S&P 500 1,080.70 -1.63%
NASDAQ 1,821.63 -1.80%
Leading Sectors
Gaming -.35%
Fashion -.44%
Homebuilders -.50%
Lagging Sectors
Iron/Steel -2.66%
Retail -3.17%
Airlines -3.68%
Other
Crude Oil 44.37 -.09%
Natural Gas 5.71 -.04%
Gold 395.00 +.05%
Base Metals 110.01 -.52%
U.S. Dollar 89.64 -.04%
10-Yr. T-note Yield 4.40% -.44%
VIX 18.32 +13.02%
Put/Call .78 -13.33%
NYSE Arms 2.83 +121.09%
After-hours Movers
DOVP +30.9% after saying it may receive as much as $455 million from Merck for the right to experimental drugs for depression and other diseases.
BSX -4.7% after the FDA said it may broaden a probe of its products.
DTSI -24.2% after disappointing 2Q results.
BCSI -24.2% after lowering 1Q estimates.
NVDA -22.1% after missing 2Q estimates substantially.
ATYT -5.6% on weakness from NVDA.
Recommendations
Prudential raised RL to Overweight. Goldman Sachs reiterated Outperform on PFE, GILD, DIS and AL. Goldman reiterated Underperform KPP.
After-hours News
U.S. stocks finished slightly lower today Google's IPO may be delayed be a week to the week of Aug. 16, CNBC reported. Saudi Arabia arrested one of its most wanted militants, Fares al-Zahrani, Agence France-Presse reported. Hedge funds had their first quarterly loss in two years in the three months to June 30, the Financial Times reported. Duke Energy CEO Anderson told CNBC that he sees natural gas prices around $5-$6 per million BTUs for the next couple of years, Bloomberg said. Pixar Animation Studios said second-quarter profit rose 91% as customers bought its "Finding Nemo" movie on home video. Coca-Cola overstated its volume of beverages sold for the past three years because of errors in reporting bottled-water sales in Indonesia, Bloomberg said.
BOTTOM LINE: The Portfolio finished unchanged today as my declining gaming and medical longs offset my falling Russian ADR and software shorts. A few of my medical and security longs hit stop-losses in the afternoon and I exited the positions, leaving the Portfolio 50% net short. It was a very bad day for the Bulls. Oil set new highs, the NASDAQ made new lows for the year, the advance/decline line was very poor and the Put/Call ratio fell. There were a few positives today. The Arms Index soared, the VIX is climbing, interest rates fell, the AAII % Bulls fell and initial jobless claims were better-than-expected. It finally appears that investor complacency is beginning to decline. This is a positive development and is necessary to set the stage for the very strong rally I see in the fourth quarter.
Thursday, August 05, 2004
Mid-day Update
S&P 500 1,088.04 -.96%
NASDAQ 1,834.66 -1.10%
Leading Sectors
Homebuilders +1.19%
Gaming +.16%
HMO's -.33%
Lagging Sectors
Defense -1.84%
Retail -2.42%
Airlines -2.70%
Other
Crude Oil 44.10 +2.85%
Natural Gas 5.72 +1.04%
Gold 394.10 -.15%
Base Metals 110.01 -.52%
U.S. Dollar 89.70 +.02%
10-Yr. T-note Yield 4.38% -.75%
VIX 17.13 +5.37%
Put/Call .78 -13.33%
NYSE Arms 1.55 +19.53%
Market Movers
GPS -6.6% after lowering 2Q guidance.
XMSR +4.6% after meeting 2Q estimates and boosting yearly subscriber forecast.
UNTD -20.4% after missing 2Q estimates and lowering 3Q outlook.
IST -23.6% on strong 2Q results.
KOSP +22.3% after beating 2Q estimates substantially and raising 3Q/04 outlook.
CUB +14.6% after reporting good 3Q results and raising dividend.
HANS +15.3% on strong 2Q results.
KIND +11.0% after substantially beating 2Q estimates and raising 04 outlook.
UVN +11.4% after beating 2Q estimates, reaffirming 3Q guidance and Merrill Lynch upgrade to Buy.
KYPH +12.0% after beating 2Q estimates and raising 04 outlook.
JOSB +7.8% on strong July same-store-sales report.
IPMT +7.2% after beating 2Q forecast and raising 04 guidance.
SHRP -19.6% after cutting 2Q/04 forecasts.
BWS -15.8% after cutting 2Q forecast.
EASI -11.8% after announcing retirement of CEO and Thomas Weisel downgrade to Peerperform.
WGR -8.5% on profit-taking after 2Q report.
ANN -10.1% after boosting 2Q guidance, but lowering 05 estimates.
TSO -11.6% on profit-taking after beating 2Q estimates and Oppenheimer downgrade to neutral.
TLB -7.8% after lowering 2Q outlook.
KWK -7.0% after missing 2Q estimates and multiple downgrades.
Economic Data
Initial Jobless Claims for last week were 336K versus an estimate of 340K and 347K prior week.
Continuing Claims were 2911K versus estimates of 2920K and 2946K prior.
Recommendations
Goldman Sachs reiterated Outperform on STA and CLX. INCY raised to Buy at UBS, target $9. RHAT rated Sector Underperform at CIBC. BBBB rated Outperform at CSFB. BRW rated Buy at Legg Mason, target $24. CINF rated Buy at Legg Mason, target $46. PGR rated Buy at Legg Mason, target $95. RL raised to Overweight at Prudential, target $40. CHE rated Buy at Legg Mason, target $60. TDW cut to Underperform at CSFB, target $32. WFMI rated Sell at Bank of America, target $70. UVN raised to Buy at Merrill, target $35. DOW rated Overweight at Morgan Stanley, target $48. GGC rated Underweight at Morgan Stanley. LYO rated Overweight at Morgan Stanley, target $24.
Mid-day News
U.S. stocks are lower mid-day on terror worries, violence in Iraq and rising oil prices. Steel Dynamics said a Michigan judge dismissed a lawsuit filed by General Motors, the Wall Street Journal reported. KeySpan CEO Catell told CNBC that more customers are switching to natural gas from oil primarily drove second-quarter profit, Bloomberg said. Two men were arrested early today during a raid on a mosque in Albany, NY, on suspicions that they were planning to buy shoulder-launched surface-to-air missiles, CBS reported. Comcast plans to announce it and Electronic Arts agreed to offer fantasy football to Comcast's Internet subscribers, the Philadelphia Inquirer said. Eight out of 10 Germans would choose Senator Kerry over President Bush if they were voting in the U.S. election, a poll for ARD tv found. Walt Disney is introducing a personal computer geared toward children because market research shows parents want computers with content protection against inappropriate Web sites, COO Iger told CNBC. Senator Kerry, in an advertisement run by a group of Vietnam veterans, is accused of lying about his Vietnam War record, the NY Times reported. Shiite Muslim cleric Moqtada al-Sadr called for a national uprising against the U.S. and allied military forces as a two-month cease-fire between the two sides collapsed, the NY Times said. Persian Gulf oil tanker rates to Asia fell for the eight day in 10, close to a three-month low, as an increasing supply of ships competing for cargo forced owners to lower prices, Bloomberg said. Wal-Mart said July sales at U.S. stores open at least a year rose 3.2%, below estimates of 4.0%, Bloomberg reported. President Bush signed legislation that approves spending $416 billion for U.S. defense in the next fiscal year, Bloomberg said. Crude oil futures in New York and London rose to records on concern spare production capacity isn't available to substitute for a possible disruption of shipments for OAO Yukos Oil, Russia's biggest exporter, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly higher today as my Russian ADR and software shorts are falling more than my medical and gaming longs. A few of my longs hit stop-losses this morning and I exited the positions, thus leaving the Portfolio 25% net short. Another ugly day for the Bulls as the advance/decline line is poor and almost all sectors are lower. Oil, terror and war continue to weigh on investors' minds. It is good to see the VIX, Arms and % Bulls showing less complacency, however the Put/Call ratio is falling. Investor anxiety will likely accelerate next week as Google's IPO will be a negative and the Fed hikes rates, notwithstanding worries over slowing economic growth. I expect U.S. stocks to weaken on tomorrow's jobs report even if it meets or exceeds expectations.
NASDAQ 1,834.66 -1.10%
Leading Sectors
Homebuilders +1.19%
Gaming +.16%
HMO's -.33%
Lagging Sectors
Defense -1.84%
Retail -2.42%
Airlines -2.70%
Other
Crude Oil 44.10 +2.85%
Natural Gas 5.72 +1.04%
Gold 394.10 -.15%
Base Metals 110.01 -.52%
U.S. Dollar 89.70 +.02%
10-Yr. T-note Yield 4.38% -.75%
VIX 17.13 +5.37%
Put/Call .78 -13.33%
NYSE Arms 1.55 +19.53%
Market Movers
GPS -6.6% after lowering 2Q guidance.
XMSR +4.6% after meeting 2Q estimates and boosting yearly subscriber forecast.
UNTD -20.4% after missing 2Q estimates and lowering 3Q outlook.
IST -23.6% on strong 2Q results.
KOSP +22.3% after beating 2Q estimates substantially and raising 3Q/04 outlook.
CUB +14.6% after reporting good 3Q results and raising dividend.
HANS +15.3% on strong 2Q results.
KIND +11.0% after substantially beating 2Q estimates and raising 04 outlook.
UVN +11.4% after beating 2Q estimates, reaffirming 3Q guidance and Merrill Lynch upgrade to Buy.
KYPH +12.0% after beating 2Q estimates and raising 04 outlook.
JOSB +7.8% on strong July same-store-sales report.
IPMT +7.2% after beating 2Q forecast and raising 04 guidance.
SHRP -19.6% after cutting 2Q/04 forecasts.
BWS -15.8% after cutting 2Q forecast.
EASI -11.8% after announcing retirement of CEO and Thomas Weisel downgrade to Peerperform.
WGR -8.5% on profit-taking after 2Q report.
ANN -10.1% after boosting 2Q guidance, but lowering 05 estimates.
TSO -11.6% on profit-taking after beating 2Q estimates and Oppenheimer downgrade to neutral.
TLB -7.8% after lowering 2Q outlook.
KWK -7.0% after missing 2Q estimates and multiple downgrades.
Economic Data
Initial Jobless Claims for last week were 336K versus an estimate of 340K and 347K prior week.
Continuing Claims were 2911K versus estimates of 2920K and 2946K prior.
Recommendations
Goldman Sachs reiterated Outperform on STA and CLX. INCY raised to Buy at UBS, target $9. RHAT rated Sector Underperform at CIBC. BBBB rated Outperform at CSFB. BRW rated Buy at Legg Mason, target $24. CINF rated Buy at Legg Mason, target $46. PGR rated Buy at Legg Mason, target $95. RL raised to Overweight at Prudential, target $40. CHE rated Buy at Legg Mason, target $60. TDW cut to Underperform at CSFB, target $32. WFMI rated Sell at Bank of America, target $70. UVN raised to Buy at Merrill, target $35. DOW rated Overweight at Morgan Stanley, target $48. GGC rated Underweight at Morgan Stanley. LYO rated Overweight at Morgan Stanley, target $24.
Mid-day News
U.S. stocks are lower mid-day on terror worries, violence in Iraq and rising oil prices. Steel Dynamics said a Michigan judge dismissed a lawsuit filed by General Motors, the Wall Street Journal reported. KeySpan CEO Catell told CNBC that more customers are switching to natural gas from oil primarily drove second-quarter profit, Bloomberg said. Two men were arrested early today during a raid on a mosque in Albany, NY, on suspicions that they were planning to buy shoulder-launched surface-to-air missiles, CBS reported. Comcast plans to announce it and Electronic Arts agreed to offer fantasy football to Comcast's Internet subscribers, the Philadelphia Inquirer said. Eight out of 10 Germans would choose Senator Kerry over President Bush if they were voting in the U.S. election, a poll for ARD tv found. Walt Disney is introducing a personal computer geared toward children because market research shows parents want computers with content protection against inappropriate Web sites, COO Iger told CNBC. Senator Kerry, in an advertisement run by a group of Vietnam veterans, is accused of lying about his Vietnam War record, the NY Times reported. Shiite Muslim cleric Moqtada al-Sadr called for a national uprising against the U.S. and allied military forces as a two-month cease-fire between the two sides collapsed, the NY Times said. Persian Gulf oil tanker rates to Asia fell for the eight day in 10, close to a three-month low, as an increasing supply of ships competing for cargo forced owners to lower prices, Bloomberg said. Wal-Mart said July sales at U.S. stores open at least a year rose 3.2%, below estimates of 4.0%, Bloomberg reported. President Bush signed legislation that approves spending $416 billion for U.S. defense in the next fiscal year, Bloomberg said. Crude oil futures in New York and London rose to records on concern spare production capacity isn't available to substitute for a possible disruption of shipments for OAO Yukos Oil, Russia's biggest exporter, Bloomberg reported.
BOTTOM LINE: The Portfolio is slightly higher today as my Russian ADR and software shorts are falling more than my medical and gaming longs. A few of my longs hit stop-losses this morning and I exited the positions, thus leaving the Portfolio 25% net short. Another ugly day for the Bulls as the advance/decline line is poor and almost all sectors are lower. Oil, terror and war continue to weigh on investors' minds. It is good to see the VIX, Arms and % Bulls showing less complacency, however the Put/Call ratio is falling. Investor anxiety will likely accelerate next week as Google's IPO will be a negative and the Fed hikes rates, notwithstanding worries over slowing economic growth. I expect U.S. stocks to weaken on tomorrow's jobs report even if it meets or exceeds expectations.
Thursday Watch
Earnings of Note
Company/Estimate
ATK/.72
ALKS/-.20
AMLN/-.40
CLX/.83
CPN/-.10
BGG/1.53
ELX/.18
NVDA/.15
PNRA/.21
SLE/.43
TOL/1.14
XMSR/-.88
Splits
None of note.
Economic Data
Initial Jobless Claims for last week estimated at 340K versus 345K the prior week.
Continuing Claims estimated at 2920K versus 2960K prior.
Recommendations
Goldman Sachs reiterated Outperform on DDR and IR. Goldman reiterated Underperform on NFS, UNM and FISV.
Late-Night News
Asian indices are mostly higher on strength in exporters as crude oil prices fell today. Tyson Foods CEO John Tyson told CNBC that the market shouldn't be concerned about last week's departure of former CFO Steve Hankins, Bloomberg reported. Jemaah Islamiyah, a Southeast Asian Islamic group blamed for terrorist attacks in Indonesia, is struggling with a shortage of money, internal divisions and continuing arrests, the AP reported. Google said it's offering to repurchase 23.2 million of it own shares at a discount to the price it expects for its IPO, Bloomberg said. A senior al-Qaeda member in the U.K., alleged to have been in the final stages of planning an attack on London's Heathrow airport, has been arrested by British police, the London-based Times reported.
Late-Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated +.11%
BOTTOM LINE: I expect U.S. stocks to open modestly higher tomorrow on optimism that oil prices may have peaked. However, unless there is follow-through to today's decline in crude prices, stocks will likely weaken as the day progresses ahead of tomorrow's labor report. The Portfolio is 25% net long heading into tomorrow.
Company/Estimate
ATK/.72
ALKS/-.20
AMLN/-.40
CLX/.83
CPN/-.10
BGG/1.53
ELX/.18
NVDA/.15
PNRA/.21
SLE/.43
TOL/1.14
XMSR/-.88
Splits
None of note.
Economic Data
Initial Jobless Claims for last week estimated at 340K versus 345K the prior week.
Continuing Claims estimated at 2920K versus 2960K prior.
Recommendations
Goldman Sachs reiterated Outperform on DDR and IR. Goldman reiterated Underperform on NFS, UNM and FISV.
Late-Night News
Asian indices are mostly higher on strength in exporters as crude oil prices fell today. Tyson Foods CEO John Tyson told CNBC that the market shouldn't be concerned about last week's departure of former CFO Steve Hankins, Bloomberg reported. Jemaah Islamiyah, a Southeast Asian Islamic group blamed for terrorist attacks in Indonesia, is struggling with a shortage of money, internal divisions and continuing arrests, the AP reported. Google said it's offering to repurchase 23.2 million of it own shares at a discount to the price it expects for its IPO, Bloomberg said. A senior al-Qaeda member in the U.K., alleged to have been in the final stages of planning an attack on London's Heathrow airport, has been arrested by British police, the London-based Times reported.
Late-Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 indicated -.04%.
NASDAQ 100 indicated +.11%
BOTTOM LINE: I expect U.S. stocks to open modestly higher tomorrow on optimism that oil prices may have peaked. However, unless there is follow-through to today's decline in crude prices, stocks will likely weaken as the day progresses ahead of tomorrow's labor report. The Portfolio is 25% net long heading into tomorrow.
Wednesday, August 04, 2004
Wednesday Close
S&P 500 1,098.63 -.10%
NASDAQ 1,855.06 -.23%
Leading Sectors
Airlines +1.38%
Disk Drives +1.07%
Semis +.94%
Lagging Sectors
Energy -2.29%
Oil Service -2.50%
Fashion -2.66%
Other
Crude Oil 42.68 -.35%
Natural Gas 5.65 -.11%
Gold 394.70 unch.
Base Metals 110.59 -.51%
U.S. Dollar 89.68 +.12%
10-Yr. T-note Yield 4.42% -.13%
VIX 16.21 +1.12%
Put/Call .90 +23.29%
NYSE Arms 1.28 -18.99%
After-hours Movers
ICOS +5.52% after beating 2Q estimates.
KYPH +8.04% after beating 2Q estimates and raising 04 outlook.
JUPM +9.55% after beating 2Q estimates and raising 3Q and 4Q guidance.
UNTD -18.4% after missing 2Q estimates and lowering 3Q outlook.
LTON -15.8% after meeting 2Q estimates and lowering 3Q forecast.
Recommendations
Goldman Sachs reiterated Outperform on JTX, DOW, ROH, DD and GLK.
After-hours News
U.S. stocks finished slightly lower today as an afternoon rally, spurred by falling oil prices, boosted shares. After the close, Google, Yahoo! and other Internet search companies were accused in a California lawsuit of promoting illegal online gambling, The Recorder reported. U.S. accounting rules makers will force companies paying off debt by issuing shares to count those shares when calculating diluted earnings, possibly reducing per-share figures for some companies, Dow Jones Newswires reported. Crude oil futures fell from a record after OAO Yukos Oil said it was given access to funds needed for oil production and exports and after a report showed that U.S. gasoline supplies rose, Bloomberg reported. Reliant Energy, owner of power plants in 12 U.S. states, will receive a $108 million claim against Enron under a settlement between the two Houston energy companies, Bloomberg said.
BOTTOM LINE: The Portfolio finished slightly lower today as a few of my energy-related longs fell more than my technology shorts. I did not trade in the afternoon, leaving the Portfolio's market exposure at 25% net long. While today's afternoon decline in oil prices and subsequent stock rally was a welcome development, it still does not appear a bottom in stocks is in place. However, further declines in oil could spur a short-term rally. The psychology of the market is such that any rally will likely be met with selling until terror and political fears subside.
NASDAQ 1,855.06 -.23%
Leading Sectors
Airlines +1.38%
Disk Drives +1.07%
Semis +.94%
Lagging Sectors
Energy -2.29%
Oil Service -2.50%
Fashion -2.66%
Other
Crude Oil 42.68 -.35%
Natural Gas 5.65 -.11%
Gold 394.70 unch.
Base Metals 110.59 -.51%
U.S. Dollar 89.68 +.12%
10-Yr. T-note Yield 4.42% -.13%
VIX 16.21 +1.12%
Put/Call .90 +23.29%
NYSE Arms 1.28 -18.99%
After-hours Movers
ICOS +5.52% after beating 2Q estimates.
KYPH +8.04% after beating 2Q estimates and raising 04 outlook.
JUPM +9.55% after beating 2Q estimates and raising 3Q and 4Q guidance.
UNTD -18.4% after missing 2Q estimates and lowering 3Q outlook.
LTON -15.8% after meeting 2Q estimates and lowering 3Q forecast.
Recommendations
Goldman Sachs reiterated Outperform on JTX, DOW, ROH, DD and GLK.
After-hours News
U.S. stocks finished slightly lower today as an afternoon rally, spurred by falling oil prices, boosted shares. After the close, Google, Yahoo! and other Internet search companies were accused in a California lawsuit of promoting illegal online gambling, The Recorder reported. U.S. accounting rules makers will force companies paying off debt by issuing shares to count those shares when calculating diluted earnings, possibly reducing per-share figures for some companies, Dow Jones Newswires reported. Crude oil futures fell from a record after OAO Yukos Oil said it was given access to funds needed for oil production and exports and after a report showed that U.S. gasoline supplies rose, Bloomberg reported. Reliant Energy, owner of power plants in 12 U.S. states, will receive a $108 million claim against Enron under a settlement between the two Houston energy companies, Bloomberg said.
BOTTOM LINE: The Portfolio finished slightly lower today as a few of my energy-related longs fell more than my technology shorts. I did not trade in the afternoon, leaving the Portfolio's market exposure at 25% net long. While today's afternoon decline in oil prices and subsequent stock rally was a welcome development, it still does not appear a bottom in stocks is in place. However, further declines in oil could spur a short-term rally. The psychology of the market is such that any rally will likely be met with selling until terror and political fears subside.
Mid-day Update
S&P 500 1,094.39 -.49%
NASDAQ 1,846.99 -.67%
Leading Sectors
Tobacco +.59%
Computer Boxmakers +.35%
Software +.22%
Lagging Sectors
Oil Service -1.77%
Airlines -2.15%
Fashion -2.65%
Other
Crude Oil 43.88 -.61%
Natural Gas 5.74 -1.31%
Gold 395.50 -.25%
Base Metals 110.46 -.63%
U.S. Dollar 89.63 +.06%
10-Yr. T-note Yield 4.39% -.66%
VIX 16.33 +1.75%
Put/Call .85 +16.44%
NYSE Arms 1.81 +14.56%
Market Movers
IACI -16.5% after missing 2Q revenue estimates, lowering 04 guidance and multiple downgrades.
VCLK -26.0% meeting 2Q forecast, announcing $29M Pricerunner acquisition and giving weaker 3Q/04 guidance.
SGP -5.4% after announcing plans to sell $1.25 billion of convertible preferred stock and use the proceeds to pay legal settlements.
VSAT +12.3% after beating 1Q revenue estimates and Sanders Morris Harris upgrade to Strong Buy.
PDLI +9.1% after better-than-expected 2Q and Lazard Freres upgrade to Buy.
UTHR +4.7% on continued optimism over 2Q report.
RL +3.1% after beating 1Q estimates and reaffirming 05 outlook.
IPXL -17.3% after missing 2Q estimates.
BCO -17.3% after reporting strong 2Q results, but saying they may revise them lower due to unpaid customs duties and value-added taxes.
ALO -14.6% after beating 2Q estimates, but lowering 04 outlook.
SFCC -9.8% after announcing it intends to offer $100 million in convertible senior notes due 2024.
CKFR -8.7% after beating 04 estimates, but weaker 05 outlook.
NTLI -7.2% after missing 2Q revenue estimates.
Economic Data
Factory Orders for June rose .7% versus estimates of a .5% rise and a .4% increase in May.
ISM Non-Manufacturing for July came in at 64.8 versus estimates of 61.5 and a reading of 59.9 in June.
Recommendations
VSH and CIEN cut to Underweight at JP Morgan. MOTV rated Overweight at JP Morgan. OI raised to Overweight at JP Morgan. CAT raised to Buy at UBS, target $85. HON cut to Reduce at UBS, target $33. GGB raised to Buy at Deutsche Bank, target $19. DVA raised to Overweight at Morgan Stanley, target $33. CLRK rated Sector Outperform at CIBC, target $15. ACDO raised to Buy at Bank of America, target $34. EELN rated Outperform at Thomas Weisel. KWK cut to Underperform at Raymond James. Goldman Sachs reiterated Outperform on IACI, PFGC, KO and COH. Goldman reiterated Underperform on MHX. Citi SmithBarney upgraded AMAT to Buy, target $21. Citi reiterated Buy on THC, target $17.50. Citi reiterated Buy on PCG, target $32. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on TYC, target $40. Citi reiterated Buy on HNT, target $30. Citi reiterated Buy on L, target $11. Citi reiterated Buy on MAS, target $37. Citi reiterated Buy on CKFR, target $39.
Mid-day News
U.S. stocks are modestly lower mid-day as oil prices remain high and some earnings reports disappointed investors. Atlantic Coast Airlines changed its name to FLYi Inc. today and began trading under the new ticker FLYI, Bloomberg reported. The U.S. FBI is monitoring suspected members of al-Qaeda and two allied terrorist groups in the New York City area, the New York Daily News reported. Microsoft Chairman Bill Gates is ready to make an offer to buy Nintendo if there is any sign the Japanese game console maker is up for sale, WirtschaftsWoche reported. Illinois started a program to invest $50 million of taxpayer money in venture capital funds to help create jobs and make the state more attractive to entrepreneurs, the Chicago Tribune reported. Tyson Foods will begin a $75 million ad campaign on Aug. 30 to brand itself as a protein provider instead of just a chicken company, the NY Times reported. A federal judge has ordered First Data to give the IRS information about certain transactions, the Denver Post reported. Doctors at two of the top three U.S. heart centers aren't using Boston Scientific Taxus stent, the world's most widely used device for propping open arteries, for most patients because they believe the risk of complications in implanting them is too high, Bloomberg reported. President Bush will be re-elected in November, according to five computer models that use economic performance to forecast the vote, Bloomberg reported. Eli Lilly said U.S. regulators cleared its Cymbalta drug for depression, a medicine that analysts estimate may reach $1.5 billion to $2 billion in annual sales, Bloomberg said. The ISM Non-Manufacturing Index, which accounts for 85% of the U.S. economy, expanded at a faster-than-expected pace in July, suggesting the expansion may be reaccelerating, Bloomberg reported. Saudi Aramco, the world's largest oil company, has started production at two new fields three months ahead of schedule and may delay the shutdown of older wells to help meet increased oil demand, Bloomberg said. Federal regulators approved TiVo's application to let viewers send recorded tv shows via the Internet to other people, a plan opposed by Hollywood, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher today as my falling healthcare and retail shorts are more than offsetting declines in my biotech and gaming longs. I have not traded and the Portfolio is still 25% net long. The tone of the market is negative today as companies reporting minor disappointments are severely punished and the advance/decline line is weak. However, it is good to see the techs stabilizing and interest rates continuing to fall. As well, the Put/Call and Arms readings are spiking, which is a positive. Finally, economic data continue to show that the 2Q slowdown was only temporary and 3Q growth should exceed 4%. I continue to believe that overall fundamentals are very good and the current weakness in U.S. equities is a direct result of terrorism fears and worries over the outcome of the election. These fears and worries should reach their peaks within the next 2 months.
NASDAQ 1,846.99 -.67%
Leading Sectors
Tobacco +.59%
Computer Boxmakers +.35%
Software +.22%
Lagging Sectors
Oil Service -1.77%
Airlines -2.15%
Fashion -2.65%
Other
Crude Oil 43.88 -.61%
Natural Gas 5.74 -1.31%
Gold 395.50 -.25%
Base Metals 110.46 -.63%
U.S. Dollar 89.63 +.06%
10-Yr. T-note Yield 4.39% -.66%
VIX 16.33 +1.75%
Put/Call .85 +16.44%
NYSE Arms 1.81 +14.56%
Market Movers
IACI -16.5% after missing 2Q revenue estimates, lowering 04 guidance and multiple downgrades.
VCLK -26.0% meeting 2Q forecast, announcing $29M Pricerunner acquisition and giving weaker 3Q/04 guidance.
SGP -5.4% after announcing plans to sell $1.25 billion of convertible preferred stock and use the proceeds to pay legal settlements.
VSAT +12.3% after beating 1Q revenue estimates and Sanders Morris Harris upgrade to Strong Buy.
PDLI +9.1% after better-than-expected 2Q and Lazard Freres upgrade to Buy.
UTHR +4.7% on continued optimism over 2Q report.
RL +3.1% after beating 1Q estimates and reaffirming 05 outlook.
IPXL -17.3% after missing 2Q estimates.
BCO -17.3% after reporting strong 2Q results, but saying they may revise them lower due to unpaid customs duties and value-added taxes.
ALO -14.6% after beating 2Q estimates, but lowering 04 outlook.
SFCC -9.8% after announcing it intends to offer $100 million in convertible senior notes due 2024.
CKFR -8.7% after beating 04 estimates, but weaker 05 outlook.
NTLI -7.2% after missing 2Q revenue estimates.
Economic Data
Factory Orders for June rose .7% versus estimates of a .5% rise and a .4% increase in May.
ISM Non-Manufacturing for July came in at 64.8 versus estimates of 61.5 and a reading of 59.9 in June.
Recommendations
VSH and CIEN cut to Underweight at JP Morgan. MOTV rated Overweight at JP Morgan. OI raised to Overweight at JP Morgan. CAT raised to Buy at UBS, target $85. HON cut to Reduce at UBS, target $33. GGB raised to Buy at Deutsche Bank, target $19. DVA raised to Overweight at Morgan Stanley, target $33. CLRK rated Sector Outperform at CIBC, target $15. ACDO raised to Buy at Bank of America, target $34. EELN rated Outperform at Thomas Weisel. KWK cut to Underperform at Raymond James. Goldman Sachs reiterated Outperform on IACI, PFGC, KO and COH. Goldman reiterated Underperform on MHX. Citi SmithBarney upgraded AMAT to Buy, target $21. Citi reiterated Buy on THC, target $17.50. Citi reiterated Buy on PCG, target $32. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on TYC, target $40. Citi reiterated Buy on HNT, target $30. Citi reiterated Buy on L, target $11. Citi reiterated Buy on MAS, target $37. Citi reiterated Buy on CKFR, target $39.
Mid-day News
U.S. stocks are modestly lower mid-day as oil prices remain high and some earnings reports disappointed investors. Atlantic Coast Airlines changed its name to FLYi Inc. today and began trading under the new ticker FLYI, Bloomberg reported. The U.S. FBI is monitoring suspected members of al-Qaeda and two allied terrorist groups in the New York City area, the New York Daily News reported. Microsoft Chairman Bill Gates is ready to make an offer to buy Nintendo if there is any sign the Japanese game console maker is up for sale, WirtschaftsWoche reported. Illinois started a program to invest $50 million of taxpayer money in venture capital funds to help create jobs and make the state more attractive to entrepreneurs, the Chicago Tribune reported. Tyson Foods will begin a $75 million ad campaign on Aug. 30 to brand itself as a protein provider instead of just a chicken company, the NY Times reported. A federal judge has ordered First Data to give the IRS information about certain transactions, the Denver Post reported. Doctors at two of the top three U.S. heart centers aren't using Boston Scientific Taxus stent, the world's most widely used device for propping open arteries, for most patients because they believe the risk of complications in implanting them is too high, Bloomberg reported. President Bush will be re-elected in November, according to five computer models that use economic performance to forecast the vote, Bloomberg reported. Eli Lilly said U.S. regulators cleared its Cymbalta drug for depression, a medicine that analysts estimate may reach $1.5 billion to $2 billion in annual sales, Bloomberg said. The ISM Non-Manufacturing Index, which accounts for 85% of the U.S. economy, expanded at a faster-than-expected pace in July, suggesting the expansion may be reaccelerating, Bloomberg reported. Saudi Aramco, the world's largest oil company, has started production at two new fields three months ahead of schedule and may delay the shutdown of older wells to help meet increased oil demand, Bloomberg said. Federal regulators approved TiVo's application to let viewers send recorded tv shows via the Internet to other people, a plan opposed by Hollywood, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher today as my falling healthcare and retail shorts are more than offsetting declines in my biotech and gaming longs. I have not traded and the Portfolio is still 25% net long. The tone of the market is negative today as companies reporting minor disappointments are severely punished and the advance/decline line is weak. However, it is good to see the techs stabilizing and interest rates continuing to fall. As well, the Put/Call and Arms readings are spiking, which is a positive. Finally, economic data continue to show that the 2Q slowdown was only temporary and 3Q growth should exceed 4%. I continue to believe that overall fundamentals are very good and the current weakness in U.S. equities is a direct result of terrorism fears and worries over the outcome of the election. These fears and worries should reach their peaks within the next 2 months.
Wednesday Watch
Earnings of Note
Company/Estimate
CI/1.25
CVS/.54
HIG/1.57
ICOS/-.93
IPMT/.30
RL/.11
TRK/.91
TOM/-.10
UVN/.19
Splits
None of note.
Economic Data
Factory Orders for June estimated +.5% versus -.3% in May.
ISM Non-Manufacturing for July estimated at 61.5 versus 59.9 in June.
Recommendations
Goldman Sachs reiterated Outperform on CZN, TYC and PCG. Goldman reiterated Underperform on VICL, CIEN and PPS.
Late-Night News
Asian indices are lower on continuing fears that high energy prices will damage growth in the region. Korea Exchange Bank will open a branch in Iraq for more than 3,000 South Korea troops who will be stationed in northern Iraq, Korea Economic Daily said. China Construction Bank's lending growth slowed in the first half of this year after it cut loans to the real estate industry, International Finance News said. Caterpillar workers will strike this week if negotiations don't lead to a new contract, the AP reported.
Late-Night Trading
Asian Indices are -1.25% to -.50% on average.
S&P 500 indicated -.37%.
NASDAQ 100 indicated -.40%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in Asia and rising oil prices. My short-term trading indicators are giving sell signals. The Portfolio is 25% net long heading into tomorrow.
Company/Estimate
CI/1.25
CVS/.54
HIG/1.57
ICOS/-.93
IPMT/.30
RL/.11
TRK/.91
TOM/-.10
UVN/.19
Splits
None of note.
Economic Data
Factory Orders for June estimated +.5% versus -.3% in May.
ISM Non-Manufacturing for July estimated at 61.5 versus 59.9 in June.
Recommendations
Goldman Sachs reiterated Outperform on CZN, TYC and PCG. Goldman reiterated Underperform on VICL, CIEN and PPS.
Late-Night News
Asian indices are lower on continuing fears that high energy prices will damage growth in the region. Korea Exchange Bank will open a branch in Iraq for more than 3,000 South Korea troops who will be stationed in northern Iraq, Korea Economic Daily said. China Construction Bank's lending growth slowed in the first half of this year after it cut loans to the real estate industry, International Finance News said. Caterpillar workers will strike this week if negotiations don't lead to a new contract, the AP reported.
Late-Night Trading
Asian Indices are -1.25% to -.50% on average.
S&P 500 indicated -.37%.
NASDAQ 100 indicated -.40%
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on weakness in Asia and rising oil prices. My short-term trading indicators are giving sell signals. The Portfolio is 25% net long heading into tomorrow.
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