S&P 500 1,087.62 -.84%
NASDAQ 1,856.77 -1.72%
Leading Sectors
Telecom +1.74%
Papers +.58%
Gaming +.33%
Lagging Sectors
Internet -2.69%
Semis -2.74%
Networking -3.02%
Other
Crude Oil 41.34 -.05%
Natural Gas 6.15 -.03%
Gold 389.30 -1.52%
Base Metals 108.18 -2.52%
U.S. Dollar 89.13 +.77%
10-Yr. T-note Yield 4.44% -.05%
VIX 16.42 +4.25%
Put/Call .71 -21.98%
NYSE Arms 1.85 +128.39%
Market Movers
AMZN -9.65% after missing 2Q estimates and giving weak guidance.
KO -7.9% after missing 2Q sales estimates and giving weak guidance.
ERTS -6.1% after beating 1Q estimates, but making cautious comments on year.
TKLC +12.7% after substantially beating 2Q estimates and raising 3Q guidance.
EFII +8.7% on rebound after fall on earnings yesterday.
CCMP +7.6% after beating 3Q estimates substantially and WR Hambrecht upgrade to Buy.
ARTI +9.3% after beating 3Q estimates.
NTMD +11.2% on continued optimism over recent study showing an experimental medicine showed "significant survival benefits" in African American patients with heart failure.
TWP +14.0% after beating 2Q estimates and giving positive guidance.
RHI +7.4% after beating 2Q estimates substantially and multiple upgrades.
FOE -20.2% after cutting 2Q estimates after finding an accounting error.
MTLG -14.6% after missing 2Q estimates and reaffirming 04 guidance.
CLSR -14.8% after beating 2Q estimates, but giving disappointing guidance.
NTY -18.3% after disappointing 3Q estimates.
Economic Data
None of note.
Recommendations
BLS raised to Buy at UBS, target $30. VZ raised to Buy at UBS, target $40. EMT cut to Reduce at UBS, target $10.50. BEAV raised to Outperform at CSFB, target $12. MCIP rated Underweight at Morgan Stanley, target $8. Merrill Lynch cut IGT to Sell from Buy. Goldman Sachs reiterated Underperform on SAY, PYX, DCLK, T and VRSN. Goldman reiterated Outperform on BAX, GE, AVP, SVU, STA, SLB, SBC, GDT and MSFT. Citi SmithBarney reiterated Buy on TXT, target $70. Citi reiterated Buy on AMGN, target $90. Citi reiterated Buy on MSFT, target $33. Citi reiterated Buy on VIAB, target $50. Citi reiterated Buy on MDU, target $28. Citi reiterated Buy on MCD, target $34. Citi reiterated Buy on BA, target $36. Citi reiterated Buy on PLUG, target $13. Citi reiterated Buy on RYL, target $125. Citi reiterated Buy on IGT, target $50. Citi reiterated Buy on RSAS, target $22. Citi reiterated Buy on FDRY, target $15. Citi reiterated Buy on WC, target $53. Citi reiterated Buy on AA, target $48. Citi reiterated Buy on ERTS, target $60. Citi reiterated Sell on T, target $14.
Mid-day News
U.S. stocks are falling mid-day on terrorism fears, earnings worries and upcoming negative political rhetoric. Lawmakers and corporate executives have discussed the possibility of amending part of the Sarbanes-Oxley Act, which bolstered requirements for corporate governance, the Washington Post reported. China's electricity consumption surged to a record yesterday as rising temperatures across the country increased usage of air-conditioners, Xinhua news said. Al-Qaeda members caught in Saudi Arabia, Pakistan and Afghanistan have provided details about a possible terrorist attack similar in scale to the attacks carried out on Sept. 11, the NY Times reported. An increasing number of Germans support working longer hours to save their jobs, ZDF tv reported. The FBI said terrorists may try to attack tv news trucks in an attempt to disrupt the July 26-29 Democratic convention in Boston, the Boston Globe reported. Copper prices in New York had their biggest decline in six weeks after Grupo Mexico SA, the world's third-biggest copper producer, won a ruling to stop two strikes that threatened to reduce half of the company's production, Bloomberg said. The U.S. FCC approved a six-month freeze on rates paid by AT&T and other telephone companies to rent lines from local carriers such as Verizon, Bloomberg reported. Goldman Sachs economists disagree with fears of a job-creation slowdown and have raised their July forecast to 300,000 non-farm payroll gains from 250,000 amid an "auspicious confluence" of events that has occurred only two other times in the past 30 years, Bloomberg reported. United Air and Northwest Air each won U.S. approval for a new daily flight between the U.S. and China, the first awards under an agreement the countries reached last month, Bloomberg said.
BOTTOM LINE: The Portfolio is substantially higher today as my software and semiconductor shorts are falling significantly. I have not traded today and the Portfolio is still 50% net short. The tone of the market is bad. The advance/decline line is poor, technology shares are very weak, oil remains high and the Put/Call ratio is falling. However, it is good to see the ARMS index spiking and the AAII % Bulls falling. The Morgan Stanley Tech Index is now down 17.5% from its January high. The P/E on the S&P 500's 04 estimated earnings is now 16.5 and falling. I continue to believe the major U.S. indices will make a bottom sometime during the next 2 months and show a significant gain in the 4th quarter. Longer-term investors should use any extreme weakness during the next several weeks to add to favorite long positions.
Friday, July 23, 2004
Friday Watch
Earnings of Note
Company/Estimate
AAII/-.20
ATN/.42
CCU/.41
CMI/1.34
FO/1.25
IT/.09
HAL/.33
LSCC/.03
ITT/1.15
MYG/.40
SLB/.49
WY/1.13
XRX/1.17
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on NUE, TPX, KO, VIAB, MCK, AMGN, SII, AA, CLS, LEA, DHR, IGT and SKYW. Goldman reiterated Underperform on VC and FISV.
Late-Night News
Asian indices are mostly lower on continuing concerns that high energy prices will affect exporters. ConocoPhillips is near an agreement to buy a 7.6% stake in Russia's OAO Lukoil for about $1.7 billion, the Wall Street Journal reported. Acambis Plc said it could still win a third contract to supply smallpox vaccines for the U.S. government, the Telegraph said. Huaneng Power plans to expand capacity by at least two-thirds in the next 4 years to meet China's expanding demand for electricity, the China Daily reported. Fast-food chains including Burger King are losing their value as consumers turn away from food brands that don't endorse healthier menus, the London-based Times said. Apple Computer starts a trade-in service for its iPod digital music player in Japan today to help prevent customers from switching to rival products, the Nikkei English News reported. Shares of LG.Philips LCD, the world's second-largest marker of liquid crystal displays, slumped on their first day of trading in the U.S. on concern falling prices will slow earnings growth, Bloomberg reported. The U.S. Congress approved an increase in defense spending to $416 billion next fiscal year, including $25 billion for military operations in Iraq. The appropriations bill passed the Senate on a vote of 96-0 and passed the House of Representatives 410-12, Bloomberg reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.43%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in technology shares. The market will likely make another rally attempt tomorrow. I will closely monitor the quality of any rally and decide whether or not to add market exposure. My short-term trading indicators are still giving sell signals and the Portfolio is 50% net short heading into tomorrow.
Company/Estimate
AAII/-.20
ATN/.42
CCU/.41
CMI/1.34
FO/1.25
IT/.09
HAL/.33
LSCC/.03
ITT/1.15
MYG/.40
SLB/.49
WY/1.13
XRX/1.17
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on NUE, TPX, KO, VIAB, MCK, AMGN, SII, AA, CLS, LEA, DHR, IGT and SKYW. Goldman reiterated Underperform on VC and FISV.
Late-Night News
Asian indices are mostly lower on continuing concerns that high energy prices will affect exporters. ConocoPhillips is near an agreement to buy a 7.6% stake in Russia's OAO Lukoil for about $1.7 billion, the Wall Street Journal reported. Acambis Plc said it could still win a third contract to supply smallpox vaccines for the U.S. government, the Telegraph said. Huaneng Power plans to expand capacity by at least two-thirds in the next 4 years to meet China's expanding demand for electricity, the China Daily reported. Fast-food chains including Burger King are losing their value as consumers turn away from food brands that don't endorse healthier menus, the London-based Times said. Apple Computer starts a trade-in service for its iPod digital music player in Japan today to help prevent customers from switching to rival products, the Nikkei English News reported. Shares of LG.Philips LCD, the world's second-largest marker of liquid crystal displays, slumped on their first day of trading in the U.S. on concern falling prices will slow earnings growth, Bloomberg reported. The U.S. Congress approved an increase in defense spending to $416 billion next fiscal year, including $25 billion for military operations in Iraq. The appropriations bill passed the Senate on a vote of 96-0 and passed the House of Representatives 410-12, Bloomberg reported.
Late-Night Trading
Asian Indices are -.75% to -.25% on average.
S&P 500 indicated -.08%.
NASDAQ 100 indicated -.43%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in technology shares. The market will likely make another rally attempt tomorrow. I will closely monitor the quality of any rally and decide whether or not to add market exposure. My short-term trading indicators are still giving sell signals and the Portfolio is 50% net short heading into tomorrow.
Thursday, July 22, 2004
Thursday Close
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.
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.
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.
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