Thursday Close

S&P 500 1,106.69 -.43%

NASDAQ 1,912.71 -.11%

 

Leading Sectors

Disk Drives +3.72%

Oil Service +2.56%

HMO's +1.81%

 

Lagging Sectors

Telecom -1.28%

Wireless -1.61%

Drugs -1.66%

 

Other

Crude Oil 40.80 -.32%

Natural Gas 5.84 -.02%

Gold 405.00 +.15%

Base Metals 112.52 +.51%

U.S. Dollar 87.92 +.39%

10-Yr. T-note Yield 4.48% unch.

VIX 14.71 +6.90%

Put/Call .82 -11.83%

NYSE Arms 1.76 +26.62%

 

After-hours Movers

RECN +3.21% after beating 4Q estimates.
RMBS +11.45% after beating 2Q estimates and announcing agreement with CDN to deliver portfolio of high-speed serial link solutions.
BSTE +9.65% after boosting 2Q forecast due to continued success in defending its Triage BNP Test franchise.
TSRA +9.3% after boosting 04 guidance.
FARO +7.75% after reaffirming 2Q and 04 forecast.
SYK -3.39% after beating 2Q eps forecast, but slightly missing sales forecast.
HOTT -12.64% after lowering 2Q, 3Q and 4Q estimates.
NFLX -11.72% after missing 2Q eps estimated, but meeting sales estimate and raising 3Q and 4Q estimates.
PMCS -9.96% after beating 2Q eps estimate, but slightly missing sales forecast.

PLXT -10.16% after missing 2Q and lowering 3Q estimates.

 

Recommendations

Goldman Sachs reiterated Outperform on TRB and PFE.

 

After-hours News

U.S. stocks finished modestly lower today as better economic and corporate earnings reports failed to spur investor enthusiasm.  After the close, California air-quality regulators will vote next week on a measure that would put a five-minute limit on the idling of diesel trucks and buses statewide, the San Francisco Chronicle reported.  Two American Indian tribes in Kansas plan to buy land Friday to build a $210 million casino resort, the Kansas City Kansan reported.  IBM said second-quarter sales and profits exceeded expectations as the company sold more consulting services to businesses and governments, Bloomberg reported.  The U.S. dollar advanced against the euro and yen in New York after manufacturing in the northeastern U.S. expanded more than forecast this month, easing concern among some investors that the economy is slowing, Bloomberg said.

 

BOTTOM LINE: The Portfolio finished slightly lower today as my falling retail shorts didn't quite offset my declining biotech longs.  I added a few longs in the afternoon, bringing the Portfolio's market exposure to 25% net long.  One of my new longs is KKD and I am using a $17.75 stop-loss on this position.  Today was disappointing for the bulls as economic reports and earnings reports should have produced a gain for the day.  Election worries and higher oil prices are currently trumping any good news.  Oil prices should subside in the near future while election worries will likely increase for the next several weeks.

Mid-day Update

S&P 500 1,113.13 +.15%
NASDAQ 1,923.51 +.48%

Leading Sectors
Disk Drives +4.59%
Oil Service +2.44%
Computer Boxmakers +1.73%

Lagging Sectors
Banks -.73%
Fashion -.95%
Wireless -1.18%

Other
Crude Oil 40.92 -.53%
Natural Gas 5.85 -2.12%
Gold 405.50 unch.
Base Metals 111.70 -.22%
U.S. Dollar 87.84 +.30%
10-Yr. T-note Yield 4.49% +.22%
VIX 14.0 +1.74%
Put/Call .79 -15.0%
NYSE Arms 1.37 -1.44%

Market Movers
NOK -13.5% after saying third-quarter earnings per share may fall by as much as half and sales will decline as it cuts prices.
AAPL +9.8% after beating 3Q estimates, raising 4Q guidance and multiple upgrades.
OVTI +11.2% after strong SNDK report.
ERICY -5.9% after better-than-expected 2Q on worries over price war with Nokia.
SNDK +23.8% after beating 2Q estimates substantially and raising 3Q forecast.
PLNR +13.4% after beating 3Q estimates, lowering 4Q guidance and multiple upgrades.
FCS +12.1% after missing 2Q estimates but making positive comments regarding 3Q margins.
PPDI +13.12% after beating 2Q estimates and multiple upgrades.
MCS +15.9% after saying La Quinta agreed to buy almost all its hotel assets for about $395 million.
FCFS +14.6% after beating 2Q estimates, raising 04 guidance and announcing 1.6 million share buyback.
GIVN +10.7% on strong second-quarter report.
CEC +11.3% after beating 2Q estimates, raising 3Q/4Q guidance and multiple upgrades.
CNJ +9.0% after Luxottica increased its bid for the company to $495 million, exceeding the offer by rival Moulin International.
CME -5.0% after CFO quit.
SWIR -6.3% after National Bank cut rating to Underperform.
HET -4.7% after agreeing to purchase Caesars for $5.18 billion.
WDFC -9.1% after missing 3Q estimates.

Economic Data
Producer Price Index for June fell .3% versus estimates for .2% rise and a .8% rise in May.
PPI Ex Food & Energy for June rose .2% versus estimates of a .2% rise and a .3% rise in May.
Initial Jobless Claims for last week were 349K versus estimates of 345K and 309K prior week.
Continuing Claims were 2971K versus estimates of 2883K and 2859K prior.
Business Inventories for May rose .4% versus estimates of a .5% rise and a .7% rise in April.
Empire Manufacturing for July came in at 36.54 versus estimates of 27.80 and 29.93 in June.
Industrial Production for June fell .3% versus estimates of a .1% rise and a .9% gain in July.
Capacity Utilization for June was 77.2% versus estimates of 77.7% and 77.6% in May.
Philly Fed for July came in at 36.1 versus estimates of 25.0 and a reading of 28.9 in June.

Recommendations
PLXS cut to Underweight at JP Morgan. CBH cut to Underweight at Morgan Stanley, target $48. PAYX raised to Outperform at CSFB, target $38. ADP raised to Outperform at CSFB, target $48. CZR cut to Underweight at Prudential, target $18. LYO raised to Buy at Bank of America, target $20. ACV raised to Buy at Bank of America, target $56. CHTT raised to Buy at Bank of America, target $36. Goldman reiterated Outperform on AMD, ETN, CSCO, MAR, ATG, KRB, EQT and AIG. Goldman reiterated Underperform on QLGC and MTG. Citi SmithBarney said to Buy ROH, target $47. Citi reiterated Buy on HET, target $63. Citi reiterated Buy on CSCO, JNPR, FDRY, FFIV, RDWR, AXTR and ETS. Citi reiterated Buy on AAPL, target $37. Citi reiterated Sell on KFT, target $29.50. Citi reiterated Buy on BCII, target $30. Citi reiterated Buy on PNR, target $40. Citi reiterated Sell on RSH, target $28.

Mid-day News
U.S. stocks are modestly higher mid-day on mostly stronger economic reports and falling inflation readings. A U.S. government plan to collect personal information on airline passengers and rank them according to risk-level is being canceled after criticism about privacy and concern about its effectiveness, USA Today reported. Gary Kelly, CFO of Southwest Air told CNBC that revenue and airline traffic have been very strong in July, Bloomberg said. The price of some types of U.S. business insurance, which can include anything from broad decisions to property damage, is beginning to decline after three years of increases, according to two new surveys, the Wall Street Journal reported. Motorola may face a market cool to investment in chip-making today when it announces share prices for the planned IPO of its Freescale Semiconductor unit, the NY Times reported. Boeing plans to use voice over Internet technology for its communications, replacing traditional phones, the Chicago Tribune reported. Marriott said second-quarter profit rose 28% after an increase in business travels enabled the hotel company to charge higher room rates, Bloomberg reported. Harrah's Entertainment agreed to buy Caesars Entertainment for about $9.44 billion in cash, stock and assumed debt, Bloomberg reported. Nokia said third-quarter profit and sales will fall as it cuts prices to regain lost market share, Bloomberg said. U.S. producer prices fell .3% last month, the biggest drop in more than a year, reflecting declines in energy and food prices, Bloomberg reported. Enron won court confirmation of a plan to exit bankruptcy, Bloomberg said. U.S. industrial production unexpectedly fell for the first time since March, led by a slowdown in car production, Bloomberg reported. Iraq's interim Prime Minister Allawi today said he will visit several other Arab nations starting next week to open new relationships and ease tensions in the Middle East, Bloomberg reported. Intel plans to spend $400 million to add a second clean room at its Colorado plant and plans to hire several hundred workers, the Denver Post reported. Manufacturing in the Philadelphia region unexpectedly expanded at a faster pace this month than in June as more companies reported rising orders and higher employment, Bloomberg reported.

BOTTOM LINE: The Portfolio is unchanged again today as my falling retail shorts are being offset by my declining biotech longs. I have not traded and the Portfolio is still market neutral. Overall, the data released today were encouraging as manufacturing readings mostly exceeded expectations and measures of inflation fell. As well, a number of corporate earnings reports were very strong. I am a little disappointed in the market's reaction so far. However, stocks should gain into the close.

Thursday Watch

Earnings of Note
Company/Estimate
VOXX/.09
CSL/1.08
C/.97
CMA/.93
CY/.23
FCS/.23
ETN/1.02
DJ/.38
IBM/1.12
LEXR/-.19
LSS/.99
MAR/.61
NFLX/.13
PEP/.61
RMBS/.06
PMCS/.07
RDC/-.03
LUV/.16
SYK/.33
TRB/.61
UNH/.92
WB/.96

Splits
None of note.

Economic Data
Producer Price Index for June estimated +.2% versus +.8% in May.
PPI Ex Food & Energy for June estimated +.2% versus +.3% in May.
Initial Jobless Claims for last week estimated at 345K versus 310K prior week.
Continuing Claims estimated at 2883K versus 2872K prior.
Business Inventories for May estimated +.5% versus +.5% in April.
Empire Manufacturing for July estimated at 27.80 versus 30.17 in June.
Industrial Production for June estimated +.1% versus +1.1% in May.
Capacity Utilization for June estimated at 77.7% versus 77.8% in May.
Philly Fed for July estimated at 25.0 versus 28.9 in June.

Recommendations
Goldman Sachs reiterated Outperform on STN, IBM and UPS.

Late-Night News
Asian indices are mostly lower after a Citigroup downgrade of several semiconductor makers in the region. Former U.S. president Bill Clinton backed U.K. Prime Minister Tony Blair's decision to go to war with Iraq, the Financial Times said, citing an interview with Clinton. Harrah's Entertainment has agreed to buy Caesars Entertainment for $5.28 billion, the Wall Street Journal reported on its Web site. Nokia may report falling sales today, while Sony Ericsson Mobile will probably say revenue jumped by a fifth, underscoring the Finnish company's loss of market share this year, Bloomberg said. The U.S. free-trade agreement with Australia, approved by the U.S. House of Representatives yesterday, should spark support by Australia's parliament, Bloomberg reported.

Late-Night Trading
Asian Indices are -1.50 to +.25% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated +.25%.

BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on a rebound in technology shares, however a lot will depend on the numerous economic data releases. Higher-than-expected inflation readings and reports showing more evidence of slowing economic growth could send shares lower on the open. The Portfolio is market neutral heading into tomorrow.

Wednesday Close

S&P 500 1,111.47 -.33%
NASDAQ 1,914.88 -.87%

Leading Sectors
Iron/Steel +2.98%
Oil Service +2.24%
Restaurants +1.83%

Lagging Sectors
Disk Drives -1.84%
Airlines -3.29%
Semis -4.48%

Other
Crude Oil 41.00 -.36%
Natural Gas 6.00 +.47%
Gold 405.20 -.10%
Base Metals 111.95 +.01%
U.S. Dollar 87.86 +.54%
10-Yr. T-note Yield 4.48% +.22%
VIX 13.76 -4.84%
Put/Call .93 +19.23%
NYSE Arms 1.39 +59.77%

After-hours Movers
SNDK +19.32% after beating 2Q estimates substantially and raising 3Q forecast.
AAPL +6.83% after beating 3Q estimates and raising 4Q guidance.
PLNR +8.98% after beating 3Q estimates and lowering 4Q guidance.
IFIN +5.91% after exceeding 2Q forecast.
QLGC +3.88% after meeting lowered 1Q forecast and lowering 2Q guidance.

Recommendations
Goldman Sachs reiterated Underperform on CNET and RKY. Goldman reiterated Outperform on HD and STN.

After-hours News
U.S. stocks finished modestly lower today as oil prices rose and technology shares remained under pressure after Intel's report. After the close, the Department of Housing and Urban Development sent letters to Fannie Mae and Freddie Mac seeking information on their international businesses, Dow Jones reported. Apple Computer said third-quarter profit more than tripled on a three-fold surge in iPod shipments. SanDisk said second-quarter profit climbed 71%, more than forecast, on record sales of equipment that stores digital photos and music, Bloomberg reported. Sudan's government hasn't met its commitments to end the humanitarian crisis in Darfur, where militias are forcing people to leave camps that provide food and shelter, a UN official said.

BOTTOM LINE: The Portfolio finished unchanged today and I did not trade in the afternoon, leaving market exposure at market neutral. It looks as though more technology companies are being rewarded for good reports in after-hours, which may lead to a better bounce tomorrow. The market's recent action is frustrating for bulls and bears and fits my expectation for a continuation of the trading range. However, the falling VIX and rising oil prices are still of concern.

Mid-day Update

S&P 500 1,114.55 -.05%
NASDAQ 1,922.80 -.46%

Leading Sectors
Iron/Steel +3.12%
Restaurants +2.33%
Networking +2.03%

Lagging Sectors
Homebuilders -1.19%
Airlines -1.78%
Semis -4.14%

Other
Crude Oil 40.40 +2.17%
Natural Gas 5.94 +.68%
Gold 405.60 +.82%
Base Metals 111.95 +.01%
U.S. Dollar 87.54 -.32%
10-Yr. T-note Yield 4.47% +.13%
VIX 13.63 -5.74%
Put/Call .94 +20.51%
NYSE Arms 1.23 +41.38%

Market Movers
GENZ +12.1% after beating 2Q estimates and raising 04 forecast.
INTC -8.7% after meeting 2Q estimates, lowering 04 gross margin estimate and reiterating 3Q forecast.
JNPR +13.4% after beating 2Q forecast substantially and announcing $250m share buy-back.
CZR +16.2% after the Wall Street Journal reported that HET may acquire it.
MOGN +13.0% after beating 2Q forecast and raising guidance on agreement to help market AAII's painkiller, Kadian.
KOMG +11.6% on bargain-hunting after lowering 2Q estimates.
HDI +6.1% after beating 2Q estimates.
IMN -21.4% after lowering 2Q forecast.
NTY -9.3% after RBC Capital downgrade to Sector Perform.
LIN -6.3% after lowering 2Q and 04 forecast.

Economic Data
Advance Retail Sales for June -1.1% versus estimates of -.8% and an upwardly revised +1.4% in May.
Retail Sales Less Autos for June -.2% versus estimates of +.2% and an upwardly revised +.9% in May.
Import Price Index for June came in -.2% versus estimates of +.1% and a downwardly revised +1.4% in May.

Recommendations
Goldman Sachs reiterated Outperform on JNPR, GCI, STZ, HCA, PFE, ROH, NFX, MDT and INTC. Goldman reiterated Underperform on BA and SGP. Citi SmithBarney reiterated Buy on MER, target $73. Citi reiterated Buy on INTC, target $33. Citi reiterated Buy on CELG, target $75. Citi reiterated Buy on JNPR, target $32.50. Citi reiterated Buy on SPRT, target $11. Citi reiterated Buy on UNH, target $86. Citi reiterated Sell on BMY, target $25. Citi reiterated Buy on YUM, target $40. TXN raised to Buy at Deutsche Bank, target $26. DISH rated Outperform at CSFB, target $37. ZLC raised to Buy at Merrill, target $24.

Mid-day News
U.S. stocks are modestly lower today as rising oil prices, weaker retail sales and disappointment over Intel's report weigh on shares. China's Premier Wen Jiabao said the government will keep up lending curbs aimed at slowing the world's seventh-largest economy, adding more needs to be done to rein in investment and solve energy shortages, Bloomberg reported. Denver billionaire Philip Anschutz's development company will announce today it's ready to start construction on a $1 billion commercial development near Los Angeles's Staples Center, the LA Times said. Boston and NY City are receiving expedited shipments of antidotes designed to counter chemical attacks ahead of the Democrat and Republican national conventions, the Boston Globe reported. Northwest Airlines passengers are facing flight delays and cancellations after a power outage near Minneapolis caused the fourth-largest U.S. airline's internal computers to fail, CNBC said. Daniel Benton's Andor Capital told investors in a letter that co-portfolio manager Chris James is leaving the hedge fund firm to start his own company, Bloomberg reported. A divided U.S. SEC proposed that hedge fund managers be required to register with the agency, the first step in Chairman Donaldson's campaign to open the $850 billion industry to greater scrutiny, Bloomberg said. More than three-quarters of U.S. consumers age 50 and older support legislation that would allow them to buy cheaper medicines from Canada and other countries, according to a poll financed by the consumer group AARP, Bloomberg said. U.S. retail sales fell in June by the most since 2003, underscoring forecasts that consumer spending slowed in the second quarter from the previous three months, Bloomberg reported.

BOTTOM LINE: The Portfolio is unchanged today as my declining longs are offsetting my falling shorts. I took profits in a few shorts into this morning's weakness and the Portfolio is now market neutral. While investors are becoming less complacent today, readings are not at levels associated with bottoms. Moreover, rising oil prices will likely prevent any substantial rally from materializing this afternoon.

Wednesday Watch

Earnings of Note
Company/Estimate
AMD/.09
AAPL/.15
BAC/1.74
GENZ/.40
HDI/.75
MTG/1.26
PGR/1.76
QLGC/.36
STN/.49
SNDK/.30

Splits
None of note.

Economic Data
Advance Retail Sales for June estimated -.8% versus +1.2% in May.
Retail Sales Less Autos for June estimated +.2% versus +.7% in May.
Import Price Index for June estimated +.1% versus +1.6% in May.

Recommendations
Goldman Sachs reiterated Attractive view of Oil Service sector and sees a longer, slower growth, more international E&P spending cycle w/potential to last into 2006, favorites are SII, BHI, SLB and NOI, but would only buy on pullback. Goldman reiterated Outperform on EQT and ROH.

Late-Night News
Asian indices are mostly lower as semiconductor shares fall in response to Intel's report after the U.S. close. Sony plans to offer a service allowing customers to download videos and television programs, the Financial Times said. Intel will need about 90 days to work through extra inventories that are reducing the company's profit margins, CFO Andy Bryant said. The terror threat against the U.S. is at the highest level since the Sept. 11, 2001, attacks because of the upcoming presidential election, Reuters reported, citing CIA acting director John McLaughlin. Micron Technology said the annual pickup in demand before students in the U.S. go back to school in September will probably occur a month later than expected, Bloomberg reported.

Late-Night Trading
Asian Indices are -1.0 to +.25% on average.
S&P 500 indicated -.26%.
NASDAQ 100 indicated -.63%.

BOTTOM LINE: I expect U.S. stocks to open lower in the morning on weakness in Asia, falling technology shares, weaker retail sales, rising energy prices and terrorism fears. However, the lows for the day will likely occur in the morning. The Portfolio is 25% net short heading into tomorrow.