.
S&P 500 indicated +.07%.
NASDAQ indicated +.04%.
BOTTOM LINE: The Portfolio is 125% net long and I expect a continuation of today's rally for the next several days. Profit-taking will likely emerge tomorrow at some point, but I do not expect it to be significant. The Portfolio is overweight technology, airlines, gaming and homebuilding. Areas of focus on the short-side are oil-service and retail.
Company/Estimate
DLP/.24
DISH/.09
MEDQ/.20
BREL/.42
Splits
SCHN 3-for-2
Economic Data
Personal Income for February estimated +.3% vs. +.2% in January.
Personal Spending for February estimated +.4% vs. +.4% in January.
Final Univ. of Mich. Consumer Confidence for March estimated at 93.7 vs. 94.1 preliminary.
Recommendations
Oppenheimer raised AVP price target to $94. Goldman Sachs said their meetings earlier this week with tower company and carrier executives at the CTIA wireless conference confirm their bullish thesis for tower stocks. ASFI is undervalued compared to its peers according to Business Week. CPD may be bought by India's Sun Pharmaceutical Industries, reported Business Week.
Late-Night News
Asian stocks are mostly higher with Japan's Nikkei leading the way again. Japanese bonds plunged as the Nikkei surged 1.85% to it highest level since June 2002 after a report showed household spending rose twice as fast as expected. The winner of Taiwan's presidential election recount may find his initiatives to revive the economy and change the island's relationship with China thwarted by questions over his legitimacy, according to executives and analysts.
Late-Night Trading
Asian Indices +.25% to +1.75%.
S&P 500 indicated +.07%.
NASDAQ indicated +.04%.
BOTTOM LINE: The Portfolio is 125% net long and I expect a continuation of today's rally for the next several days. Profit-taking will likely emerge tomorrow at some point, but I do not expect it to be significant. The Portfolio is overweight technology, airlines, gaming and homebuilding. Areas of focus on the short-side are oil-service and retail.
Thursday, March 25, 2004
Thursday Close
S&P 500 1,109.19 +1.64%
NASDAQ 1,967.17 +3.02%
Leading Sectors
Airlines +5.11%
Networking +4.46%
Internet +4.14%
Lagging Sectors
Tobacco +.41%
Drugs +.32%
Energy -.26%
Other
Crude Oil 35.52 +.03%
Natural Gas 5.33 -.02%
Gold 416.40 -.12%
Base Metals 110.43 -1.23%
U.S. Dollar 88.95 +.06%
10-Yr. Long-Bond Yield 3.73% unch.
VIX 17.88 -9.74%
Put/Call .69 -22.47%
NYSE Arms .44 -64.52%
After-hours Movers
ET +4.72% after announcing it will replace FleetBoston is S&P 500 Index.
OMNI +5.06% after reporting strong 4Q earnings.
ASKJ +5.57% on no news.
UTEK -4.93% after lowering 1Q forecast and maintaining 04 estimates.
MYOG -30.05% after saying its Enoximone heart-failure drug fails to meet study goal.
Recommendations
Goldman Sachs just released its annual survey of slot floor managers, reinforcing their positive view on the slot manufacturers. It indicates that: 1)there is more room to go in cashless 2)mid-size casinos are providing a second leg to the accelerated replacement cycle 3)significant demand for low and multi-denominational exists and 4)IGT still sets the industry's pace. GS said World pulp data for Feb. reflects a tightening pulp market, prices moving higher, positive for WY, IP, TBC.CA, BOW and ARA. Cramer, of TheStreet.com, likes GS at current levels.
After-hours News
U.S. stocks finished substantially higher on Thursday as falling energy prices, strong economic data and better-than-expected earnings reports propelled the S&P 500 to its largest gain in six months. After the close, the Financial Times reported at least 40 U.S. congressman and senators have criticized the European Union's decision to levy a $609M fine on Microsoft. Executives pay packages will probably fall in coming years as compensation committees respond to accounting changes and upset investors, Business Week reported. U.S. House Leader Delay has been talking with colleagues about the possibility he will have to temporarily leave his post if he's indicted for alleged campaign finance abuses, Roll Call reported. Progressive Corp. tops Business Week's eighth annual rankings of best performing members on the S&P 500 because it never stops trying to find ways to do things cheaper and faster for its customers, Business Week reported. AOL could be worth $10.6B in a sale, Business Week reported. Jamie Olis, a former v.p. of finance at Dynegy, was sentenced to 24 years in prison for his role in a $300M accounting fraud at the company. Hewlett-Packard sued Gateway alleging infringement of six patents.
BOTTOM LINE: The Portfolio had a good day today as my shorts were unchanged and my longs rose substantially. I added a few other beaten-up special situation longs in the afternoon, bringing the Portfolio's market exposure to 125% net long. Terror threats and Micron's disappointing earnings report didn't even slow down the rally today. Thus, with falling oil prices and quarter-end positioning in the near-term, I expect further gains for U.S. equities over the next few days.
NASDAQ 1,967.17 +3.02%
Leading Sectors
Airlines +5.11%
Networking +4.46%
Internet +4.14%
Lagging Sectors
Tobacco +.41%
Drugs +.32%
Energy -.26%
Other
Crude Oil 35.52 +.03%
Natural Gas 5.33 -.02%
Gold 416.40 -.12%
Base Metals 110.43 -1.23%
U.S. Dollar 88.95 +.06%
10-Yr. Long-Bond Yield 3.73% unch.
VIX 17.88 -9.74%
Put/Call .69 -22.47%
NYSE Arms .44 -64.52%
After-hours Movers
ET +4.72% after announcing it will replace FleetBoston is S&P 500 Index.
OMNI +5.06% after reporting strong 4Q earnings.
ASKJ +5.57% on no news.
UTEK -4.93% after lowering 1Q forecast and maintaining 04 estimates.
MYOG -30.05% after saying its Enoximone heart-failure drug fails to meet study goal.
Recommendations
Goldman Sachs just released its annual survey of slot floor managers, reinforcing their positive view on the slot manufacturers. It indicates that: 1)there is more room to go in cashless 2)mid-size casinos are providing a second leg to the accelerated replacement cycle 3)significant demand for low and multi-denominational exists and 4)IGT still sets the industry's pace. GS said World pulp data for Feb. reflects a tightening pulp market, prices moving higher, positive for WY, IP, TBC.CA, BOW and ARA. Cramer, of TheStreet.com, likes GS at current levels.
After-hours News
U.S. stocks finished substantially higher on Thursday as falling energy prices, strong economic data and better-than-expected earnings reports propelled the S&P 500 to its largest gain in six months. After the close, the Financial Times reported at least 40 U.S. congressman and senators have criticized the European Union's decision to levy a $609M fine on Microsoft. Executives pay packages will probably fall in coming years as compensation committees respond to accounting changes and upset investors, Business Week reported. U.S. House Leader Delay has been talking with colleagues about the possibility he will have to temporarily leave his post if he's indicted for alleged campaign finance abuses, Roll Call reported. Progressive Corp. tops Business Week's eighth annual rankings of best performing members on the S&P 500 because it never stops trying to find ways to do things cheaper and faster for its customers, Business Week reported. AOL could be worth $10.6B in a sale, Business Week reported. Jamie Olis, a former v.p. of finance at Dynegy, was sentenced to 24 years in prison for his role in a $300M accounting fraud at the company. Hewlett-Packard sued Gateway alleging infringement of six patents.
BOTTOM LINE: The Portfolio had a good day today as my shorts were unchanged and my longs rose substantially. I added a few other beaten-up special situation longs in the afternoon, bringing the Portfolio's market exposure to 125% net long. Terror threats and Micron's disappointing earnings report didn't even slow down the rally today. Thus, with falling oil prices and quarter-end positioning in the near-term, I expect further gains for U.S. equities over the next few days.
Mid-day Update
S&P 500 1,106.44 +1.37%
NASDAQ 1,955.34 +2.40%
Leading Sectors
Airlines +4.89%
Networking +3.75%
Software +3.65%
Lagging Sectors
Drugs +.48%
Tobacco +.24%
Energy -.17%
Other
Crude Oil 35.90 -3.0%%
Natural Gas 5.34 -1.64%
Gold 417.20 -.07%
Base Metals 110.43 -1.23%
U.S. Dollar 88.75 -.17%
10-Yr. Long-Bond Yield 3.73% +.66%
VIX 18.13 -8.48%
Put/Call .62 -30.34%
NYSE Arms .42 -66.13%
Market Movers
NANX +19.7% after announcing that it received a $10M investment from Germany's Altana AG to develop paints, plastics and coatings.
GETI +18.6% after selling its phone-gear business for $291M to ADC Telecom.
KVHI +13.9% after Raymond James upgrade to Strong Buy.
VIP +8.0% on strong 4Q earnings report.
AVP +6.7% after raising 1Q guidance substantially.
INFY +4.6% after positive comments from Citi Smith Barney.
ASCA +9.9% after boosting 1Q guidance substantially.
MERX -11.9% after meeting 3Q estimates and lowering 4Q guidance.
IBC -11.6% after lowering 3Q guidance substantially.
Economic Data
Final 4Q GDP was +4.1% vs. expectations of 4.1%.
Initial Jobless Claims last week were 339K vs. expectations of 340K.
Continuing Claims were 3004K vs. 3050K prior.
Existing Home Sales for February were 6.12M vs. expectations of 6.12M.
Help Wanted Index for February was 40 vs. expectations of 39.
Recommendations
Jim Cramer of TheStreet.com is positive on cable stocks, favorites are CMCSA, TWX and CHTR. CTXS raised to Outperform at CSFB. CTB raised to Buy at Deutshe Bank. CTAS raised to Overweight at Morgan Stanley. CIBC positive on AUDC, saying it will likely exceed estimates on strong voice-over-internet-protocol sales. MKC raised to Buy at Merrill. KVHI raised to Strong Buy at Raymond James. Goldman Sachs reiterated Underperform on LSI. Goldman says tone at Society of Toxicology conference in Baltimore was markedly positive for CRO companies. GS reiterated Outperform on AVP, AG and BBY. Citi Smith Barney positive on commodity chemical companies, favorites are EMN, NCX and MCH. Citi would Buy MU on weakness.
Mid-day News
U.S. stocks are rising sharply mid-day, led by airlines and technology shares. A drop in energy prices, strong earnings reports and more positive economic data are the catalysts for the rise. Lucent(LU) will repair and upgrade Iraq's telecom networks under a two-year contract valued at $75M from the U.S. Dept. of Defense, the Star-Ledger reported. Texas oil refineries are possible targets for terrorists, the FBI said today, Reuters reported. Al Jazeera aired a tape of al-Qaeda's Zawahiri calling on Pakistanis to overthrow the government, CNN reported. The number of Americans filing initial claims for jobless benefits remained near a 3-year low, a government report showed. Eli Lilly, maker of the world's top-selling schizophrenia medicine, Zyprexa, said its marketing and promotional practices are being investigated by the U.S. Attorney in Pennsylvania. Oil fell after members of OPEC said the group should postpone production cuts. The U.S. economy expanded at a 4.1% annual rate in the final 3 months of 2003 after a rise of 8.2% in the 3rd quarter, resulting in the fastest six-month economic growth in almost 20 years. The National Association of Manufacturing says 55% of companies surveyed expect to increase hiring in the near future, the most positive results they have seen in a very long time, reported CNBC.
BOTTOM LINE: The Portfolio is having a good day today as I added technology and airline longs on the gap up open in the Morgan Stanley High-tech Index and the gap down in crude oil. The Portfolio is 100% net long. This countertrend rally should have legs into next week on quarter-end positioning. Hedge funds will take profits in their shorts and Mutual funds will use cash to attempt to boost shares at quarter-end. Tech stocks positive reaction to Micron's relatively weak quarter, the fall in crude oil prices and the broad market's strength in the face of another al-Qaeda video tape threat also leads me to believe that this countertrend rally will continue for a few days.
NASDAQ 1,955.34 +2.40%
Leading Sectors
Airlines +4.89%
Networking +3.75%
Software +3.65%
Lagging Sectors
Drugs +.48%
Tobacco +.24%
Energy -.17%
Other
Crude Oil 35.90 -3.0%%
Natural Gas 5.34 -1.64%
Gold 417.20 -.07%
Base Metals 110.43 -1.23%
U.S. Dollar 88.75 -.17%
10-Yr. Long-Bond Yield 3.73% +.66%
VIX 18.13 -8.48%
Put/Call .62 -30.34%
NYSE Arms .42 -66.13%
Market Movers
NANX +19.7% after announcing that it received a $10M investment from Germany's Altana AG to develop paints, plastics and coatings.
GETI +18.6% after selling its phone-gear business for $291M to ADC Telecom.
KVHI +13.9% after Raymond James upgrade to Strong Buy.
VIP +8.0% on strong 4Q earnings report.
AVP +6.7% after raising 1Q guidance substantially.
INFY +4.6% after positive comments from Citi Smith Barney.
ASCA +9.9% after boosting 1Q guidance substantially.
MERX -11.9% after meeting 3Q estimates and lowering 4Q guidance.
IBC -11.6% after lowering 3Q guidance substantially.
Economic Data
Final 4Q GDP was +4.1% vs. expectations of 4.1%.
Initial Jobless Claims last week were 339K vs. expectations of 340K.
Continuing Claims were 3004K vs. 3050K prior.
Existing Home Sales for February were 6.12M vs. expectations of 6.12M.
Help Wanted Index for February was 40 vs. expectations of 39.
Recommendations
Jim Cramer of TheStreet.com is positive on cable stocks, favorites are CMCSA, TWX and CHTR. CTXS raised to Outperform at CSFB. CTB raised to Buy at Deutshe Bank. CTAS raised to Overweight at Morgan Stanley. CIBC positive on AUDC, saying it will likely exceed estimates on strong voice-over-internet-protocol sales. MKC raised to Buy at Merrill. KVHI raised to Strong Buy at Raymond James. Goldman Sachs reiterated Underperform on LSI. Goldman says tone at Society of Toxicology conference in Baltimore was markedly positive for CRO companies. GS reiterated Outperform on AVP, AG and BBY. Citi Smith Barney positive on commodity chemical companies, favorites are EMN, NCX and MCH. Citi would Buy MU on weakness.
Mid-day News
U.S. stocks are rising sharply mid-day, led by airlines and technology shares. A drop in energy prices, strong earnings reports and more positive economic data are the catalysts for the rise. Lucent(LU) will repair and upgrade Iraq's telecom networks under a two-year contract valued at $75M from the U.S. Dept. of Defense, the Star-Ledger reported. Texas oil refineries are possible targets for terrorists, the FBI said today, Reuters reported. Al Jazeera aired a tape of al-Qaeda's Zawahiri calling on Pakistanis to overthrow the government, CNN reported. The number of Americans filing initial claims for jobless benefits remained near a 3-year low, a government report showed. Eli Lilly, maker of the world's top-selling schizophrenia medicine, Zyprexa, said its marketing and promotional practices are being investigated by the U.S. Attorney in Pennsylvania. Oil fell after members of OPEC said the group should postpone production cuts. The U.S. economy expanded at a 4.1% annual rate in the final 3 months of 2003 after a rise of 8.2% in the 3rd quarter, resulting in the fastest six-month economic growth in almost 20 years. The National Association of Manufacturing says 55% of companies surveyed expect to increase hiring in the near future, the most positive results they have seen in a very long time, reported CNBC.
BOTTOM LINE: The Portfolio is having a good day today as I added technology and airline longs on the gap up open in the Morgan Stanley High-tech Index and the gap down in crude oil. The Portfolio is 100% net long. This countertrend rally should have legs into next week on quarter-end positioning. Hedge funds will take profits in their shorts and Mutual funds will use cash to attempt to boost shares at quarter-end. Tech stocks positive reaction to Micron's relatively weak quarter, the fall in crude oil prices and the broad market's strength in the face of another al-Qaeda video tape threat also leads me to believe that this countertrend rally will continue for a few days.
Thursday Watch
Earnings Announcements
Company/Estimate
CKEC/-.15
CAG/.38
SHRP/1.40
SRR/.23
Splits
AMSG 3-for-2
RJF 3-for-2
Economic Data
Final 4Q GDP estimated at 4.1%.
Initial Jobless Claims last week estimated at 340K vs. 336K prior week.
Existing Home Sales for Feb. estimated at 6.12M vs. 6.04M in Jan.
Help Wanted Index estimated at 39 in Feb. vs. 38 in Jan.
Recommendations
Goldman Sachs reiterated Underperform on RNWK and THC. GS reiterated Outperform on KMI, TYC and KMR. JP Morgan cut its estimate for the euro against the U.S. dollar after it reduced its estimate for economic growth in the European Union. JP Morgan said the yen may rally 12% to 95 per dollar by year-end, boosting its forecast from 99, as economic growth in Japan attracts foreign investment.
Late-Night News
Asian stocks are mostly lower with Japan's Nikkei being the lone stand-out on the upside. Japanese stocks rose after a government report showed a widening trade surplus, adding to optimism that the pace of economic growth can be sustained, reported Bloomberg. The European Union may log all airline passengers arriving from the U.S. to allow it to collect similar data to the U.S.' monitoring of travelers from European destinations, the Financial Times reported. Nokia's sales from it Indian operations rose 97% to more than $1.21B in 03, making the country its fastest growing market after the United Arab Emirates, the Business Standard reported. Human Genome Sciences'(HGSI) Chairman and CEO will leave the company later this year once a successor is found, the NY Times reported. Nokia(NOK) executives bought shares worth millions of euros in the past year, the Helsingin Sanomat reported.
Late-Night Trading
Asian Indices -1.25% to +.25%. Japan's Nikkei +1.46%.
S&P 500 indicated +.12%.
NASDAQ indicated +.25%.
BOTTOM LINE: The Nikkei will break a double top on a close above 11,577. The world's 3rd largest economy is finally improving after years of dragging down world economic growth. This is a very positive development and I would not underestimate its consequences. The Semiconductor Index is still hovering right near its 200-day moving average. If the SOX can hold its recent lows, after Micron's relatively disappointing report, or rise tomorrow I would expect the entire tech sector to benefit. This should then lead to broad-market countertrend rally. The Portfolio is 25% net long.
Company/Estimate
CKEC/-.15
CAG/.38
SHRP/1.40
SRR/.23
Splits
AMSG 3-for-2
RJF 3-for-2
Economic Data
Final 4Q GDP estimated at 4.1%.
Initial Jobless Claims last week estimated at 340K vs. 336K prior week.
Existing Home Sales for Feb. estimated at 6.12M vs. 6.04M in Jan.
Help Wanted Index estimated at 39 in Feb. vs. 38 in Jan.
Recommendations
Goldman Sachs reiterated Underperform on RNWK and THC. GS reiterated Outperform on KMI, TYC and KMR. JP Morgan cut its estimate for the euro against the U.S. dollar after it reduced its estimate for economic growth in the European Union. JP Morgan said the yen may rally 12% to 95 per dollar by year-end, boosting its forecast from 99, as economic growth in Japan attracts foreign investment.
Late-Night News
Asian stocks are mostly lower with Japan's Nikkei being the lone stand-out on the upside. Japanese stocks rose after a government report showed a widening trade surplus, adding to optimism that the pace of economic growth can be sustained, reported Bloomberg. The European Union may log all airline passengers arriving from the U.S. to allow it to collect similar data to the U.S.' monitoring of travelers from European destinations, the Financial Times reported. Nokia's sales from it Indian operations rose 97% to more than $1.21B in 03, making the country its fastest growing market after the United Arab Emirates, the Business Standard reported. Human Genome Sciences'(HGSI) Chairman and CEO will leave the company later this year once a successor is found, the NY Times reported. Nokia(NOK) executives bought shares worth millions of euros in the past year, the Helsingin Sanomat reported.
Late-Night Trading
Asian Indices -1.25% to +.25%. Japan's Nikkei +1.46%.
S&P 500 indicated +.12%.
NASDAQ indicated +.25%.
BOTTOM LINE: The Nikkei will break a double top on a close above 11,577. The world's 3rd largest economy is finally improving after years of dragging down world economic growth. This is a very positive development and I would not underestimate its consequences. The Semiconductor Index is still hovering right near its 200-day moving average. If the SOX can hold its recent lows, after Micron's relatively disappointing report, or rise tomorrow I would expect the entire tech sector to benefit. This should then lead to broad-market countertrend rally. The Portfolio is 25% net long.
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