Earnings of Note
Company/Estimate
ADI/.35
AEOS/.33
AMSC/-.23
BEAS/.08
DELL/.28
KSS/.33
LTXX/.07
MTZ/.11
TGT/.47
TIF/.27
URBN/.38
WMT/.49
Splits
ASBC 3-for-2
DNA 2-for-1
Economic Data
Producer Price Index for April estimated +.3% versus +.5% in March.
PPI Ex Food & Energy for April estimated +.2% versus +.2% in March.
Advance Retail Sales for April estimated -.2% versus +1.8% in March.
Retail Sales Less Autos for April estimated -.2% versus +1.7% in March.
Initial Jobless Claims for last week estimated at 325K versus 315K prior week.
Continuing Claims estimated at 2900K versus 2935K prior.
Recommendations
Goldman Sachs reiterated Outperform on ADP, CEN, PAYX, MERQ, BAX and BIIB. GS reiterated Underperform on HRB.
Late-Night News
Asian indices are lower on concerns that rising oil prices will crimp world economic growth. China scheduled a final test of a homegrown high-speed mobile-phone technology in Shanghai and Beijing on May 20. Nortel Networks and China Putian are supplying equipment for the test, China Daily reported. The U.S. issued an alert for U.S. citizens visiting next month's Euro 2004 soccer tournament in Portugal over possible terrorist attacks. China's industrial production grew 19.1% last month as factories made more computers, cars and cell phones to meet rising demand at home and abroad.
Late-Night Trading
Asian Indices -2.25% to -.25%.
S&P 500 indicated +.03%.
NASDAQ indicated +.04%.
BOTTOM LINE: U.S. stocks may open lower on weakness in Asia, however I expect shares to stabilize and rally later in the day, barring a significant rise in interest rates. The Portfolio is 125% net long heading into tomorrow.
Thursday, May 13, 2004
Wednesday, May 12, 2004
Wednesday Close
S&P 500 1,097.28 +.17%
NASDAQ 1,929.59 -.30%
Leading Sectors
Iron/Steel +2.16%
Banks +1.32%
HMO's +1.12%
Lagging Sectors
Fashion -1.36%
Tobacco -1.56%
Semis -1.75%
Other
Crude Oil 40.69 -.20%
Natural Gas 6.38 -.31%
Gold 377.70 unch.
Base Metals 102.64 +1.28%
U.S. Dollar 91.28 -.41%
10-Yr. Long-Bond Yield 4.81% +1.37%
VIX 18.14 -2.32%
Put/Call 1.12 -9.34%
NYSE Arms .97 -7.62%
After-hours Movers
MAMA +17.26% on strong 1Q earnings.
NCRX -5.84% after missing 2Q estimates and CFO resignation.
Recommendations
Goldman Sachs rated MER Overweight and BSC Underweight. GS reiterated Outperform on RE. A decline in repossessed manufactured-housing loans since 02 suggests prices on mobile homes and related securities may begin to rise in late 04 or early next year, said UBS analyst Thomas Zimmerman.
After-hours News
U.S. stocks finished mixed Wednesday as a vicious afternoon rally led investors to speculate that the market's recent correction had run its course. After the close, Enron said it will partially settle a lawsuit filed on behalf of current and former workers and their retirement plan for $85 million, the Houston Chronicle reported. Disney's second-quarter profit rose 71% as sales increased at its theme parks and cable networks, Bloomberg reported. Biogen Idec said Nabil Hanna, its executive v.p. for research resigned after the company conducted an internal investigation, Bloomberg reported.
BOTTOM LINE: The Portfolio fell slightly today and I bought back many longs that I sold earlier in the day, thus leaving the Portfolio with 125% net long market exposure. Trading action today had many markings of a key reversal day. The QQQs(Nasdaq 100 tracking stock) finished the day higher, after a significant intra-day decline, on volume that was 61% higher than its 15-day average. At their nadir, the Qs were down 12.1% from their highs in January and trading below their 200-day moving average. Barton Biggs' bullish comments on CNBC and the ARMs index hitting an extreme reading of 3.56, both occurring around 2pm est., seemed to provide the catalyst for the vicious rally. I believe a short-term bottom is in place now and I am leaning towards the belief that an intermediate-low was made today. The fundamentals of the market are excellent, while investor psychology has been the problem. I would like to see another strong rally on good volume within the next few days to confirm the move of the last 2 days. I expect this will occur by next Monday at the latest. If investor psychology has shifted, I would also expect to see much more focus on the many positives of this market and less attention to the few negatives.
NASDAQ 1,929.59 -.30%
Leading Sectors
Iron/Steel +2.16%
Banks +1.32%
HMO's +1.12%
Lagging Sectors
Fashion -1.36%
Tobacco -1.56%
Semis -1.75%
Other
Crude Oil 40.69 -.20%
Natural Gas 6.38 -.31%
Gold 377.70 unch.
Base Metals 102.64 +1.28%
U.S. Dollar 91.28 -.41%
10-Yr. Long-Bond Yield 4.81% +1.37%
VIX 18.14 -2.32%
Put/Call 1.12 -9.34%
NYSE Arms .97 -7.62%
After-hours Movers
MAMA +17.26% on strong 1Q earnings.
NCRX -5.84% after missing 2Q estimates and CFO resignation.
Recommendations
Goldman Sachs rated MER Overweight and BSC Underweight. GS reiterated Outperform on RE. A decline in repossessed manufactured-housing loans since 02 suggests prices on mobile homes and related securities may begin to rise in late 04 or early next year, said UBS analyst Thomas Zimmerman.
After-hours News
U.S. stocks finished mixed Wednesday as a vicious afternoon rally led investors to speculate that the market's recent correction had run its course. After the close, Enron said it will partially settle a lawsuit filed on behalf of current and former workers and their retirement plan for $85 million, the Houston Chronicle reported. Disney's second-quarter profit rose 71% as sales increased at its theme parks and cable networks, Bloomberg reported. Biogen Idec said Nabil Hanna, its executive v.p. for research resigned after the company conducted an internal investigation, Bloomberg reported.
BOTTOM LINE: The Portfolio fell slightly today and I bought back many longs that I sold earlier in the day, thus leaving the Portfolio with 125% net long market exposure. Trading action today had many markings of a key reversal day. The QQQs(Nasdaq 100 tracking stock) finished the day higher, after a significant intra-day decline, on volume that was 61% higher than its 15-day average. At their nadir, the Qs were down 12.1% from their highs in January and trading below their 200-day moving average. Barton Biggs' bullish comments on CNBC and the ARMs index hitting an extreme reading of 3.56, both occurring around 2pm est., seemed to provide the catalyst for the vicious rally. I believe a short-term bottom is in place now and I am leaning towards the belief that an intermediate-low was made today. The fundamentals of the market are excellent, while investor psychology has been the problem. I would like to see another strong rally on good volume within the next few days to confirm the move of the last 2 days. I expect this will occur by next Monday at the latest. If investor psychology has shifted, I would also expect to see much more focus on the many positives of this market and less attention to the few negatives.
Mid-day Update
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.
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 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.
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