S&P 500 1,096.84 +.27%
NASDAQ 1,889.06 +.78%
Leading Sectors
Semis +3.10%
Wireless +1.87%
Homebuilders +1.68%
Lagging Sectors
Transports -.84%
Computer Services -.95%
Fashion -2.24%
Other
Crude Oil 41.38 +1.97%
Natural Gas 6.11 +3.10%
Gold 395.50 +.05%
Base Metals 110.98 +.12%
U.S. Dollar 88.45 -.12%
10-Yr. T-note Yield 4.44% -.48%
VIX 15.75 -4.02%
Put/Call .91 +21.33%
NYSE Arms .81 -43.36%
After-hours Movers
AMZN -4.85% after missing 2Q estimates, but raising 04 guidance.
FLEX -4.88% after announcing 24M share secondary and reaffirming guidance.
RSAS -6.12% after beating 2Q estimates and lowering 3Q guidance.
CLSR -7.59% after beating 2Q estimates, but giving disappointing guidance.
NTY -7.7% after disappointing 3Q estimates.
HTCH -9.4% after beating 3Q estimates and lowering 4Q guidance.
MENT -14.86% after missing 2Q revenues estimate and lowering 3Q forecast.
FDRY -14.11% after missing 2Q estimates and lowering 3Q forecast.
ARTI +13.9% after beating 3Q estimates.
TKLC +6.55% after beating 2Q estimates and raising 3Q guidance.
OSTK +5.2% after beating 2Q estimates.
AVID +3.0% after beating 2Q estimates.
MSCC +3.6% after beating 3Q estimates and raising 4Q guidance.
FINL +3.7% after the board launched a quarterly dividend and buyback plan.
Recommendations
Merrill Lynch raised SGP to Buy from Neutral. Goldman Sachs reiterated Outperform on AMGN, IR, SUN, UST, UPS and ALK. Goldman reiterated Underperform on SLG and DCLK. WGA, which makes color monitors and video displays for slot machines and other devices, is expected to benefit as demand for gambling grows, Business Week said. RDWR may recover now that new programs have been implemented, Business Week said. POT is expected to benefit from growing demand from farmers for its products, Business Week reported.
After-hours News
U.S. stocks finished modestly higher today on short-covering and speculation the major indices formed a double-bottom. After the close, nineteen Los Alamos National Laboratory workers were placed on leave as officials probe the disappearance of computer disks that held classified information, the AP reported. Motorola CEO Zander may restructure the world's No. 2 maker of mobile phones into customer-based divisions instead of product-based units, Business Week reported. Japan's seven-month ban on U.S. beef may end if officials in Washington and Tokyo accept a compromise recommended by Japanese and U.S. scientists, the AP reported. Iowa Republican Senator Charles Grassley said he'd push in September for a five-year renewal of tax breaks for middle-income families requested by President Bush, Bloomberg reported. Microsoft said fourth-quarter profit rose 81% as sales of Office programs and Windows corporate network software increased. Crude oil and gasoline futures rose, lifted by surging natural gas prices, after the U.S. Energy Department reported gas inventories gained less than forecast, Bloomberg reported. A state-appointed arbitrator's settlement of a two-year-old contract dispute between Boston's police union and the city won't keep police from picketing events at next week's Democratic National Convention, Bloomberg said. Metabolife Intl. and its founder were indicted by a federal grand jury for making false statements to U.S. regulators about consumer claims over and ephedra-based diet supplement, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today and I added a few new shorts into afternoon strength, leaving market exposure 50% net short. One of my new shorts is ARO and I am using a $31 stop-loss on this position. The strength of the afternoon rally today was surprising and could continue for a few more days. However, I still believe that the major U.S. indices will fall through their recent lows set in May in the near future.
Thursday, July 22, 2004
Mid-day Update
S&P 500 1,091.01 -.26%
NASDAQ 1,869.78 -.24%
Leading Sectors
Semis +1.54%
Wireless +1.21%
Homebuilding +1.08%
Lagging Sectors
Airlines -1.64%
Computer Services -1.66%
Fashion -2.23%
Other
Crude Oil 41.45 +2.14%
Natural Gas 6.18 +4.28%
Gold 397.70 +.10%
Base Metals 110.98 +.12%
U.S. Dollar 88.30 -.29%
10-Yr. T-note Yield 4.46% -.13%
VIX 16.21 -1.22%
Put/Call .85 +13.33%
NYSE Arms 1.0 -30.07%
Market Movers
LRCX +16.6% after substantially beating 4Q estimates and multiple upgrades.
ELN -9.4% after a presentation by the company and its partner Wyeth contained little new information about their experimental Alzheimer's vaccine.
ISSX +10.7% after beating 2Q estimates and raising 04 guidance.
FLIR +10.4% after beating 2Q estimates and raising 04 outlook.
ALGN +9.2% after beating 2Q estimates.
PTRY +8.97% after beating 3Q estimates and raising 04 guidance.
PHCC +9.8% after beating 2Q sales estimate.
KAR -21.9% after missing 2Q forecast and lowering 04 guidance.
ROG -21.3% after missing 2Q estimates and lowering 3Q forecast.
AFCO -18.4% after missing 4Q estimates and lowering 1Q guidance.
TSA -18.5% after cutting 2Q forecast and multiple downgrades.
AVCT -9.1% after only meeting 2Q estimates.
ELAB -15.7% after largest holder filed to sell 14.7 million shares and disappointing earnings guidance.
Economic Data
Initial Jobless Claims for last week were 339K versus estimates of 345K and an upwardly revised 350K prior week.
Continuing Claims were 2797K versus estimates of 2930K and a downwardly revised 2964K prior.
Leading Indicators for June fell .2% versus estimates of unch. and an increase of .4% in May.
Recommendations
SYMC raised to Buy at Deutsche Bank, target $53. OMM raised to Sector Outperform, target $20. SKYW cut to Underweight at Morgan Stanley. COP raised to Overweight at Prudential, target $80. LRCX raised to Buy at Bank of America, target $30.70. SIGI cut to Underperform at CSFB, target $34. SGP raised to Buy at Merrill, target $23. MXO cut to sell at Merrill. CVG cut to Underperform at Raymond James. Goldman Sachs reiterated Attractive view of Paper sector, favorites are IP, DTC and SPP. Goldman reiterated Outperform on AIG, SYMC, DD, GLK, BAC, WFC, FS, EBAY and FON. Goldman reiterated Underperform on TLAB, AZR, EK, CL, PYX, DO, AKS and CVD. Citi SmithBarney reiterated Buy on SBUX, target $54. Citi reiterated Buy on EXTR, target $11. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on LRCX, target $35. Citi reiterated Buy on DPMI, target $26. Citi reiterated Buy on NCX, target $32. Citi reiterated Buy on TGT, target $50. Citi reiterated Buy on FON, target $22. Citi reiterated Sell on GD, target $84. Citi reiterated Buy on TEX, target $52. Citi reiterated Buy on JPM, target $50. Citi reiterated Buy on SEBL, target $11. Citi reiterated Sell on USM, target $38.
Mid-day News
U.S. stocks are modestly lower mid-day on rising oil prices and a weaker-than-expected economic report. TiVo, which makes video recorders that can pause and replay live tv, faces opposition from film studios and the NFL over its plan to introduce technology allowing copies of shows to be transferred to computers, the Washington Post reported. China wants to reform its system of allocating investments and reduce government interference in business decisions, China Central tv said. French wine growers sought government help in coping with one of the industry's biggest slumps in a meeting last night with the Agriculture Minister, the Times of London reported. The New York state legislature is the least deliberative in the U.S., "strikingly inefficient" and has the lowest rate of bills that become law, the NY Times reported. Tribune's Newsday has been sued by 50 car dealerships who say the newspaper charged them advertising rates that were tied to inflated circulation figures, the NY Times reported. OAO Yukos Oil, Russia's biggest oil exporter, said it will go bankrupt if the government carries out plans to sell the company's main unit, after a freeze on its assets left Yukos with enough cash to produce oil for three more weeks, Bloomberg reported. The number of Americans filing new claims for unemployment benefits fell more than forecast last week, Bloomberg reported. The index of leading U.S. economic indicators fell for the first time in more than a year in June, as a decrease in building permits and hours worked restrained the measure, Bloomberg said. JP Morgan's buyout unit agreed to acquire a majority stake in AMC Entertainment for $2 billion and plans to take the movie chain private, Bloomberg reported. With 181 S&P 500 companies reporting, 71.3% have exceeded estimates, 11.05% have missed estimates and the average profit gain has been 22.4%, CNBC reported.
BOTTOM LINE: The Portfolio is higher today as my medical and technology shorts are falling substantially and my gold longs are rising. I have not traded and the Portfolio is still 25% net short. While the market has rallied off its lows from this morning, it appears to me to be mainly a result of short-covering. With oil rising again and investor complacency readings still too high, I expect stocks to fall into the afternoon.
NASDAQ 1,869.78 -.24%
Leading Sectors
Semis +1.54%
Wireless +1.21%
Homebuilding +1.08%
Lagging Sectors
Airlines -1.64%
Computer Services -1.66%
Fashion -2.23%
Other
Crude Oil 41.45 +2.14%
Natural Gas 6.18 +4.28%
Gold 397.70 +.10%
Base Metals 110.98 +.12%
U.S. Dollar 88.30 -.29%
10-Yr. T-note Yield 4.46% -.13%
VIX 16.21 -1.22%
Put/Call .85 +13.33%
NYSE Arms 1.0 -30.07%
Market Movers
LRCX +16.6% after substantially beating 4Q estimates and multiple upgrades.
ELN -9.4% after a presentation by the company and its partner Wyeth contained little new information about their experimental Alzheimer's vaccine.
ISSX +10.7% after beating 2Q estimates and raising 04 guidance.
FLIR +10.4% after beating 2Q estimates and raising 04 outlook.
ALGN +9.2% after beating 2Q estimates.
PTRY +8.97% after beating 3Q estimates and raising 04 guidance.
PHCC +9.8% after beating 2Q sales estimate.
KAR -21.9% after missing 2Q forecast and lowering 04 guidance.
ROG -21.3% after missing 2Q estimates and lowering 3Q forecast.
AFCO -18.4% after missing 4Q estimates and lowering 1Q guidance.
TSA -18.5% after cutting 2Q forecast and multiple downgrades.
AVCT -9.1% after only meeting 2Q estimates.
ELAB -15.7% after largest holder filed to sell 14.7 million shares and disappointing earnings guidance.
Economic Data
Initial Jobless Claims for last week were 339K versus estimates of 345K and an upwardly revised 350K prior week.
Continuing Claims were 2797K versus estimates of 2930K and a downwardly revised 2964K prior.
Leading Indicators for June fell .2% versus estimates of unch. and an increase of .4% in May.
Recommendations
SYMC raised to Buy at Deutsche Bank, target $53. OMM raised to Sector Outperform, target $20. SKYW cut to Underweight at Morgan Stanley. COP raised to Overweight at Prudential, target $80. LRCX raised to Buy at Bank of America, target $30.70. SIGI cut to Underperform at CSFB, target $34. SGP raised to Buy at Merrill, target $23. MXO cut to sell at Merrill. CVG cut to Underperform at Raymond James. Goldman Sachs reiterated Attractive view of Paper sector, favorites are IP, DTC and SPP. Goldman reiterated Outperform on AIG, SYMC, DD, GLK, BAC, WFC, FS, EBAY and FON. Goldman reiterated Underperform on TLAB, AZR, EK, CL, PYX, DO, AKS and CVD. Citi SmithBarney reiterated Buy on SBUX, target $54. Citi reiterated Buy on EXTR, target $11. Citi reiterated Buy on FFIV, target $45. Citi reiterated Buy on LRCX, target $35. Citi reiterated Buy on DPMI, target $26. Citi reiterated Buy on NCX, target $32. Citi reiterated Buy on TGT, target $50. Citi reiterated Buy on FON, target $22. Citi reiterated Sell on GD, target $84. Citi reiterated Buy on TEX, target $52. Citi reiterated Buy on JPM, target $50. Citi reiterated Buy on SEBL, target $11. Citi reiterated Sell on USM, target $38.
Mid-day News
U.S. stocks are modestly lower mid-day on rising oil prices and a weaker-than-expected economic report. TiVo, which makes video recorders that can pause and replay live tv, faces opposition from film studios and the NFL over its plan to introduce technology allowing copies of shows to be transferred to computers, the Washington Post reported. China wants to reform its system of allocating investments and reduce government interference in business decisions, China Central tv said. French wine growers sought government help in coping with one of the industry's biggest slumps in a meeting last night with the Agriculture Minister, the Times of London reported. The New York state legislature is the least deliberative in the U.S., "strikingly inefficient" and has the lowest rate of bills that become law, the NY Times reported. Tribune's Newsday has been sued by 50 car dealerships who say the newspaper charged them advertising rates that were tied to inflated circulation figures, the NY Times reported. OAO Yukos Oil, Russia's biggest oil exporter, said it will go bankrupt if the government carries out plans to sell the company's main unit, after a freeze on its assets left Yukos with enough cash to produce oil for three more weeks, Bloomberg reported. The number of Americans filing new claims for unemployment benefits fell more than forecast last week, Bloomberg reported. The index of leading U.S. economic indicators fell for the first time in more than a year in June, as a decrease in building permits and hours worked restrained the measure, Bloomberg said. JP Morgan's buyout unit agreed to acquire a majority stake in AMC Entertainment for $2 billion and plans to take the movie chain private, Bloomberg reported. With 181 S&P 500 companies reporting, 71.3% have exceeded estimates, 11.05% have missed estimates and the average profit gain has been 22.4%, CNBC reported.
BOTTOM LINE: The Portfolio is higher today as my medical and technology shorts are falling substantially and my gold longs are rising. I have not traded and the Portfolio is still 25% net short. While the market has rallied off its lows from this morning, it appears to me to be mainly a result of short-covering. With oil rising again and investor complacency readings still too high, I expect stocks to fall into the afternoon.
Thursday Watch
Earnings of Note
Company/Estimate
AIG/1.11
AMZN/.19
AMGN/.59
ABC/.98
T/.07
AVID/.43
BRCM/.32
CME/1.64
CAT/1.74
DECK/.35
ERTS/.05
GDT/.58
MSFT/.28
NUE/2.94
ODP/.23
OSTK/-.14
VRSN/.15
XLNX/.28
Splits
None of note.
Economic Data
Initial Jobless Claims for last week estimated at 345K versus 349K prior week.
Continuing Claims estimated at 2930K versus 2971K prior.
Leading Indicators for June estimated unch. versus +.5% in May.
Recommendations
Goldman Sachs reiterated Attractive view of Lodging sector, favorites are FS, PFE, AMR, GLK, CVD, UTX, KMI, KMR, HOT, MAR and HLT. Goldman reiterated Underperform on SGP, FISV, DO, EK, AKS, AZR and PLXS. Goldman reiterated Outperform on ACS.
Late-Night News
Asian indices are mostly lower on broad-based weakness in technology shares. Verizon Wireless, Cingular Wireless and the mobile unit of Sprint reached agreement with 32 states, ending an investigation into alleged false advertising, the AP said. Monster.com may acquire a company to boost its market share in Singapore to 50%, the Business Times reported. LG Electronics of South Korea may receive billions of dollars in royalty payments from the U.S. until 2020 because of a digital broadcasting technology, Korea Economic Daily reported. A surveillance video from Washington's Dulles Airport shows four of the five Sept. 11, 2001, hijackers being checked before they boarded the airplane that crashed into the Pentagon, the AP reported. Avon Products won Chinese government approval to start direct selling in the country, the Oriental Morning Post reported. The NASD has stepped up its scrutiny of how brokerage firms are marketing hedge funds to their customers, the Wall Street Journal reported. Structural problems are limiting the ability of Europe's economy to grow without generating inflation and that suggests expansion has reached its limit, the Wall Street Journal reported. OAO Yukos Oil, Russia's biggest oil exporter, holds a briefing in Moscow today amid speculation the company may file for bankruptcy to prevent the state from seizing and selling its assets to help pay $3.4 billion in taxes, Bloomberg reported. Corning said a Taiwanese customer agreed to pay $510 million for products in advance to help Corning expand its glass production, Bloomberg said. SAP AG, the world's largest maker of business-management software, said second-quarter net income rose 14% as it won more mid-sized customers and took market share. The company said it is sticking to its full-year forecasts, Bloomberg said.
Late-Night Trading
Asian Indices are -1.25% to -.50% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated unch.
BOTTOM LINE: I expect U.S. stocks to open lower in the morning on weakness in Asia, a weaker-than-expected leading indicators report and a continuation of today's sell-off. My short-term trading indicators are giving sell signals and the Portfolio is 25% net short heading into tomorrow.
Company/Estimate
AIG/1.11
AMZN/.19
AMGN/.59
ABC/.98
T/.07
AVID/.43
BRCM/.32
CME/1.64
CAT/1.74
DECK/.35
ERTS/.05
GDT/.58
MSFT/.28
NUE/2.94
ODP/.23
OSTK/-.14
VRSN/.15
XLNX/.28
Splits
None of note.
Economic Data
Initial Jobless Claims for last week estimated at 345K versus 349K prior week.
Continuing Claims estimated at 2930K versus 2971K prior.
Leading Indicators for June estimated unch. versus +.5% in May.
Recommendations
Goldman Sachs reiterated Attractive view of Lodging sector, favorites are FS, PFE, AMR, GLK, CVD, UTX, KMI, KMR, HOT, MAR and HLT. Goldman reiterated Underperform on SGP, FISV, DO, EK, AKS, AZR and PLXS. Goldman reiterated Outperform on ACS.
Late-Night News
Asian indices are mostly lower on broad-based weakness in technology shares. Verizon Wireless, Cingular Wireless and the mobile unit of Sprint reached agreement with 32 states, ending an investigation into alleged false advertising, the AP said. Monster.com may acquire a company to boost its market share in Singapore to 50%, the Business Times reported. LG Electronics of South Korea may receive billions of dollars in royalty payments from the U.S. until 2020 because of a digital broadcasting technology, Korea Economic Daily reported. A surveillance video from Washington's Dulles Airport shows four of the five Sept. 11, 2001, hijackers being checked before they boarded the airplane that crashed into the Pentagon, the AP reported. Avon Products won Chinese government approval to start direct selling in the country, the Oriental Morning Post reported. The NASD has stepped up its scrutiny of how brokerage firms are marketing hedge funds to their customers, the Wall Street Journal reported. Structural problems are limiting the ability of Europe's economy to grow without generating inflation and that suggests expansion has reached its limit, the Wall Street Journal reported. OAO Yukos Oil, Russia's biggest oil exporter, holds a briefing in Moscow today amid speculation the company may file for bankruptcy to prevent the state from seizing and selling its assets to help pay $3.4 billion in taxes, Bloomberg reported. Corning said a Taiwanese customer agreed to pay $510 million for products in advance to help Corning expand its glass production, Bloomberg said. SAP AG, the world's largest maker of business-management software, said second-quarter net income rose 14% as it won more mid-sized customers and took market share. The company said it is sticking to its full-year forecasts, Bloomberg said.
Late-Night Trading
Asian Indices are -1.25% to -.50% on average.
S&P 500 indicated +.06%.
NASDAQ 100 indicated unch.
BOTTOM LINE: I expect U.S. stocks to open lower in the morning on weakness in Asia, a weaker-than-expected leading indicators report and a continuation of today's sell-off. My short-term trading indicators are giving sell signals and the Portfolio is 25% net short heading into tomorrow.
Wednesday, July 21, 2004
Wednesday Close
S&P 500 1,093.88 -1.33%
NASDAQ 1,874.37 -2.23%
Leading Sectors
Fashion +.96%
Banks -.60%
Drugs -.63%
Lagging Sectors
Airlines -4.25%
Biotech -4.43%
Disk Drives -4.48%
Other
Crude Oil 40.58 +.35%
Natural Gas 5.96 +.47%
Gold 397.20 -.03%
Base Metals 110.85 -.77%
U.S. Dollar 88.50 +.76%
10-Yr. T-note Yield 4.47% +.57%
VIX 16.40 +15.88%
Put/Call .75 +13.64%
NYSE Arms 1.43 +116.67%
After-hours Movers
LRCX +5.56% after beating 4Q estimates.
FFIV +4.46% after beating 3Q estimates and raising 4Q guidance.
AFCO -19.0% after missing 4Q estimates and lowering 1Q forecast substantially.
ORBZ -14.2% after cutting 2Q and 04 forecast.
ERES -10.7% on profit-taking after beating 2Q forecast, raising 3Q guidance and 04 outlook.
EFII -10.5% after missing 2Q estimates and lowering 3Q guidance.
EBAY -5.57% after beating 2Q estimates, but weaker 3Q/4Q guidance.
SWIR -4.92% on profit-taking after beating 2Q estimates and lowering 3Q guidance.
Recommendations
Goldman Sachs rated DD Outperform. Goldman reiterated Underperform on CL.
After-hours News
U.S. stocks finished lower today on some weaker-than-expected earnings reports and rising interest rates. After the close, PepsiCo topped Coca-Cola in supermarket soft-drink sales in the New York metropolitan area after Coke shrank bottle sizes without cutting prices, the Atlanta Journal-Constitution reported. Starbucks said net income climbed 44% in its fiscal third quarter, and the coffee-shop chain again raised its earnings outlook for the full fiscal year, Bloomberg reported. Qualcomm, the world's second-largest maker of microchips that power mobile telephones, said third-quarter profit more than doubled to $486.4 million on rising demand for phones based on its technology, Bloomberg reported. EBay said second-quarter earnings more than doubled to $190.4 million as a record number of users bought and sold merchandise online and utilized its electronic-payment system, Bloomberg said. Microsoft's decision to spend $75 billion on dividends and stock buybacks may pressure other companies to increase their payouts, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on across-the-board weakness in my long positions. I took profits in a few longs in the afternoon and added some more shorts, leaving the Portfolio with 25% net short market exposure. This was very bad day for the Bulls. Volume expanded and the advance/decline ratio was very poor. Many stocks in the NASDAQ are sustaining significant technical damage. Moreover, there is still way too much complacency for the amount of damage that is being done. I expect the major U.S. averages to take out their May lows within the next few days. It is my belief that investors are very worried over political developments, potential terrorist acts on U.S. soil, stubbornly high oil prices and the possibility that the economy is slowing substantially when the Fed is in the beginning stages of raising rates.
NASDAQ 1,874.37 -2.23%
Leading Sectors
Fashion +.96%
Banks -.60%
Drugs -.63%
Lagging Sectors
Airlines -4.25%
Biotech -4.43%
Disk Drives -4.48%
Other
Crude Oil 40.58 +.35%
Natural Gas 5.96 +.47%
Gold 397.20 -.03%
Base Metals 110.85 -.77%
U.S. Dollar 88.50 +.76%
10-Yr. T-note Yield 4.47% +.57%
VIX 16.40 +15.88%
Put/Call .75 +13.64%
NYSE Arms 1.43 +116.67%
After-hours Movers
LRCX +5.56% after beating 4Q estimates.
FFIV +4.46% after beating 3Q estimates and raising 4Q guidance.
AFCO -19.0% after missing 4Q estimates and lowering 1Q forecast substantially.
ORBZ -14.2% after cutting 2Q and 04 forecast.
ERES -10.7% on profit-taking after beating 2Q forecast, raising 3Q guidance and 04 outlook.
EFII -10.5% after missing 2Q estimates and lowering 3Q guidance.
EBAY -5.57% after beating 2Q estimates, but weaker 3Q/4Q guidance.
SWIR -4.92% on profit-taking after beating 2Q estimates and lowering 3Q guidance.
Recommendations
Goldman Sachs rated DD Outperform. Goldman reiterated Underperform on CL.
After-hours News
U.S. stocks finished lower today on some weaker-than-expected earnings reports and rising interest rates. After the close, PepsiCo topped Coca-Cola in supermarket soft-drink sales in the New York metropolitan area after Coke shrank bottle sizes without cutting prices, the Atlanta Journal-Constitution reported. Starbucks said net income climbed 44% in its fiscal third quarter, and the coffee-shop chain again raised its earnings outlook for the full fiscal year, Bloomberg reported. Qualcomm, the world's second-largest maker of microchips that power mobile telephones, said third-quarter profit more than doubled to $486.4 million on rising demand for phones based on its technology, Bloomberg reported. EBay said second-quarter earnings more than doubled to $190.4 million as a record number of users bought and sold merchandise online and utilized its electronic-payment system, Bloomberg said. Microsoft's decision to spend $75 billion on dividends and stock buybacks may pressure other companies to increase their payouts, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on across-the-board weakness in my long positions. I took profits in a few longs in the afternoon and added some more shorts, leaving the Portfolio with 25% net short market exposure. This was very bad day for the Bulls. Volume expanded and the advance/decline ratio was very poor. Many stocks in the NASDAQ are sustaining significant technical damage. Moreover, there is still way too much complacency for the amount of damage that is being done. I expect the major U.S. averages to take out their May lows within the next few days. It is my belief that investors are very worried over political developments, potential terrorist acts on U.S. soil, stubbornly high oil prices and the possibility that the economy is slowing substantially when the Fed is in the beginning stages of raising rates.
Mid-day Update
S&P 500 1,104.69 -.36%
NASDAQ 1,893.06 -1.25%
Leading Sectors
Oil Service +1.26%
Fashion +.96%
I-Banks +.81%
Lagging Sectors
Airlines -1.65%
Iron/Steel -1.75%
Disk Drives -3.12%
Other
Crude Oil 40.84 +.99%
Natural Gas 5.91 +1.34%
Gold 497.10 -1.24%
Base Metals 110.85 -.77%
U.S. Dollar 88.55 +.82%
10-Yr. T-note Yield 4.49% +1.14%
VIX 14.31 +.92%
Put/Call .62 -6.06%
NYSE Arms .74 +12.12%
Market Movers
MERQ -13.0% after missing 2Q estimates, lowering 3Q and 04 forecast.
IMCL -17.5% after beating 2Q estimates, but saying it would wait until next near to seek U.S. approval for a new use of Erbitux in head and neck cancer.
ERICY +5.5% after better-than-expected 2Q results.
IVGN -18.5% after meeting 2Q estimates, but lowering 3Q/4Q sales forecast.
PLT +8.77% after beating 1Q estimates, raising 2Q guidance and initiating cash dividend.
WEBX +10.05% after beating 2Q estimates, raising 3Q and 04 guidance.
INTL +10.7% after slightly missing 2Q forecast, but raising dividend.
WNC +11.3% after substantially beating 2Q estimates.
TSS +7.4% after meeting 2Q estimates and reaffirming 04 forecast.
WIRE +9.8% after declaring 3-for-2 split.
SGTL -31.0% after beating 2Q estimates and lowering 3Q forecast.
HIBB -17.4% after lowering 2Q guidance.
BLUD -13.4% after meeting 4Q estimates, but lowering 04 guidance.
Economic Data
None of note.
Recommendations
POS raised to Buy at JP Morgan. SANM raised to Sector Outperform at CIBC, target $17. RFMD cut to Sell at Bank of America, target $5. Goldman reiterated Underperform on INFA, AMCC, F, SLG, RSH, HMT, CL and SGP. Goldman reiterated Outperform on MSFT, JCI, LIZ, NFX, HD, FDC, ABK, GE, MERQ, INTC and N. Citi SmithBarney reiterated Buy on MSFT, target $33. Citi reiterated Buy on AFCI, target $24. Citi reiterated Buy on LLTC, target $45. Citi reiterated Buy on AINV, target $18. Citi reiterated Buy on CMCSK, target $34. Citi reiterated Sell on TER, target $20. Citi reiterated Buy on FCX, target $50. Citi reiterated Buy on INFA, target $10.50. Citi reiterated Buy on SPRT, target $11.50.
Mid-day News
U.S. stocks are mostly lower mid-day on rising interest rates, increasing oil prices and some earnings disappointments. Google's IPO conditions are frustrating some investment banks involved in the transaction and may cause some to drop out, as Merrill Lynch did last month, the Wall Street Journal reported. The U.S. government will announce a plan to get the computer systems of doctors, hospitals, laboratories, pharmacists and insurers communicating and sharing information, the NY Times reported. Saudi Arabian authorities have found the head of Paul Johnson, a Lockheed Martin engineer who was abducted and beheaded by militants last month, the AP said. Harrah's CEO Loveman told CNBC that Atlantic City, NJ, was the company's weakest market in the second quarter, Bloomberg reported. California Governor Schwarzenegger vetoed a Democratic bill that would have let people grow at least 6 marijuana plants and possess at least eight ounces without being arrested, the San Jose Mercury News reported. General Motors said second-quarter profit rose 49%, boosted by rising sales in China and income from its finance unit, Bloomberg said. Delta Air's pilots union proposed a 23% wage cut and other measures to help the carrier avoid a bankruptcy filing, Bloomberg reported. DreamWorks plans to raise as much as $650 million through an IPO to finance at least two productions a year and repay debt, Bloomberg said. The dollar had its biggest gain in more than two months against the yen on speculation the Fed will boost its interest-rate target four more times this year as economic growth accelerates, Bloomberg said.
BOTTOM LINE: The Portfolio is lower today on weakness in my biotech, airline and internet longs. A number of my longs hit stop-losses and I added a few new shorts this morning, leaving the Portfolio 50% net long. One of my new shorts is SSNC and I am using a $22 stop-loss on this position. The tone of the market is pretty bad. The advance/decline line is very poor and investor complacency is high. It is also disappointing there is no follow-through to yesterday's fall in oil. Finally, rising interest rates and more disappointing earnings reports will likely prevent any meaningful rally today. I expect U.S. stocks to weaken into the close.
NASDAQ 1,893.06 -1.25%
Leading Sectors
Oil Service +1.26%
Fashion +.96%
I-Banks +.81%
Lagging Sectors
Airlines -1.65%
Iron/Steel -1.75%
Disk Drives -3.12%
Other
Crude Oil 40.84 +.99%
Natural Gas 5.91 +1.34%
Gold 497.10 -1.24%
Base Metals 110.85 -.77%
U.S. Dollar 88.55 +.82%
10-Yr. T-note Yield 4.49% +1.14%
VIX 14.31 +.92%
Put/Call .62 -6.06%
NYSE Arms .74 +12.12%
Market Movers
MERQ -13.0% after missing 2Q estimates, lowering 3Q and 04 forecast.
IMCL -17.5% after beating 2Q estimates, but saying it would wait until next near to seek U.S. approval for a new use of Erbitux in head and neck cancer.
ERICY +5.5% after better-than-expected 2Q results.
IVGN -18.5% after meeting 2Q estimates, but lowering 3Q/4Q sales forecast.
PLT +8.77% after beating 1Q estimates, raising 2Q guidance and initiating cash dividend.
WEBX +10.05% after beating 2Q estimates, raising 3Q and 04 guidance.
INTL +10.7% after slightly missing 2Q forecast, but raising dividend.
WNC +11.3% after substantially beating 2Q estimates.
TSS +7.4% after meeting 2Q estimates and reaffirming 04 forecast.
WIRE +9.8% after declaring 3-for-2 split.
SGTL -31.0% after beating 2Q estimates and lowering 3Q forecast.
HIBB -17.4% after lowering 2Q guidance.
BLUD -13.4% after meeting 4Q estimates, but lowering 04 guidance.
Economic Data
None of note.
Recommendations
POS raised to Buy at JP Morgan. SANM raised to Sector Outperform at CIBC, target $17. RFMD cut to Sell at Bank of America, target $5. Goldman reiterated Underperform on INFA, AMCC, F, SLG, RSH, HMT, CL and SGP. Goldman reiterated Outperform on MSFT, JCI, LIZ, NFX, HD, FDC, ABK, GE, MERQ, INTC and N. Citi SmithBarney reiterated Buy on MSFT, target $33. Citi reiterated Buy on AFCI, target $24. Citi reiterated Buy on LLTC, target $45. Citi reiterated Buy on AINV, target $18. Citi reiterated Buy on CMCSK, target $34. Citi reiterated Sell on TER, target $20. Citi reiterated Buy on FCX, target $50. Citi reiterated Buy on INFA, target $10.50. Citi reiterated Buy on SPRT, target $11.50.
Mid-day News
U.S. stocks are mostly lower mid-day on rising interest rates, increasing oil prices and some earnings disappointments. Google's IPO conditions are frustrating some investment banks involved in the transaction and may cause some to drop out, as Merrill Lynch did last month, the Wall Street Journal reported. The U.S. government will announce a plan to get the computer systems of doctors, hospitals, laboratories, pharmacists and insurers communicating and sharing information, the NY Times reported. Saudi Arabian authorities have found the head of Paul Johnson, a Lockheed Martin engineer who was abducted and beheaded by militants last month, the AP said. Harrah's CEO Loveman told CNBC that Atlantic City, NJ, was the company's weakest market in the second quarter, Bloomberg reported. California Governor Schwarzenegger vetoed a Democratic bill that would have let people grow at least 6 marijuana plants and possess at least eight ounces without being arrested, the San Jose Mercury News reported. General Motors said second-quarter profit rose 49%, boosted by rising sales in China and income from its finance unit, Bloomberg said. Delta Air's pilots union proposed a 23% wage cut and other measures to help the carrier avoid a bankruptcy filing, Bloomberg reported. DreamWorks plans to raise as much as $650 million through an IPO to finance at least two productions a year and repay debt, Bloomberg said. The dollar had its biggest gain in more than two months against the yen on speculation the Fed will boost its interest-rate target four more times this year as economic growth accelerates, Bloomberg said.
BOTTOM LINE: The Portfolio is lower today on weakness in my biotech, airline and internet longs. A number of my longs hit stop-losses and I added a few new shorts this morning, leaving the Portfolio 50% net long. One of my new shorts is SSNC and I am using a $22 stop-loss on this position. The tone of the market is pretty bad. The advance/decline line is very poor and investor complacency is high. It is also disappointing there is no follow-through to yesterday's fall in oil. Finally, rising interest rates and more disappointing earnings reports will likely prevent any meaningful rally today. I expect U.S. stocks to weaken into the close.
Wednesday Watch
Earnings of Note
Company/Estimate
ALTR/.17
AGR/A/.00
ATVI/.05
BJS/.41
CDN/.15
CHIR/.24
CERN/.37
EBAY/.27
DHI/.88
DRIV/.22
ERES/.14
FFIV/.17
GD/1.40
HET/.79
GM/2.24
IMCL/.25
JPM/.83
LRCX/.26
LIN/.01
LU/.02
NXTL/.51
PFCB/.32
PFE/.46
QCOM/.53
SEBL/.02
SBUX/.22
SYMC/.34
Splits
KNGT 3-for-2
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on CAL, FORM, TRMS, N, JCI and HD. Goldman reiterated Underperform on AVB, F and SLG.
Late-Night News
Asian indices are mostly higher on optimism over Alan Greenspan's comments and Japanese economic growth. New York Senator Hillary Rodham Clinton is favored by delegates to the Democratic National Convention to seek the presidency in 2008 if John Kerry fails to win the Nov. 2 election, the AP reported. Dinakar Singh, head of Goldman Sachs Group's Principal Strategies Department, is leaving the firm to start his own hedge fund, the Wall Street Journal reported. The U.S. may "significantly" reduce its military presence in Japan within the next several years, Nikkei English news reported. OPEC may raise output by as much as 500,000 barrels a day in September, Kuwait's Minister of Energy said.
Late-Night Trading
Asian Indices are +.25% to +1.75% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.32%.
BOTTOM LINE: I expect U.S. stocks to open higher in the morning on strength in technology shares, short covering and better overall earnings reports. A fall in oil below $40/bbl. and a stabilization of interest rates would also boost shares. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
ALTR/.17
AGR/A/.00
ATVI/.05
BJS/.41
CDN/.15
CHIR/.24
CERN/.37
EBAY/.27
DHI/.88
DRIV/.22
ERES/.14
FFIV/.17
GD/1.40
HET/.79
GM/2.24
IMCL/.25
JPM/.83
LRCX/.26
LIN/.01
LU/.02
NXTL/.51
PFCB/.32
PFE/.46
QCOM/.53
SEBL/.02
SBUX/.22
SYMC/.34
Splits
KNGT 3-for-2
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on CAL, FORM, TRMS, N, JCI and HD. Goldman reiterated Underperform on AVB, F and SLG.
Late-Night News
Asian indices are mostly higher on optimism over Alan Greenspan's comments and Japanese economic growth. New York Senator Hillary Rodham Clinton is favored by delegates to the Democratic National Convention to seek the presidency in 2008 if John Kerry fails to win the Nov. 2 election, the AP reported. Dinakar Singh, head of Goldman Sachs Group's Principal Strategies Department, is leaving the firm to start his own hedge fund, the Wall Street Journal reported. The U.S. may "significantly" reduce its military presence in Japan within the next several years, Nikkei English news reported. OPEC may raise output by as much as 500,000 barrels a day in September, Kuwait's Minister of Energy said.
Late-Night Trading
Asian Indices are +.25% to +1.75% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.32%.
BOTTOM LINE: I expect U.S. stocks to open higher in the morning on strength in technology shares, short covering and better overall earnings reports. A fall in oil below $40/bbl. and a stabilization of interest rates would also boost shares. The Portfolio is 125% net long heading into tomorrow.
Subscribe to:
Posts (Atom)