S&P 500 1,115.14 +.07%
NASDAQ 1,931.66 -.27%
Leading Sectors
Homebuilders +2.33%
HMO's +1.96%
Iron/Steel +1.59%
Lagging Sectors
Tobacco -1.01%
Software -1.77%
Airlines -4.02%
Other
Crude Oil 39.66 +.30%
Natural Gas 5.92 +.23%
Gold 402.70 +.10%
Base Metals 111.94 -.48%
U.S. Dollar 87.86 +.54%
10-Yr. T-note Yield 4.47% +.57%
VIX 14.46 -3.34%
Put/Call .78 -34.45%
NYSE Arms .87 -35.56%
After-hours Movers
INTC -4.21% after meeting 2Q estimates, lowering 04 gross margin estimtate and reiterating 3Q forecast.
JNPR +10.73% after beating 2Q forecast substantially and announcing $250m share buy-back.
Recommendations
Goldman Sachs reiterated Outperform on MER and BAC. Goldman downgraded AG to Underperform.
After-hours News
U.S. stocks finished mixed today as investors feared making big bets ahead of Intel and Juniper's earnings reports. After the close, an Iraqi group calling itself al-Tawhid wa al-Jihad said it executed one of two Bulgarian truck drivers it took hostage last week, Bloomberg reported. Democrats will prevent a proposed constitutional amendment to ban same-sex marriage from coming to a vote in the U.S. Senate, Minority Leader Tom Daschle said. The dollar had the biggest gain against the euro in two weeks and advanced against the yen after the U.S. trade deficit narrowed for the first time in six months as exports surged to a record, Bloomberg reported. Sales at Juniper Networks rose 86% to $306.9 million in the second-quarter, the fastest pace in three years, Bloomberg said. Intel said second-quarter earnings almost doubled to the highest in four years, however profit margins may be narrower-than-expected this quarter, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly lower today and I did not trade in the afternoon, leaving market exposure at 25% net short. The Nasdaq after-hours futures are down 12.0 as investors are paying more attention to Intel's slightly disappointing quarter than to Juniper's exceptional report. Energy prices rose in the afternoon and investor complacency remains too high.
Tuesday, July 13, 2004
Mid-day Update
S&P 500 1,113.84 -.05%
NASDAQ 1,933.84 -.16%
Leading Sectors
Homebuilders +2.64%
HMO's +1.86%
Iron/Steel +.98%
Lagging Sectors
I-Banks -1.12%
Software -1.48%
Airlines -2.62%
Other
Crude Oil 39.45 -.55%
Natural Gas 5.90 +.82%
Gold 402.00 -1.57%
Base Metals 111.94 -.48%
U.S. Dollar 88.01 +.71%
10-Yr. T-note Yield 4.49% +1.01%
VIX 14.78 -1.20%
Put/Call .72 -39.50%
NYSE Arms .92 -31.85%
Market Movers
RHAT -21.2% after saying it will restate three years of sales and profit to correct accounting for subscription revenue.
ADTN -12.5% after meeting 2Q estimates.
FIC -21.5% after lowering 3Q and 4Q guidance substantially and multiple downgrades.
SCCS -26.3% after lowering 2Q and 04 forecast and multiple downgrades.
OPTN +21.9% after raising 2Q and 04 guidance.
FAST +8.7% after exceeding 2Q estimates.
MDC +6.8% after beating 2Q estimates substantially.
STLY +7.2% after beating 2Q estimates and raising 3Q and 04 guidance.
CYT +6.2% after CSFB upgrade to Outperform from Neutral.
CNJ +9.7% after saying Moulin Intl. revised its bid to buy it to $25/share.
NAP -10.8% after saying Bank of America would acquire it for $1.4B.
AGN -7.4% after saying its acne drug Tazoral failed to win the recommendation of a FDA panel as a treatment for psoriasis.
STT -8.6% after meeting 2Q estimates, but giving cautious 2nd half guidance.
TZOO -11.6% on profit-taking after strong 2Q report.
Economic Data
Trade Balance for May came in at -$46.0B versus an estimate of -$48.3B and -$48.1B in April.
Recommendations
ARM raised to Buy at UBS, target $25. IBM raised to Overweight at Morgan Stanley, target $100. HSIC rated Overweight at Morgan Stanley, target $74. PHCC rated Underweight at Morgan Stanley. JKHY rated Outperform at CSFB, target $24. CYT raised to Outperform at CSFB, target $54. YHOO rated Buy at Bank of America, target $39. AMSG rated Buy at Bank of America, target $30. SMBI rated Buy at Bank of America, target $22. SLNK cut to Underweight at JP Morgan. AAP rated new Buy at Oppenheimer. Goldman Sachs reiterated Attractive view of Paper stocks, favorites are IP, SPP and DTC. Goldman reiterated Underweight on LSI, TLAB, DO and S. Goldman reiterated Overweight on ZION, CSCO, ACN, MDT, MER, PFGC, DELL, CTSH and TPX. Citi SmithBarney reiterated Buy on GCI, target $95. Citi reiterated Buy on MTB, target $102.00.
Mid-day News
U.S. stocks are modestly lower mid-day on continuing earnings worries and rising interest rates. Google plans to introduce a function that allows users to comb the Web for audio and video clips, the NY Post reported. Citigroup will transfer more than 1,000 employees to New Jersey from Lower Manhattan, raising concerns about the recovery of downtown New York after the Sept. 11 attacks, the NY Times reported. Baghdad police arrested 527 suspects in a crackdown on criminals in the Iraqi capital, Sky News reported. Median LA County home prices rose 32% to $414,000 in June, the biggest increase in at least 15 years, the LA Times reported. Mike Ditka, the former Chicago Bears head coach, is considering joining the race to represent Illinois as a Republican in the U.S. Senate, the Chicago Sun-Times reported. Seventeen suspected members of the Ansar al-Islam terrorist group were captured in the Iraqi city of Kirkuk in raids over the last three days, Agence France-Presse said. Delta Air said it plans a total $1.65 billion in charges for the second quarter because of income-tax deferrals and a settlement for pilot pensions, Bloomberg reported. Oil demand will rise by 2.2% next year, almost double the average annual rate in the 90's, because of rising consumption from strong economic growth in China and the U.S., the IEA said. A Manhattan apartment's average price for the first time topped $1 million, the highest of any U.S. city, as New York's economic growth outpaced the nation's, Bloomberg reported. The U.S. trade deficit narrowed in May for the first time in six months as exports surged to a record, led by aircraft, engines and other capital goods, Bloomberg reported. President Bush leads Senator Kerry by 15 percentage points in North Carolina, the home state of Kerry's ticket mate, John Edwards, according to a poll by USA Today and CNN. Duke Energy, the largest U.S. utility owner, agreed to pay $207.5 million to settle claims that the company overcharged customers for power during the western energy crisis of 2000 and 2001, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower today as my medical and technology distribution shorts are rising more than my oil service and software shorts are falling. I exited a couple of shorts and longs this morning as I reposition the Portfolio, leaving market exposure at 25% net short. I expect U.S. stocks to fall modestly into the afternoon on rising interest rates and fears over technology reports after the close. Moreover, the Put/Call and Arms readings are plunging which also points to a weaker close.
NASDAQ 1,933.84 -.16%
Leading Sectors
Homebuilders +2.64%
HMO's +1.86%
Iron/Steel +.98%
Lagging Sectors
I-Banks -1.12%
Software -1.48%
Airlines -2.62%
Other
Crude Oil 39.45 -.55%
Natural Gas 5.90 +.82%
Gold 402.00 -1.57%
Base Metals 111.94 -.48%
U.S. Dollar 88.01 +.71%
10-Yr. T-note Yield 4.49% +1.01%
VIX 14.78 -1.20%
Put/Call .72 -39.50%
NYSE Arms .92 -31.85%
Market Movers
RHAT -21.2% after saying it will restate three years of sales and profit to correct accounting for subscription revenue.
ADTN -12.5% after meeting 2Q estimates.
FIC -21.5% after lowering 3Q and 4Q guidance substantially and multiple downgrades.
SCCS -26.3% after lowering 2Q and 04 forecast and multiple downgrades.
OPTN +21.9% after raising 2Q and 04 guidance.
FAST +8.7% after exceeding 2Q estimates.
MDC +6.8% after beating 2Q estimates substantially.
STLY +7.2% after beating 2Q estimates and raising 3Q and 04 guidance.
CYT +6.2% after CSFB upgrade to Outperform from Neutral.
CNJ +9.7% after saying Moulin Intl. revised its bid to buy it to $25/share.
NAP -10.8% after saying Bank of America would acquire it for $1.4B.
AGN -7.4% after saying its acne drug Tazoral failed to win the recommendation of a FDA panel as a treatment for psoriasis.
STT -8.6% after meeting 2Q estimates, but giving cautious 2nd half guidance.
TZOO -11.6% on profit-taking after strong 2Q report.
Economic Data
Trade Balance for May came in at -$46.0B versus an estimate of -$48.3B and -$48.1B in April.
Recommendations
ARM raised to Buy at UBS, target $25. IBM raised to Overweight at Morgan Stanley, target $100. HSIC rated Overweight at Morgan Stanley, target $74. PHCC rated Underweight at Morgan Stanley. JKHY rated Outperform at CSFB, target $24. CYT raised to Outperform at CSFB, target $54. YHOO rated Buy at Bank of America, target $39. AMSG rated Buy at Bank of America, target $30. SMBI rated Buy at Bank of America, target $22. SLNK cut to Underweight at JP Morgan. AAP rated new Buy at Oppenheimer. Goldman Sachs reiterated Attractive view of Paper stocks, favorites are IP, SPP and DTC. Goldman reiterated Underweight on LSI, TLAB, DO and S. Goldman reiterated Overweight on ZION, CSCO, ACN, MDT, MER, PFGC, DELL, CTSH and TPX. Citi SmithBarney reiterated Buy on GCI, target $95. Citi reiterated Buy on MTB, target $102.00.
Mid-day News
U.S. stocks are modestly lower mid-day on continuing earnings worries and rising interest rates. Google plans to introduce a function that allows users to comb the Web for audio and video clips, the NY Post reported. Citigroup will transfer more than 1,000 employees to New Jersey from Lower Manhattan, raising concerns about the recovery of downtown New York after the Sept. 11 attacks, the NY Times reported. Baghdad police arrested 527 suspects in a crackdown on criminals in the Iraqi capital, Sky News reported. Median LA County home prices rose 32% to $414,000 in June, the biggest increase in at least 15 years, the LA Times reported. Mike Ditka, the former Chicago Bears head coach, is considering joining the race to represent Illinois as a Republican in the U.S. Senate, the Chicago Sun-Times reported. Seventeen suspected members of the Ansar al-Islam terrorist group were captured in the Iraqi city of Kirkuk in raids over the last three days, Agence France-Presse said. Delta Air said it plans a total $1.65 billion in charges for the second quarter because of income-tax deferrals and a settlement for pilot pensions, Bloomberg reported. Oil demand will rise by 2.2% next year, almost double the average annual rate in the 90's, because of rising consumption from strong economic growth in China and the U.S., the IEA said. A Manhattan apartment's average price for the first time topped $1 million, the highest of any U.S. city, as New York's economic growth outpaced the nation's, Bloomberg reported. The U.S. trade deficit narrowed in May for the first time in six months as exports surged to a record, led by aircraft, engines and other capital goods, Bloomberg reported. President Bush leads Senator Kerry by 15 percentage points in North Carolina, the home state of Kerry's ticket mate, John Edwards, according to a poll by USA Today and CNN. Duke Energy, the largest U.S. utility owner, agreed to pay $207.5 million to settle claims that the company overcharged customers for power during the western energy crisis of 2000 and 2001, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower today as my medical and technology distribution shorts are rising more than my oil service and software shorts are falling. I exited a couple of shorts and longs this morning as I reposition the Portfolio, leaving market exposure at 25% net short. I expect U.S. stocks to fall modestly into the afternoon on rising interest rates and fears over technology reports after the close. Moreover, the Put/Call and Arms readings are plunging which also points to a weaker close.
Tuesday Watch
Earnings of Note
Company/Estimate
ADTN/.26
ASO/.46
FAST/.41
GCI/1.30
INTC/.27
JEF/.44
JNJ/.79
JNPR/.04
MER/1.10
PCP/.74
RJF/.48
STT/.68
TZOO/.06
YUM/.52
Splits
SLXP 3-for-2
Economic Data
Trade Balance in May estimated at -$48.3B versus -$48.3B in April.
Monthly Budget Statement for June estimated at $16.0B versus $21.2B in May.
Recommendations
Goldman Sachs reiterated Outperform on SSI, TPX and DELL. Goldman reiterated Underperform on DO. Tom Kurlak, writing for TheStreet.com, said semi-equipment buying this year will total about 20% of semi industry revenue, in line with the industry's 20-year average and only half of the level at the last cycle peak.
Late-Night News
Asian indices are mostly lower on continuing fears of technology sector overcapacity. Goldman Sachs agreed to invest $40 million in a privately owned pharmacy chain in China, aiming to turn it into the biggest drug retailer in China, the South China Morning Post reported. IBM will Tuesday start selling a range of computers it claims are two years ahead of products offered by other software markets, the Financial Times reported. Some flat-panel display makers in Taiwan are expected to post "tens of billions" of dollars in losses in 2005 as plant expansions cause overcapacity, Commercial Times reported. Foreign investment into China rose 12% in the first half, climbing as companies including Sony and General Motors seek to benefit from booming domestic demand, Bloomberg said.
Late-Night Trading
Asian Indices are -1.0% to +.25% on average.
S&P 500 indicated -.01%.
NASDAQ 100 indicated -.07%.
BOTTOM LINE: I expect U.S. stocks to open mixed in the morning as weakness in Asia offsets falling oil prices and better earnings reports. A strong rally is unlikely ahead of Intel and Juniper's reports after the close. The Portfolio is 25% net short heading into tomorrow.
Company/Estimate
ADTN/.26
ASO/.46
FAST/.41
GCI/1.30
INTC/.27
JEF/.44
JNJ/.79
JNPR/.04
MER/1.10
PCP/.74
RJF/.48
STT/.68
TZOO/.06
YUM/.52
Splits
SLXP 3-for-2
Economic Data
Trade Balance in May estimated at -$48.3B versus -$48.3B in April.
Monthly Budget Statement for June estimated at $16.0B versus $21.2B in May.
Recommendations
Goldman Sachs reiterated Outperform on SSI, TPX and DELL. Goldman reiterated Underperform on DO. Tom Kurlak, writing for TheStreet.com, said semi-equipment buying this year will total about 20% of semi industry revenue, in line with the industry's 20-year average and only half of the level at the last cycle peak.
Late-Night News
Asian indices are mostly lower on continuing fears of technology sector overcapacity. Goldman Sachs agreed to invest $40 million in a privately owned pharmacy chain in China, aiming to turn it into the biggest drug retailer in China, the South China Morning Post reported. IBM will Tuesday start selling a range of computers it claims are two years ahead of products offered by other software markets, the Financial Times reported. Some flat-panel display makers in Taiwan are expected to post "tens of billions" of dollars in losses in 2005 as plant expansions cause overcapacity, Commercial Times reported. Foreign investment into China rose 12% in the first half, climbing as companies including Sony and General Motors seek to benefit from booming domestic demand, Bloomberg said.
Late-Night Trading
Asian Indices are -1.0% to +.25% on average.
S&P 500 indicated -.01%.
NASDAQ 100 indicated -.07%.
BOTTOM LINE: I expect U.S. stocks to open mixed in the morning as weakness in Asia offsets falling oil prices and better earnings reports. A strong rally is unlikely ahead of Intel and Juniper's reports after the close. The Portfolio is 25% net short heading into tomorrow.
Monday, July 12, 2004
Monday Close
S&P 500 1,114.35 +.14%
NASDAQ 1,936.92 -.48%
Leading Sectors
Airlines +1.63%
Restaurants +.91%
Insurance +.80%
Lagging Sectors
Disk Drives -1.73%
Networking -2.0%
Semis -2.21%
Other
Crude Oil 39.31 -.48%
Natural Gas 5.88 +.55%
Gold 408.00 -.10%
Base Metals 112.48 -.75%
U.S. Dollar 87.36 -.07%
10-Yr. T-note Yield 4.44% -.26%
VIX 14.96 -5.20%
Put/Call 1.19 +60.81%
NYSE Arms 1.35 +32.35%
After-hours Movers
PECS +8.68% after announcing that the Dept. of Homeland Security has awarded the company two task orders with $5.2 million.
LSI +4.04% after cutting 2Q revenue forecast, but maintaining profit guidance and saying second half of year would be stronger than first half.
SCSS -25.33% after lowering 2Q and 04 forecast.
FIC -15.15% after lowering 3Q and 4Q guidance substantially.
OO -8.29% after lowering 2Q and 04 forecast.
AGN -5.99% after saying its acne drug Tazoral failed to win the recommendation of a FDA panel as a treatment for psoriasis.
Recommendations
Goldman Sachs reiterated Outperform on DIS, HD, GILD and BBY.
After-hours News
U.S. stocks finished mixed today as crude oil futures fell from a five-week high on speculation surging U.S. fuel imports will meet record demand. After the close, two workers at Chicago's O'Hare International Airport were injured and travelers were delayed after an explosion in an electrical vault knocked out power in two terminals, the Chicago Tribune said. Yahoo! said it bought privately held e-mail software developer Oddpost for an undisclosed amount Friday, CBS MarketWatch.com reported. The U.S. Congress probably won't pass legislation this year to permit greater federal funding of stem-cell research and allow imports of cheaper medicines, Senate Majority Leader Bill Frist said.
BOTTOM LINE: The Portfolio finished lower today as my shorts were mostly higher and longs were mostly lower. I exited a few short positions in the afternoon as they hit stop-losses and added a couple of new ones, leaving the Portfolio with 25% net short market exposure. One of my new shorts is APA and I am using a $46.5 stop-loss on this position. The continuing fall in interest rates and the reversal in crude oil prices this afternoon are welcome developments. As well, Put/Call and Arms readings remained relatively high throughout the day. However, the falling VIX and relatively high AAII % Bulls reading are still showing too much investor complacency.
NASDAQ 1,936.92 -.48%
Leading Sectors
Airlines +1.63%
Restaurants +.91%
Insurance +.80%
Lagging Sectors
Disk Drives -1.73%
Networking -2.0%
Semis -2.21%
Other
Crude Oil 39.31 -.48%
Natural Gas 5.88 +.55%
Gold 408.00 -.10%
Base Metals 112.48 -.75%
U.S. Dollar 87.36 -.07%
10-Yr. T-note Yield 4.44% -.26%
VIX 14.96 -5.20%
Put/Call 1.19 +60.81%
NYSE Arms 1.35 +32.35%
After-hours Movers
PECS +8.68% after announcing that the Dept. of Homeland Security has awarded the company two task orders with $5.2 million.
LSI +4.04% after cutting 2Q revenue forecast, but maintaining profit guidance and saying second half of year would be stronger than first half.
SCSS -25.33% after lowering 2Q and 04 forecast.
FIC -15.15% after lowering 3Q and 4Q guidance substantially.
OO -8.29% after lowering 2Q and 04 forecast.
AGN -5.99% after saying its acne drug Tazoral failed to win the recommendation of a FDA panel as a treatment for psoriasis.
Recommendations
Goldman Sachs reiterated Outperform on DIS, HD, GILD and BBY.
After-hours News
U.S. stocks finished mixed today as crude oil futures fell from a five-week high on speculation surging U.S. fuel imports will meet record demand. After the close, two workers at Chicago's O'Hare International Airport were injured and travelers were delayed after an explosion in an electrical vault knocked out power in two terminals, the Chicago Tribune said. Yahoo! said it bought privately held e-mail software developer Oddpost for an undisclosed amount Friday, CBS MarketWatch.com reported. The U.S. Congress probably won't pass legislation this year to permit greater federal funding of stem-cell research and allow imports of cheaper medicines, Senate Majority Leader Bill Frist said.
BOTTOM LINE: The Portfolio finished lower today as my shorts were mostly higher and longs were mostly lower. I exited a few short positions in the afternoon as they hit stop-losses and added a couple of new ones, leaving the Portfolio with 25% net short market exposure. One of my new shorts is APA and I am using a $46.5 stop-loss on this position. The continuing fall in interest rates and the reversal in crude oil prices this afternoon are welcome developments. As well, Put/Call and Arms readings remained relatively high throughout the day. However, the falling VIX and relatively high AAII % Bulls reading are still showing too much investor complacency.
Mid-day Update
S&P 500 1,108.39 -.41%
NASDAQ 1,924.72 -1.11%
Leading Sectors
Airlines +.56%
Telecom +.38%
Insurance +.26%
Lagging Sectors
Disk Drives -2.05%
Networking -2.32%
Semis -3.22%
Other
Crude Oil 40.46 +1.25%
Natural Gas 6.02 -1.97%
Gold 407.40 -.12%
Base Metals 112.48 -.75%
U.S. Dollar 87.38 -.05%
10-Yr. T-note Yield 4.43% -.44%
VIX 15.17 -3.87%
Put/Call 1.20 +62.16%
NYSE Arms 1.52 +49.02%
Market Movers
NVLS -4.3% after beating 2Q estimates and raising 3Q guidance.
MCIA +9.7% after saying Leucadia National is seeking U.S. government approval to buy a controlling stake in the company.
*Semis down across the board on Merrill downgrade of sector.
NCR +10.5% after raising 2Q forecast substantially.
CALM +13.7% after reporting strong 4Q results.
TZOO +5.8% after saying it is entering the cost-per-click search business with the launch of SuperSearch, a tool that allows consumers to search multiple travel Web sites.
MTB +5.5% after beating 2Q estimates and reaffirming 04 forecast.
CENT -18.8% after cutting 3Q and 04 forecast.
ELAB -11.9% after downgrade to Sell at ThinkEquity Partners.
ZBRA -5.6% after Thomas Weisel downgrade to Underperform.
ESI -6.3% after saying President resigned.
Economic Data
None of note.
Recommendations
CRL raised to Buy at UBS, target $55. FON raised to Buy at Legg Mason, target $23. NHP raised to Buy at Legg Mason. EMC raised to Outperform at Thomas Weisel. NNI raised to Overweight at Morgan Stanley, target $25. Merrill Lynch cut its rating on the global chip industry, saying earnings growth at companies such as Intel and Taiwan Semi may slow as customers try to reduce inventories, Bloomberg reported. ATYT, LSI, MCHP, ISIL, NVDA, TXN, PMCS, IDTI, VTSS, TER, AEIS, ESIO, DPMI, ATMI and KLIC cut to Sell at Merrill. LNET rated Outperform at Bear Stearns, target $24. Goldman Sachs reiterated Outperform on MDT, CZN, DIS, GILD, CTSH and GE. Citi SmithBarney said Buy BAC and TCB for near-term trade. Citi said to Buy EOG, target $75. Citi reiterated Buy on JPM, target $50. Citi reiterated Buy on ACLS, target $15. Citi reiterated Buy on ACS, target $70. Citi reiterated Buy on RTLX, target $27.50. Citi reiterated Buy on GE, target $38.
Mid-day News
U.S. stocks are lower mid-day on continuing weakness in the technology sector after a Merrill Lynch downgrade of semiconductor shares. China's coal consumption rose faster than domestic production in the first half this year, China Central Television reported. Anarchists planning to disrupt next month's Republican National Convention in New York say they will seek to fool bomb-sniffing dogs on trains bound for Manhattan's Penn Station with samples of gunpowder or ammonium nitrate-laced tablets, the NY Daily News reported. Applied Materials CEO Splinter told CNBC that confidence continues to grow in the semiconductor industry, Bloomberg reported. Cendant Corp.'s Century 21 Real Estate division is reporting very strong sales in most marketplaces, CEO Kunz told CNBC. Ford Motor plans to spend $750 million at an Atlanta plant to produce new Lincoln sedans, Automotive News reported. Wendy's is set to overtake Burger King as the second-largest U.S. hamburger-restaurant company by sales behind McDonald's, the AP reported. Lea Fastow, the wife of Enron's former CFO, began a one-year prison term today for her role in the accounting fraud that forced the company into bankruptcy, Bloomberg said. Athens and other parts of southern Greece were blacked out this afternoon, closing the subway system and knocking out traffic lights at a time when organizers are seeking to ensure electricity supplies for next month's Olympics, Bloomberg said. Eli Lilly and marketing partner Icos started offering men free Cialis impotence pills, three months after Pfizer began a discount program for its top-selling Viagra, Bloomberg said. Union Pacific and other U.S. railroads have more business than they can handle in a strengthening economy, causing delays that cut Arch Coal's profit and forced Dow Chemical to idle a Michigan plant, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower today as my Chinese ADR and Internet longs are down a little more than my oil service and software shorts. I added a few new shorts this morning, bringing the Portfolio's market exposure to 25% net short. One of my new shorts is CMN and I am using a $26.75 stop-loss on the position. Investor sentiment towards technology stocks continues to be overly pessimistic. Novellus Systems reported better-than-expected earnings and raised guidance, yet the stock is down. As well, Applied Materials' CEO made very positive comments regarding current and future business conditions. However, the semi sector is down substantially as investors only focus on Merrill's downgrade of the sector. Longer-term investors should use any extreme weakness in the coming weeks to add to favorite semi long positions as I believe they will rally substantially in the fourth quarter. It is good to see the Put/Call and Arms readings soaring, however rising oil prices will likely prevent any significant rally from occurring today.
NASDAQ 1,924.72 -1.11%
Leading Sectors
Airlines +.56%
Telecom +.38%
Insurance +.26%
Lagging Sectors
Disk Drives -2.05%
Networking -2.32%
Semis -3.22%
Other
Crude Oil 40.46 +1.25%
Natural Gas 6.02 -1.97%
Gold 407.40 -.12%
Base Metals 112.48 -.75%
U.S. Dollar 87.38 -.05%
10-Yr. T-note Yield 4.43% -.44%
VIX 15.17 -3.87%
Put/Call 1.20 +62.16%
NYSE Arms 1.52 +49.02%
Market Movers
NVLS -4.3% after beating 2Q estimates and raising 3Q guidance.
MCIA +9.7% after saying Leucadia National is seeking U.S. government approval to buy a controlling stake in the company.
*Semis down across the board on Merrill downgrade of sector.
NCR +10.5% after raising 2Q forecast substantially.
CALM +13.7% after reporting strong 4Q results.
TZOO +5.8% after saying it is entering the cost-per-click search business with the launch of SuperSearch, a tool that allows consumers to search multiple travel Web sites.
MTB +5.5% after beating 2Q estimates and reaffirming 04 forecast.
CENT -18.8% after cutting 3Q and 04 forecast.
ELAB -11.9% after downgrade to Sell at ThinkEquity Partners.
ZBRA -5.6% after Thomas Weisel downgrade to Underperform.
ESI -6.3% after saying President resigned.
Economic Data
None of note.
Recommendations
CRL raised to Buy at UBS, target $55. FON raised to Buy at Legg Mason, target $23. NHP raised to Buy at Legg Mason. EMC raised to Outperform at Thomas Weisel. NNI raised to Overweight at Morgan Stanley, target $25. Merrill Lynch cut its rating on the global chip industry, saying earnings growth at companies such as Intel and Taiwan Semi may slow as customers try to reduce inventories, Bloomberg reported. ATYT, LSI, MCHP, ISIL, NVDA, TXN, PMCS, IDTI, VTSS, TER, AEIS, ESIO, DPMI, ATMI and KLIC cut to Sell at Merrill. LNET rated Outperform at Bear Stearns, target $24. Goldman Sachs reiterated Outperform on MDT, CZN, DIS, GILD, CTSH and GE. Citi SmithBarney said Buy BAC and TCB for near-term trade. Citi said to Buy EOG, target $75. Citi reiterated Buy on JPM, target $50. Citi reiterated Buy on ACLS, target $15. Citi reiterated Buy on ACS, target $70. Citi reiterated Buy on RTLX, target $27.50. Citi reiterated Buy on GE, target $38.
Mid-day News
U.S. stocks are lower mid-day on continuing weakness in the technology sector after a Merrill Lynch downgrade of semiconductor shares. China's coal consumption rose faster than domestic production in the first half this year, China Central Television reported. Anarchists planning to disrupt next month's Republican National Convention in New York say they will seek to fool bomb-sniffing dogs on trains bound for Manhattan's Penn Station with samples of gunpowder or ammonium nitrate-laced tablets, the NY Daily News reported. Applied Materials CEO Splinter told CNBC that confidence continues to grow in the semiconductor industry, Bloomberg reported. Cendant Corp.'s Century 21 Real Estate division is reporting very strong sales in most marketplaces, CEO Kunz told CNBC. Ford Motor plans to spend $750 million at an Atlanta plant to produce new Lincoln sedans, Automotive News reported. Wendy's is set to overtake Burger King as the second-largest U.S. hamburger-restaurant company by sales behind McDonald's, the AP reported. Lea Fastow, the wife of Enron's former CFO, began a one-year prison term today for her role in the accounting fraud that forced the company into bankruptcy, Bloomberg said. Athens and other parts of southern Greece were blacked out this afternoon, closing the subway system and knocking out traffic lights at a time when organizers are seeking to ensure electricity supplies for next month's Olympics, Bloomberg said. Eli Lilly and marketing partner Icos started offering men free Cialis impotence pills, three months after Pfizer began a discount program for its top-selling Viagra, Bloomberg said. Union Pacific and other U.S. railroads have more business than they can handle in a strengthening economy, causing delays that cut Arch Coal's profit and forced Dow Chemical to idle a Michigan plant, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower today as my Chinese ADR and Internet longs are down a little more than my oil service and software shorts. I added a few new shorts this morning, bringing the Portfolio's market exposure to 25% net short. One of my new shorts is CMN and I am using a $26.75 stop-loss on the position. Investor sentiment towards technology stocks continues to be overly pessimistic. Novellus Systems reported better-than-expected earnings and raised guidance, yet the stock is down. As well, Applied Materials' CEO made very positive comments regarding current and future business conditions. However, the semi sector is down substantially as investors only focus on Merrill's downgrade of the sector. Longer-term investors should use any extreme weakness in the coming weeks to add to favorite semi long positions as I believe they will rally substantially in the fourth quarter. It is good to see the Put/Call and Arms readings soaring, however rising oil prices will likely prevent any significant rally from occurring today.
Monday Watch
Earnings of Note
Company/Estimate
CTAS/.41
MDC/1.98
NVLS/.26
TSCO/.75
STI/1.26
MTB/1.45
HELE/.45
Splits
URBN 2-for-1
Economic Data
None of note.
Weekend Recommendations
Forbes on Fox had guests that were positive on GILD, MWY, SEBL, SAP and mixed on BNI, SUNW. Bulls and Bears had guests that were positive on LSS, SYY and mixed on VLCCF, ELY, KKD. Cashin' In had guests that were positive on TNP, DHB and AFR. Louis Rukeyser's Wall Street had guests that were positive on SPLS, LOW, GE, WTW, ISCA, WSH, DNR, ASKJ, CVD, MER, JPM, CSCO, MOT and INTC. Wall St. Week w/Fortune had guests that were positive on AIG, CEPH, BLL, SAFM, SWY, DIS, C and SYMC. Barron's had positive comments on VLO, BTU, TRW, LMT and negative comments on RDC, UCL. Goldman Sachs reiterated Outperform on HD, BBY, SII, AGN, GE, SAP and Underperform on CL, UIS, AKS.
Weekend News
Volkswagen AG, Europe's biggest carmaker, will make an announcement soon that it won't be able to meet its 2004 profit forecast, German weekly magazine Spiegel reported. Democratic vice presidential candidate John Edwards earned almost $27 million as a trial lawyer in the four years before joining the Senate in 1999, and set up a shelter that helped him avoid paying $519,112 in Medicare taxes, the NY Times reported. The wife of Senator Kerry hosted former Enron Corp. Chairman Ken Lay at the couple's home 10 months after the energy company's collapse, the NY Times reported. Philadelphia International Airport is on pace to set a record for passenger traffic this year, helped by lower airfares and waning terrorism fears, the Philadelphia Inquirer reported. Los Alamos National Lab, a New Mexico nuclear weapons research facility, has lost two computer disks containing classified information, the third incident in eight months, the LA Times reported. Iraqi resistance fighters and foreign Islamic militants appear to be growing divided over strategy and goals, the NY Times reported. Automotive air bags have prevented the deaths of about 15,000 people in U.S. accidents over the past 20 years, the AP reported. OPEC may decide in its next meeting to increase production beyond the 500,000 barrels of oil a day members have already agreed to add in August if prices remain high, Bloomberg reported. Vodafone Group may increase its stock buyback to as much as 10% of the shares outstanding, the Sunday Times reported. Half of Europe's Internet-connected homes will have high-speed broadband connections by 2006, enabling new services such as Internet t.v. to be commercially viable, The Business newspaper reported. Saudi militants who entered Iraq to fight the U.S. military are returning home to plan strikes against the Saudi government and Western interests in the country, the Washington Post said. Shares of Domino's pizza may debut on the NYSE as soon as Tuesday after the company sells stock to the public to raise as much as $400 million, the Washington Post said. GE plans a research agreement with Applera Corp's Celera Genomics Group to develop cancer testing, the Financial Times said. North Korea may be selling heroin, methamphetamines and other drugs to fund ballistic missile production, Kyodo News said.
Late-Night Trading
Asian indices are mixed, -1.0% to .75% on average.
S&P 500 indicated -.13%.
NASDAQ 100 indicated -.35%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on falling energy prices, strength in Japan and no major terror attacks over the weekend. The Portfolio is up substantially for the year, thus I will try and maintain a relatively conservative stance over the coming weeks to preserve profits. The Portfolio is market neutral heading into the week.
Company/Estimate
CTAS/.41
MDC/1.98
NVLS/.26
TSCO/.75
STI/1.26
MTB/1.45
HELE/.45
Splits
URBN 2-for-1
Economic Data
None of note.
Weekend Recommendations
Forbes on Fox had guests that were positive on GILD, MWY, SEBL, SAP and mixed on BNI, SUNW. Bulls and Bears had guests that were positive on LSS, SYY and mixed on VLCCF, ELY, KKD. Cashin' In had guests that were positive on TNP, DHB and AFR. Louis Rukeyser's Wall Street had guests that were positive on SPLS, LOW, GE, WTW, ISCA, WSH, DNR, ASKJ, CVD, MER, JPM, CSCO, MOT and INTC. Wall St. Week w/Fortune had guests that were positive on AIG, CEPH, BLL, SAFM, SWY, DIS, C and SYMC. Barron's had positive comments on VLO, BTU, TRW, LMT and negative comments on RDC, UCL. Goldman Sachs reiterated Outperform on HD, BBY, SII, AGN, GE, SAP and Underperform on CL, UIS, AKS.
Weekend News
Volkswagen AG, Europe's biggest carmaker, will make an announcement soon that it won't be able to meet its 2004 profit forecast, German weekly magazine Spiegel reported. Democratic vice presidential candidate John Edwards earned almost $27 million as a trial lawyer in the four years before joining the Senate in 1999, and set up a shelter that helped him avoid paying $519,112 in Medicare taxes, the NY Times reported. The wife of Senator Kerry hosted former Enron Corp. Chairman Ken Lay at the couple's home 10 months after the energy company's collapse, the NY Times reported. Philadelphia International Airport is on pace to set a record for passenger traffic this year, helped by lower airfares and waning terrorism fears, the Philadelphia Inquirer reported. Los Alamos National Lab, a New Mexico nuclear weapons research facility, has lost two computer disks containing classified information, the third incident in eight months, the LA Times reported. Iraqi resistance fighters and foreign Islamic militants appear to be growing divided over strategy and goals, the NY Times reported. Automotive air bags have prevented the deaths of about 15,000 people in U.S. accidents over the past 20 years, the AP reported. OPEC may decide in its next meeting to increase production beyond the 500,000 barrels of oil a day members have already agreed to add in August if prices remain high, Bloomberg reported. Vodafone Group may increase its stock buyback to as much as 10% of the shares outstanding, the Sunday Times reported. Half of Europe's Internet-connected homes will have high-speed broadband connections by 2006, enabling new services such as Internet t.v. to be commercially viable, The Business newspaper reported. Saudi militants who entered Iraq to fight the U.S. military are returning home to plan strikes against the Saudi government and Western interests in the country, the Washington Post said. Shares of Domino's pizza may debut on the NYSE as soon as Tuesday after the company sells stock to the public to raise as much as $400 million, the Washington Post said. GE plans a research agreement with Applera Corp's Celera Genomics Group to develop cancer testing, the Financial Times said. North Korea may be selling heroin, methamphetamines and other drugs to fund ballistic missile production, Kyodo News said.
Late-Night Trading
Asian indices are mixed, -1.0% to .75% on average.
S&P 500 indicated -.13%.
NASDAQ 100 indicated -.35%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on falling energy prices, strength in Japan and no major terror attacks over the weekend. The Portfolio is up substantially for the year, thus I will try and maintain a relatively conservative stance over the coming weeks to preserve profits. The Portfolio is market neutral heading into the week.
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