S&P 500 1,080.39 -1.37%
NASDAQ 1,888.27 -2.23%
Leading Sectors
Iron/Steel +1.96%
Oil Service +.26%
Energy +.15%
Lagging Sectors
Networking -2.97%
Tobacco -3.23%
Semis -3.67%
Other
Crude Oil 40.58 +1.27%
Natural Gas 6.45 +1.08%
Gold 380.50 +.87%
Base Metals 102.73 +1.37%
U.S. Dollar 91.24 -.45%
10-Yr. Long-Bond Yield 4.78% +.75%
VIX 19.97 +7.54%
Put/Call .79 -36.25%
NYSE Arms 2.38 +126.67%
Market Movers
SEM -22.8% on investor concern that a new admissions limit Medicare proposed for extended hospital stays will reduce earnings and multiple downgrades.
KMX -11.2% after cutting 1Q guidance.
BRCM -5.8% on worries over inventory increases at CSCO.
PFG +5.35% after saying that Citigroup agreed to buy its residential-mortgage business for $1.26 billion.
Economic Data
Trade Balance for March came in at -$46.0B versus -$43.0B estimate and -$42.1B in February.
Import Price Index for April rose .2% versus expectations of a .4% rise and a .8% rise in March.
Recommendations
ANF raised to Overweight at JP Morgan. TRW rated Buy at Deutsche Bank, target $23. COF raised to Overweight at Morgan Stanley, target $71. CEY raised to Overweight at Morgan Stanley, target $40. BAC raised to Overweight at Prudential, target $86. SFA raised to Buy at Oppenheimer, target $38. LPX cut to Underweight at Lehman, target $24. Goldman reiterated Outperform on TIF, KO, DTV, CLS, SLR, FD and KRB. Goldman made favorable comments on communications semis after CSCO call, favorites are MRVL and AGR/A.
Mid-day News
U.S. stocks are falling mid-day on rising energy prices, a widening trade-deficit and an adverse reaction by investors to Cisco's better-than-expected earnings report. Wal-Mart's growing power and the wages and benefits given its workers will be discussed at a meeting of union leaders, academics and community activists in Washington today, the NY Times said. Cisco Systems is adding more jobs in the U.S., CEO Chambers told CNBC. Qualcomm is raising prices on its chips as demand increases, CEO Jacobs told CNBC. China's out-of-control economy, led by a runaway housing market, could be headed for a bust much like that of the U.S. dot-com industry four years ago, the LA Times reported. World oil demand this year will rise the most since 1988 as economic growth accelerates and consumption surges in the U.S. and China, the IEA said. Saudi Arabia, the world's largest oil exporter, stands ready to boost production after it holds talks with OPEC colleagues next week, a senior OPEC delegate said.
BOTTOM LINE: The Portfolio down today as my technology longs and market-exposure are hurting performance. The market's adverse reaction to Cisco's better-than-expected earnings report and raised guidance leads me to believe that tech still has more downside. Investor psychology is exceptionally bad as the negative is accentuated and the positive is ignored. I do not want to take the chance of giving back my profits for the year, thus I sold many longs this morning bringing the Portfolio's market exposure back to market neutral. The S&P 500's 04 P/E is now 16.8 and falling as the market's multiple contraction phase continues.
Wednesday, May 12, 2004
Wednesday Watch
Earnings of Note
Company/Estimate
ANN/.65
CKEC/.39
CPWR/.09
DIS/.21
Splits
YHOO 2-for-1
Economic Data
Trade Balance for March estimated at -$43.0B versus -$42.1B in February.
Import Price Index for April estimated +.4% versus +.9% in March.
Recommendations
Goldman Sachs reiterated Outperform on CIT and MET. GS reiterated Underperform on SYMC and VRSN. Citi SmithBarney reiterated Buy on CSCO, saying they increased estimates on a strong quarter, strong order growth, upbeat conference call and solid guidance.
Late-Night News
Asian indices are higher on strength in U.S. technology shares and strong regional earnings reports. Goldman Sachs said it expects copper, nickel and aluminum prices to rise by the third quarter because base metal supplies haven't kept pace with expanding demand, Reuters reported. GE may buying Boeing Capital's commercial finance portfolio for about $2 billion, the Financial Times said. Google could be worth close to $50 billion, the Telegraph said, citing Marianne Wolk, an analyst at Susquehanna Financial. Massive Inc. has developed a system to insert and track advertisements in video games, the Wall Street Journal reported. Johnson & Johnson next year will be first in the U.S. to offer artificial spinal disks for the treatment of severe back pain, and Medtronic will follow in 2007, Dow Jones reported. Hewlett-Packard and Dell are embroiled in a price war that has cut profits on PC sales to razor-thin margins, the Wall Street Journal reported. About 90% of Gap's 3,000 contracted factories in 50 countries failed to meet the company's own standards for worker conditions, the Wall Street Journal said. Sony unveiled its first hand-held game player and lowered the price of its PlayStation 2 console as it tries to take a bigger share of the global video-game market. Ford is counting on the gasoline-electric version of its Escape sport-utility vehicle to win new customers, Bloomberg reported. The Bush administration imposed new sanctions on Syria, including a ban on all U.S. exports except food and medicine, citing Syria's continued support for terrorism and actions hindering the U.S. effort in Iraq, Bloomberg reported.
Late-Night Trading
Asian Indices +.50% to +2.0%.
S&P 500 indicated +.03%.
NASDAQ indicated +.04%.
BOTTOM LINE: I expect U.S. stocks to continue to rally from oversold levels tomorrow as Cisco beat 3Q estimates and raised 4Q guidance after the close today. Strength in Asia should help as well. The Portfolio had a very good day today and is now 125% net long.
Company/Estimate
ANN/.65
CKEC/.39
CPWR/.09
DIS/.21
Splits
YHOO 2-for-1
Economic Data
Trade Balance for March estimated at -$43.0B versus -$42.1B in February.
Import Price Index for April estimated +.4% versus +.9% in March.
Recommendations
Goldman Sachs reiterated Outperform on CIT and MET. GS reiterated Underperform on SYMC and VRSN. Citi SmithBarney reiterated Buy on CSCO, saying they increased estimates on a strong quarter, strong order growth, upbeat conference call and solid guidance.
Late-Night News
Asian indices are higher on strength in U.S. technology shares and strong regional earnings reports. Goldman Sachs said it expects copper, nickel and aluminum prices to rise by the third quarter because base metal supplies haven't kept pace with expanding demand, Reuters reported. GE may buying Boeing Capital's commercial finance portfolio for about $2 billion, the Financial Times said. Google could be worth close to $50 billion, the Telegraph said, citing Marianne Wolk, an analyst at Susquehanna Financial. Massive Inc. has developed a system to insert and track advertisements in video games, the Wall Street Journal reported. Johnson & Johnson next year will be first in the U.S. to offer artificial spinal disks for the treatment of severe back pain, and Medtronic will follow in 2007, Dow Jones reported. Hewlett-Packard and Dell are embroiled in a price war that has cut profits on PC sales to razor-thin margins, the Wall Street Journal reported. About 90% of Gap's 3,000 contracted factories in 50 countries failed to meet the company's own standards for worker conditions, the Wall Street Journal said. Sony unveiled its first hand-held game player and lowered the price of its PlayStation 2 console as it tries to take a bigger share of the global video-game market. Ford is counting on the gasoline-electric version of its Escape sport-utility vehicle to win new customers, Bloomberg reported. The Bush administration imposed new sanctions on Syria, including a ban on all U.S. exports except food and medicine, citing Syria's continued support for terrorism and actions hindering the U.S. effort in Iraq, Bloomberg reported.
Late-Night Trading
Asian Indices +.50% to +2.0%.
S&P 500 indicated +.03%.
NASDAQ indicated +.04%.
BOTTOM LINE: I expect U.S. stocks to continue to rally from oversold levels tomorrow as Cisco beat 3Q estimates and raised 4Q guidance after the close today. Strength in Asia should help as well. The Portfolio had a very good day today and is now 125% net long.
Tuesday, May 11, 2004
Tuesday Close
***There will not be a Tuesday close today as I will be traveling, however the Wednesday Watch will be posted at its regular time.
Mid-day Update
S&P 500 1,094.99 +.71%
NASDAQ 1,928.90 +1.73%
Leading Sectors
Airlines +3.08%
Nanotechnology +2.86%
Internet +2.79%
Lagging Sectors
Computer Services -.04%
Drugs -.38%
Tobacco -.68%
Other
Crude Oil 39.30 +.95%
Natural Gas 6.26 +1.31%
Gold 375.40 -.87%
Base Metals 101.22 +1.64%
U.S. Dollar 91.93 +.40%
10-Yr. Long-Bond Yield 4.76% -.65%
VIX 18.16 -8.14%
Put/Call 1.32 +5.60%
NYSE Arms 1.04 +55.22%
Market Movers
LTON +39.37% after substantially beating 1Q estimates and raising 2Q guidance.
SBL +15.9% after beating 1Q estimates and multiple upgrades.
GIVN +13.18% after saying a unit of JNJ will market a version for the esophagus of its "camera-in-a-capsule" used to diagnose ailments of the small intestine.
NFLX +7.7% after CSFB upgrade to Outperform, target $43.
ANPI -4.77% after disappointing 1Q estimates.
EDS -7.93% after saying it may lower dividend and issue stock to keep credit rating.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on AVP, BAX and PG. GS upgraded IP to Outperform. GS reiterated Underperform on LSI. DIS raised to Buy at UBS, target $30. WM raised to Buy at UBS, target $45. DJ raised to Buy at Citi SmithBarney, target $64. NVTL rated Outperform at Thomas Weisel. MER raised to Buy at Bank of America, target $65. AGE rated Buy at Bank of America, target $46. SCH rated Buy at Bank of America, target $13. ATK raised to Outperform at CSFB, target $68. PSUN cut to Underweight at Prudential, target $19. NSM raised to Overweight at Lehman, target $49.
Mid-day News
U.S. stocks are rising mid-day on strength in technology shares and falling interest rates. The U.S. economic recovery is strong enough to withstand the increase in energy prices Dallas Fed President McTeer wrote in a Wall Street Journal commentary. Support is growing among health insurers, state officials and pharmacy chains for the legalization of prescription-drug imports from pharmacies in Canada and other countries, the New York Times said. The OECD said it now expects global growth to reach 3.4% this year, up from a prior forecast of 3.0%, Bloomberg reported. The U.S. economy will expand 4.7% this year, which would be the fastest pace in two decades, up from an earlier prediction of 4.2% growth, the OECD said. Procter & Gamble bought the remaining 20% stake in its China venture for $1.8B, allowing the company to speed its expansion into the fast-growing Chinese market. Intel and Texas Instruments have increased inventories to their highest levels since 2001 in a bet that spending on electronics will rise, Bloomberg reported.
BOTTOM LINE: The Portfolio is up today as my new tech, Chinese and basic material longs are rising substantially. I added a few new internet, biotech and networking longs this morning, bringing the Portfolio's market exposure to 100% net long. I expect stocks to rise into the close as shorts take profits and investors bargain-hunt ahead of Cisco's earnings report. The continuing high Put/Call reading also bodes well for afternoon strength.
NASDAQ 1,928.90 +1.73%
Leading Sectors
Airlines +3.08%
Nanotechnology +2.86%
Internet +2.79%
Lagging Sectors
Computer Services -.04%
Drugs -.38%
Tobacco -.68%
Other
Crude Oil 39.30 +.95%
Natural Gas 6.26 +1.31%
Gold 375.40 -.87%
Base Metals 101.22 +1.64%
U.S. Dollar 91.93 +.40%
10-Yr. Long-Bond Yield 4.76% -.65%
VIX 18.16 -8.14%
Put/Call 1.32 +5.60%
NYSE Arms 1.04 +55.22%
Market Movers
LTON +39.37% after substantially beating 1Q estimates and raising 2Q guidance.
SBL +15.9% after beating 1Q estimates and multiple upgrades.
GIVN +13.18% after saying a unit of JNJ will market a version for the esophagus of its "camera-in-a-capsule" used to diagnose ailments of the small intestine.
NFLX +7.7% after CSFB upgrade to Outperform, target $43.
ANPI -4.77% after disappointing 1Q estimates.
EDS -7.93% after saying it may lower dividend and issue stock to keep credit rating.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on AVP, BAX and PG. GS upgraded IP to Outperform. GS reiterated Underperform on LSI. DIS raised to Buy at UBS, target $30. WM raised to Buy at UBS, target $45. DJ raised to Buy at Citi SmithBarney, target $64. NVTL rated Outperform at Thomas Weisel. MER raised to Buy at Bank of America, target $65. AGE rated Buy at Bank of America, target $46. SCH rated Buy at Bank of America, target $13. ATK raised to Outperform at CSFB, target $68. PSUN cut to Underweight at Prudential, target $19. NSM raised to Overweight at Lehman, target $49.
Mid-day News
U.S. stocks are rising mid-day on strength in technology shares and falling interest rates. The U.S. economic recovery is strong enough to withstand the increase in energy prices Dallas Fed President McTeer wrote in a Wall Street Journal commentary. Support is growing among health insurers, state officials and pharmacy chains for the legalization of prescription-drug imports from pharmacies in Canada and other countries, the New York Times said. The OECD said it now expects global growth to reach 3.4% this year, up from a prior forecast of 3.0%, Bloomberg reported. The U.S. economy will expand 4.7% this year, which would be the fastest pace in two decades, up from an earlier prediction of 4.2% growth, the OECD said. Procter & Gamble bought the remaining 20% stake in its China venture for $1.8B, allowing the company to speed its expansion into the fast-growing Chinese market. Intel and Texas Instruments have increased inventories to their highest levels since 2001 in a bet that spending on electronics will rise, Bloomberg reported.
BOTTOM LINE: The Portfolio is up today as my new tech, Chinese and basic material longs are rising substantially. I added a few new internet, biotech and networking longs this morning, bringing the Portfolio's market exposure to 100% net long. I expect stocks to rise into the close as shorts take profits and investors bargain-hunt ahead of Cisco's earnings report. The continuing high Put/Call reading also bodes well for afternoon strength.
Tuesday Watch
Earnings of Note
Company/Estimate
ANF/.30
CYD/.40
CSCO/.18
MAY/.15
OSIP/-1.03
SCMR/-.04
Splits
None of note.
Economic Data
Trade Balance for March estimated at -$43.0B versus -$42.1B in February.
Import Price Index for April estimated +.4% versus +.9% in March.
Recommendations
Goldman Sachs reiterated Outperform on MO, EXC and YHOO. GS reiterated Underperform on EDS and YBTVA.
Late-Night News
Asian indices are mixed as strength in Japan is being offset by weakness in Hong Kong. Tribesman in Pakistan's border region with Afghanistan plan to form a force of 1,800 militiamen to help hunt for suspected al-Qaeda leaders hiding in the area, the BBC reported. Chinese steel prices will continue to decline in the near term as the government's polices cool the economy and raw materials prices fall, the China Securities Journal reported. Prices of construction steel, including threaded steel rods, have fallen more than 17% from the beginning of March to $415/ton. The Senate Banking Committee will ask the SEC to investigate whether Citigroup, Merrill Lynch and other banks stuffed clients shares into mutual funds during the three-year stock market decline, Bloomberg reported.
Late-Night Trading
Asian Indices -.25% to +.50%.
S&P 500 indicated +.13%.
NASDAQ indicated +.18%.
BOTTOM LINE: The Portfolio is 50% net long heading into trading tomorrow. I will wait for signs that a significant rally has begun before adding additional market exposure. I expect this to occur at any time as the major U.S. indices are very oversold short-term. Bears will likely move to protect their recent gains heading into Cisco's earnings report after the close tomorrow.
Company/Estimate
ANF/.30
CYD/.40
CSCO/.18
MAY/.15
OSIP/-1.03
SCMR/-.04
Splits
None of note.
Economic Data
Trade Balance for March estimated at -$43.0B versus -$42.1B in February.
Import Price Index for April estimated +.4% versus +.9% in March.
Recommendations
Goldman Sachs reiterated Outperform on MO, EXC and YHOO. GS reiterated Underperform on EDS and YBTVA.
Late-Night News
Asian indices are mixed as strength in Japan is being offset by weakness in Hong Kong. Tribesman in Pakistan's border region with Afghanistan plan to form a force of 1,800 militiamen to help hunt for suspected al-Qaeda leaders hiding in the area, the BBC reported. Chinese steel prices will continue to decline in the near term as the government's polices cool the economy and raw materials prices fall, the China Securities Journal reported. Prices of construction steel, including threaded steel rods, have fallen more than 17% from the beginning of March to $415/ton. The Senate Banking Committee will ask the SEC to investigate whether Citigroup, Merrill Lynch and other banks stuffed clients shares into mutual funds during the three-year stock market decline, Bloomberg reported.
Late-Night Trading
Asian Indices -.25% to +.50%.
S&P 500 indicated +.13%.
NASDAQ indicated +.18%.
BOTTOM LINE: The Portfolio is 50% net long heading into trading tomorrow. I will wait for signs that a significant rally has begun before adding additional market exposure. I expect this to occur at any time as the major U.S. indices are very oversold short-term. Bears will likely move to protect their recent gains heading into Cisco's earnings report after the close tomorrow.
Monday, May 10, 2004
Monday Close
S&P 500 1,087.12 -1.05%
NASDAQ 1,896.07 -1.14%
Leading Sectors
Semiconductors +.41%
I-Banks -.50%
Papers -.51%
Lagging Sectors
Airlines -3.01%
Oil Service -3.05%
Nanotechnology -6.14%
Other
Crude Oil 38.95 +.05%
Natural Gas 6.18 -.06%
Gold 378.00 -.18%
Base Metals 99.59 -3.56%
U.S. Dollar 91.75 +.21%
10-Yr. Long-Bond Yield 4.79% +.31%
VIX 19.77 +9.05%
Put/Call 1.25 +25.00%
NYSE Arms .67 +3.08%
After-hours Movers
LTON +37.5% after substantially beating 1Q estimates and raising 2Q guidance.
PSUN +3.32% after beating 1Q estimates and raising 04 forecast.
MCIA +3.42% after announcing another 7,500 job cuts.
Recommendations
Goldman Sachs reiterated Underperform on PSS and RKY.
After-hours News
U.S. stocks finished lower Monday, sending the Dow below 10,000 for the first time this year, on continued fears of rising interest rates and slowing Chinese economic growth. After the close, Merrill Lynch said it gained approval to invest in China's stock markets, the first foreign bank to be licensed this year, the Financial Times reported. U.S. auto safety regulators Wednesday will release proposed rules that may reduce by as much as 11% the 9,000 deaths annually from side-impact crashes, Bloomberg reported. Electronic Data Systems said it may cut its dividend or issue stock to raise more than $1B to avoid a cut in its credit rating to below investment grade, Bloomberg reported. Chiquita Brands said the U.S. is investigating payments the company's Colombian subsidiary made to groups identified as foreign terrorists, Bloomberg reported. IBM, McDonald's, GE and other large U.S. employers said they may use their buying power to extend health insurance to workers who lack coverage, Bloomberg reported.
BOTTOM LINE: The Portfolio fell slightly today as I increased market exposure into the afternoon weakness by adding several new long positions. The Portfolio is now 50% net long. Semiconductors significantly outperformed again today in another sign that tech is stabilizing. I believe that the major U.S. indices are very close to at least a short-term bottom and possibly an intermediate-term one. I will look to increase market exposure into any extreme weakness tomorrow in anticipation of this expected rally. One of the new longs I added into afternoon weakness was SWIR. I am keeping a $21 stop-loss on this position.
NASDAQ 1,896.07 -1.14%
Leading Sectors
Semiconductors +.41%
I-Banks -.50%
Papers -.51%
Lagging Sectors
Airlines -3.01%
Oil Service -3.05%
Nanotechnology -6.14%
Other
Crude Oil 38.95 +.05%
Natural Gas 6.18 -.06%
Gold 378.00 -.18%
Base Metals 99.59 -3.56%
U.S. Dollar 91.75 +.21%
10-Yr. Long-Bond Yield 4.79% +.31%
VIX 19.77 +9.05%
Put/Call 1.25 +25.00%
NYSE Arms .67 +3.08%
After-hours Movers
LTON +37.5% after substantially beating 1Q estimates and raising 2Q guidance.
PSUN +3.32% after beating 1Q estimates and raising 04 forecast.
MCIA +3.42% after announcing another 7,500 job cuts.
Recommendations
Goldman Sachs reiterated Underperform on PSS and RKY.
After-hours News
U.S. stocks finished lower Monday, sending the Dow below 10,000 for the first time this year, on continued fears of rising interest rates and slowing Chinese economic growth. After the close, Merrill Lynch said it gained approval to invest in China's stock markets, the first foreign bank to be licensed this year, the Financial Times reported. U.S. auto safety regulators Wednesday will release proposed rules that may reduce by as much as 11% the 9,000 deaths annually from side-impact crashes, Bloomberg reported. Electronic Data Systems said it may cut its dividend or issue stock to raise more than $1B to avoid a cut in its credit rating to below investment grade, Bloomberg reported. Chiquita Brands said the U.S. is investigating payments the company's Colombian subsidiary made to groups identified as foreign terrorists, Bloomberg reported. IBM, McDonald's, GE and other large U.S. employers said they may use their buying power to extend health insurance to workers who lack coverage, Bloomberg reported.
BOTTOM LINE: The Portfolio fell slightly today as I increased market exposure into the afternoon weakness by adding several new long positions. The Portfolio is now 50% net long. Semiconductors significantly outperformed again today in another sign that tech is stabilizing. I believe that the major U.S. indices are very close to at least a short-term bottom and possibly an intermediate-term one. I will look to increase market exposure into any extreme weakness tomorrow in anticipation of this expected rally. One of the new longs I added into afternoon weakness was SWIR. I am keeping a $21 stop-loss on this position.
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