S&P 500 1,114.11 +.10%
NASDAQ 1,969.28 +.24%
Leading Sectors
Disk Drives +1.48%
Networking +1.17%
Biotech +1.05%
Lagging Sectors
Telecom -1.24%
Oil Service -1.29%
Homebuilders -1.30%
Other
Crude Oil 41.20 +.15%
Natural Gas 6.66 -.36%
Gold 388.00 -.13%
Base Metals 106.71 +1.09%
U.S. Dollar 89.79 -.04%
10-Yr. T-note Yield 4.68% -.67%
VIX 15.92 -.25%
Put/Call .95 +10.47%
NYSE Arms 1.01 +68.33%
Market Movers
TIVO +5.42% after beating 1Q estimates and raising 2Q guidance.
BSX +5.8% after announcing more positive data from its Taxus VI clinical trial.
MAGS +20.25% on continued optimism over a Homeland Security contract.
CPRT +18.58% after beating 3Q estimates substantially.
EYET +15.57% after saying the FDA scheduled a meeting in August to discuss its Macugen treatment for age-related macular degeneration.
FNF +6.96% after saying it filed with the SEC to sell shares of its mortgage-processing and data-services unit to the public and spin it off.
SNIC +10.31% after saying that Toshiba had chosen it to bundle RecordNow! with its entire line of PCs worldwide and to include PrimeTime DVD burning in all of its Windows XP Media Center edition PCs.
APSG +9.69% after beating 2Q estimates substantially.
TSA -4.71% after missing 1Q estimates, but boosting 04 guidance.
DRIV -5.89% after announcing $175 million convertible senior note offering.
Economic Data
Durable Goods Orders for April -2.9% versus expectations of -.9% and +5.7% in March.
Durable Goods Less Transportation for April -2.1% versus expectations of -1.0% and +6.3% in March.
New Home Sales in April were 1093K versus expectations of 1200K and 1239K in March.
Recommendations
BOW raised to Buy at UBS, target $52. AMSG raised to Buy at UBS, target $30. USPI rated Buy at UBS. QLTY raised to Buy at Legg Mason, target $14. UHS rated Outperform at Bear Stearns. Goldman Sachs reiterated Outperform on CLX, IP, WFC, AIG, GDT and EMC. Goldman said cell-tower stocks should continue to move higher as it is becoming increasingly clear that carriers are going to move more aggressively to 3G. Goldman still positive on Gold, target $445/oz next 12 months. Goldman reiterated Underperform on F and VTS. Citi SmithBarney said to Buy YHOO, target $33, ahead of quarterly reported. Citi upgraded LLY to Buy, target $82. Citi reiterated Buy on LXK, target $110. Citi reiterated Buy on CSCO, target $34. Citi reiterated Buy on BEAS, target $13. Citi reiterated Buy on TGT, target $50. Jim Cramer, of TheStreet.com, has a positive column on cable stocks, saying VOIP will make them huge winners.
Mid-day News
U.S. stocks are mixed mid-day as falling interest rates and stabilizing energy prices boost some shares, offsetting fears over holiday terrorism and weaker-than-expected economic reports. Optimism among German exporters rose to the highest since January 2001 in May as growth in the U.S., Asia and Europe boosts foreign demand and a weaker euro makes their goods cheaper abroad, according to a survey by the Ifo economic institute. The U.S. will outline anti-terrorism measures the government is planning after intelligence reports said al-Qaeda may attack on U.S. soil in coming months, Bloomberg reported. GM has added Caterpillar to the list of companies that may buy its locomotive-manufacturing division, the Detroit Free Press reported. Harvey Pitt, former chairman of the SEC, told CNBC that New York Attorney General Eliot Spitzer's lawsuit against Grasso isn't an "effective use of anyone's time," Bloomberg reported. A unit of PetroChina, China's biggest oil producer, found more than 400 million metric tons of crude oil in a deposit in the country's northwestern province of Gansu, China Central TV reported. U.K. Prime Minister Tony Blair said he and U.S. President Bush are "absolutely agreed" that sovereignty in Iraq will be transferred to a new government and coalition troops will remain under U.S. Command, Bloomberg said. U.S. sales of new houses fell 11.8% in April, the biggest monthly drop in more than a decade, as mortgage rates rose and prices soared to a record, Bloomberg reported. Comcast plans to offer digital phone service to almost all its customers by the end of 2006, CEO Brian Roberts said.
BOTTOM LINE: The Portfolio is having a good day today and I have not traded, leaving market exposure at 125% net long. I expect stocks to rise slightly after Ashcroft's speech at 2 est. However, some profit-taking could occur later on before the holiday weekend on terrorism fears. The market is holding up very well today considering the news and yesterday's large gain. I would not want to be short on Tue., barring any significant terror act. Biotechs look like they could outperform over the next week as a major cancer meeting(ASCO) begins June 4th and lasts through June 8th. Positive news should benefit DNA, OSIP, AMGN and ABGX. BBH is a conservative way to play the sector.
Wednesday, May 26, 2004
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Wednesday Watch
Earnings of Note
Company/Estimate
CPRT/.20
MIK/.37
RL/.78
TECD/.49
TOL/.87
VTS/.22
Splits
HNP 2-for-1
TLM 3-for-1
Economic Data
Durable Goods Orders for April estimated -1.0% versus +5.4% in March.
New Home Sales for April estimated at 1200K versus 1228K in March.
Recommendations
Goldman Sachs reiterated Underperform on VRTS. Goldman reiterated Outperform on BSX, CSCO and MDT.
Late-Night News
Asian indices are higher after a strong showing by U.S. stocks and optimism over economic growth in Japan. Members of al-Qaeda or other terrorists are in the U.S. and preparing for a major attack later this year, the AP reported, citing a senior U.S. counter-terrorism official. China doesn't need to take harsher measures to rein in the overall economy because only some industries are overheated, the Shanghai Securities News said. Wellington Management, which advises more than a dozen funds offered by Vanguard Group, is being investigated by the SEC, the NY Times said.
Late-Night Trading
Asian Indices +.50% to +1.75% on average.
S&P 500 indicated -.16%.
NASDAQ indicated -.14%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on terrorism-related concerns and a likely weaker-than-expected Durable Goods report. However, a rally may surface later in the day on falling interest rates and short-covering. I do not expect a significant move up or down tomorrow. The Portfolio is 125% net long.
Company/Estimate
CPRT/.20
MIK/.37
RL/.78
TECD/.49
TOL/.87
VTS/.22
Splits
HNP 2-for-1
TLM 3-for-1
Economic Data
Durable Goods Orders for April estimated -1.0% versus +5.4% in March.
New Home Sales for April estimated at 1200K versus 1228K in March.
Recommendations
Goldman Sachs reiterated Underperform on VRTS. Goldman reiterated Outperform on BSX, CSCO and MDT.
Late-Night News
Asian indices are higher after a strong showing by U.S. stocks and optimism over economic growth in Japan. Members of al-Qaeda or other terrorists are in the U.S. and preparing for a major attack later this year, the AP reported, citing a senior U.S. counter-terrorism official. China doesn't need to take harsher measures to rein in the overall economy because only some industries are overheated, the Shanghai Securities News said. Wellington Management, which advises more than a dozen funds offered by Vanguard Group, is being investigated by the SEC, the NY Times said.
Late-Night Trading
Asian Indices +.50% to +1.75% on average.
S&P 500 indicated -.16%.
NASDAQ indicated -.14%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on terrorism-related concerns and a likely weaker-than-expected Durable Goods report. However, a rally may surface later in the day on falling interest rates and short-covering. I do not expect a significant move up or down tomorrow. The Portfolio is 125% net long.
Tuesday, May 25, 2004
Tuesday Close
S&P 500 1,113.05 +1.61%
NASDAQ 1,964.65 +2.17%
Leading Sectors
Homebuilders +4.88%
Nanotechnology +4.02%
Disk Drives +3.53%
Lagging Sectors
Broadcasting +.87%
Telecom +.04%
Fashion -.81%
Other
Crude Oil 41.01 -.32%
Natural Gas 6.63 -.58%
Gold 388.50 +.03%
Base Metals 105.56 -.68%
U.S. Dollar 89.84 -.78%
10-Yr. T-note Yield 4.72% -.25%
VIX 15.96 -11.73%
Put/Call .86 +13.16%
NYSE Arms .60 -49.19%
After-hours Movers
APSG +8.48% after beating 2Q estimates substantially.
SEAC +6.58 after beating 1Q estimates and raising 2Q forecast.
CA -3.11% after missing 4Q estimates and lowering 1Q guidance.
Recommendations
Goldman Sachs reiterated Underperform on DO. Goldman reiterated Outperform on PPL. TheStreet.com has a positive column on IVII. TheStreet.com also has a positive column on the tech sector, saying it should outperform the rest of the year.
After-hours News
U.S. stocks finished sharply higher Tuesday as oil and interest rates declined and most sectors rose. After the close, the U.S. and the UN are close to an agreement on selecting Shiite Hussain Shahristani, a nuclear scientist imprisoned by Saddam Hussein, to serve as prime minister in the new Iraqi government, the Washington Post reported. An aspirin a day may cut a woman's risk of developing breast cancer by more than 20%, according to a study in tomorrow's Journal of the AMA. Computer Associates said 4th quarter sales rose 10%, below estimates, and lowered 1st quarter guidance. Defense Secretary Rumsfeld has decided to defer until at least November a decision on signing a contract with Boeing for aerial refueling tankers worth as much as $23 billion.
BOTTOM LINE: The Portfolio had a very good day today as a few of my biotech, semiconductor and internet longs rose substantially. I took profits in one of my basic materials longs and added CHINA. I am using a stop-loss of $6.75 on this position. The Portfolio is still 125% net long. Very good day for the Bulls as volume swelled into the afternoon rally. Breadth was good and almost all sectors participated. As well, all major U.S. indices are now above their 200-day moving-averages and small-caps continue to outperform. Finally, the news wasn't even that good today, however the market's reaction was significant. A positive shift in investor psychology seems to finally be at hand. This has been the market's main problem lately as the underlying fundamentals are excellent.
NASDAQ 1,964.65 +2.17%
Leading Sectors
Homebuilders +4.88%
Nanotechnology +4.02%
Disk Drives +3.53%
Lagging Sectors
Broadcasting +.87%
Telecom +.04%
Fashion -.81%
Other
Crude Oil 41.01 -.32%
Natural Gas 6.63 -.58%
Gold 388.50 +.03%
Base Metals 105.56 -.68%
U.S. Dollar 89.84 -.78%
10-Yr. T-note Yield 4.72% -.25%
VIX 15.96 -11.73%
Put/Call .86 +13.16%
NYSE Arms .60 -49.19%
After-hours Movers
APSG +8.48% after beating 2Q estimates substantially.
SEAC +6.58 after beating 1Q estimates and raising 2Q forecast.
CA -3.11% after missing 4Q estimates and lowering 1Q guidance.
Recommendations
Goldman Sachs reiterated Underperform on DO. Goldman reiterated Outperform on PPL. TheStreet.com has a positive column on IVII. TheStreet.com also has a positive column on the tech sector, saying it should outperform the rest of the year.
After-hours News
U.S. stocks finished sharply higher Tuesday as oil and interest rates declined and most sectors rose. After the close, the U.S. and the UN are close to an agreement on selecting Shiite Hussain Shahristani, a nuclear scientist imprisoned by Saddam Hussein, to serve as prime minister in the new Iraqi government, the Washington Post reported. An aspirin a day may cut a woman's risk of developing breast cancer by more than 20%, according to a study in tomorrow's Journal of the AMA. Computer Associates said 4th quarter sales rose 10%, below estimates, and lowered 1st quarter guidance. Defense Secretary Rumsfeld has decided to defer until at least November a decision on signing a contract with Boeing for aerial refueling tankers worth as much as $23 billion.
BOTTOM LINE: The Portfolio had a very good day today as a few of my biotech, semiconductor and internet longs rose substantially. I took profits in one of my basic materials longs and added CHINA. I am using a stop-loss of $6.75 on this position. The Portfolio is still 125% net long. Very good day for the Bulls as volume swelled into the afternoon rally. Breadth was good and almost all sectors participated. As well, all major U.S. indices are now above their 200-day moving-averages and small-caps continue to outperform. Finally, the news wasn't even that good today, however the market's reaction was significant. A positive shift in investor psychology seems to finally be at hand. This has been the market's main problem lately as the underlying fundamentals are excellent.
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Mid-day Update
S&P 500 1,100.56 +.48%
NASDAQ 1,934.78 +.63%
Leading Sectors
Homebuilders +3.26%
Airlines +2.10%
Nanotechnology +1.84%
Lagging Sectors
Telecom -.79%
Fashion -.80%
I-Banks -1.08%
Other
Crude Oil 41.04 -1.61%
Natural Gas 6.58 -1.86%
Gold 388.30 +.67%
Base Metals 105.56 -.68%
U.S. Dollar 89.89 -.73%
10-Yr. T-note Yield 4.72% -.38%
VIX 16.73 -7.47%
Put/Call 1.13 +48.68%
NYSE Arms 1.00 -15.25%
Market Movers
IPIX +20.7% after announcing a new patent and reseller agreement with JCS Digital.
BSX +4.7% after announcing positive results from it Taxus VI stent clinical trial.
DYAX -34.7% after reporting that the FDA has advised the company that INDs for its recombinant protein DX-88 have been placed on clinical hold.
SWFT +16.0% after raising 2Q guidance substantially, announcing $40M stock buyback and Legg Mason upgrade to Buy.
TEN +16.85% after withdrawing secondary offering.
OCR +6.0% after multiple positive comments from analysts on NeighborCare acquisition.
BOBE -10.0% after lowering 1Q/05 guidance and downgrade to Underperform by Whitaker Securities.
IPMT -7.9% after multiple analyst downgrades.
Economic Data
Existing Home Sales for May came in at 6.64M versus expectations of 6.46M and 6.48M in April.
Consumer Confidence for May 93.2 versus expectations of 94.0 and 93.0 in April.
Recommendations
PFG cut to Underperform at JP Morgan. CVX raised to Buy at Deutsche Bank, target $99. ADP raised to Overweight at Morgan Stanley, target $61. EFX cut to Underweight at Morgan Stanley. MANH rated Outperform at CSFB, target $33. OCR raised to Outperform at Schwab SoundView, target $50. LMT rated Buy at Legg Mason, target $64. RTN rated Buy at Legg Mason, target $42. Goldman Sachs reiterated Outperform on MDT. Goldman downgraded CVH to Underperform. Citi SmithBarney said it favors GE over 3M. Citi said to Buy MO and RJR on weakness. Citi reiterated Buy on MAR, target $58. Citi said recent US semiconductor purchasing manager's survey is positive for LLTC, ADI, TXN and MXIM. Citi also likes INTC and CY at current levels. Citi reiterated Buy on UNM, target $20. Citi reiterated Buy on MDT, target $59. Goldman reiterated Outperform on DELL, target $42.
Mid-day News
U.S. stocks are higher mid-day led by homebuilders and airlines as energy prices and interest rates fall. Russia will enter the World Trade Organization in 2007, the Itar-Tass news service reported. Linux users are adopting a way to track contributions to the operating system, a process that may head off future disputes about who added what, the Wall Street Journal reported. Ford may cut production of sport-utility vehicles during the third quarter because of slow sales, Dow Jones Newswires reported. Cisco introduced a faster router to help retake market share from Juniper, Reuters reported. Trump Hotels & Casino Resorts is expected to make a $73.1M interest payment that was due May 1 to avoid default, the Star-Ledger reported. Harvard University's student-run sex magazine, H Bomb, made its debut this morning to students and newsstands around the Cambridge, Mass. campus, the Boston Globe reported. Russia will seek to increase oil exports amid higher prices, Interfax news service reported. TV political ads in the 2004 presidential election campaign have been filled with exaggerations, leaving voters with distorted impressions of both President Bush and Senator Kerry, the NY Times reported. The world's seven most industrialized nations and Russia expect the world economy to growth at a strong pace next year, the Financial Times reported. A multinational force will be needed in Iraq "for months, rather than years," as the country develops its own military to maintain security, Iraqi Defense Minister Allawi said today. SBC Communications and the Communications Workers of America agreed on a five-year contract that guarantees the jobs of 100,000 employees, Bloomberg reported.
BOTTOM LINE: The Portfolio is having another good day today as a few of my biotech, basic material and semi-equipment longs post solid gains. I took profits this morning in one of my basic material longs and bought PETS. I am using a $6.50 stop-loss on the position. The Portfolio is still 125% net long. A high put/call ratio, falling interest rates/energy prices and significant outperformance by small-caps leads me to believe today's rally is sustainable and may improve this afternoon.
NASDAQ 1,934.78 +.63%
Leading Sectors
Homebuilders +3.26%
Airlines +2.10%
Nanotechnology +1.84%
Lagging Sectors
Telecom -.79%
Fashion -.80%
I-Banks -1.08%
Other
Crude Oil 41.04 -1.61%
Natural Gas 6.58 -1.86%
Gold 388.30 +.67%
Base Metals 105.56 -.68%
U.S. Dollar 89.89 -.73%
10-Yr. T-note Yield 4.72% -.38%
VIX 16.73 -7.47%
Put/Call 1.13 +48.68%
NYSE Arms 1.00 -15.25%
Market Movers
IPIX +20.7% after announcing a new patent and reseller agreement with JCS Digital.
BSX +4.7% after announcing positive results from it Taxus VI stent clinical trial.
DYAX -34.7% after reporting that the FDA has advised the company that INDs for its recombinant protein DX-88 have been placed on clinical hold.
SWFT +16.0% after raising 2Q guidance substantially, announcing $40M stock buyback and Legg Mason upgrade to Buy.
TEN +16.85% after withdrawing secondary offering.
OCR +6.0% after multiple positive comments from analysts on NeighborCare acquisition.
BOBE -10.0% after lowering 1Q/05 guidance and downgrade to Underperform by Whitaker Securities.
IPMT -7.9% after multiple analyst downgrades.
Economic Data
Existing Home Sales for May came in at 6.64M versus expectations of 6.46M and 6.48M in April.
Consumer Confidence for May 93.2 versus expectations of 94.0 and 93.0 in April.
Recommendations
PFG cut to Underperform at JP Morgan. CVX raised to Buy at Deutsche Bank, target $99. ADP raised to Overweight at Morgan Stanley, target $61. EFX cut to Underweight at Morgan Stanley. MANH rated Outperform at CSFB, target $33. OCR raised to Outperform at Schwab SoundView, target $50. LMT rated Buy at Legg Mason, target $64. RTN rated Buy at Legg Mason, target $42. Goldman Sachs reiterated Outperform on MDT. Goldman downgraded CVH to Underperform. Citi SmithBarney said it favors GE over 3M. Citi said to Buy MO and RJR on weakness. Citi reiterated Buy on MAR, target $58. Citi said recent US semiconductor purchasing manager's survey is positive for LLTC, ADI, TXN and MXIM. Citi also likes INTC and CY at current levels. Citi reiterated Buy on UNM, target $20. Citi reiterated Buy on MDT, target $59. Goldman reiterated Outperform on DELL, target $42.
Mid-day News
U.S. stocks are higher mid-day led by homebuilders and airlines as energy prices and interest rates fall. Russia will enter the World Trade Organization in 2007, the Itar-Tass news service reported. Linux users are adopting a way to track contributions to the operating system, a process that may head off future disputes about who added what, the Wall Street Journal reported. Ford may cut production of sport-utility vehicles during the third quarter because of slow sales, Dow Jones Newswires reported. Cisco introduced a faster router to help retake market share from Juniper, Reuters reported. Trump Hotels & Casino Resorts is expected to make a $73.1M interest payment that was due May 1 to avoid default, the Star-Ledger reported. Harvard University's student-run sex magazine, H Bomb, made its debut this morning to students and newsstands around the Cambridge, Mass. campus, the Boston Globe reported. Russia will seek to increase oil exports amid higher prices, Interfax news service reported. TV political ads in the 2004 presidential election campaign have been filled with exaggerations, leaving voters with distorted impressions of both President Bush and Senator Kerry, the NY Times reported. The world's seven most industrialized nations and Russia expect the world economy to growth at a strong pace next year, the Financial Times reported. A multinational force will be needed in Iraq "for months, rather than years," as the country develops its own military to maintain security, Iraqi Defense Minister Allawi said today. SBC Communications and the Communications Workers of America agreed on a five-year contract that guarantees the jobs of 100,000 employees, Bloomberg reported.
BOTTOM LINE: The Portfolio is having another good day today as a few of my biotech, basic material and semi-equipment longs post solid gains. I took profits this morning in one of my basic material longs and bought PETS. I am using a $6.50 stop-loss on the position. The Portfolio is still 125% net long. A high put/call ratio, falling interest rates/energy prices and significant outperformance by small-caps leads me to believe today's rally is sustainable and may improve this afternoon.
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