Earnings of Note
Company/Estimate
LWAY/.08
ZOLT/-.23
Splits
None of Note.
Economic Data
PPI for July estimated +.3% versus -.3% in June.
PPI Ex Food & Energy for July estimated +.1% versus +.2% in June.
Trade Balance for June estimated at -$47.0B versus -$46.0B in May.
Preliminary Univ. of Mich. Consumer Confidence for August estimated at 97.2 versus 96.7 in July.
Recommendations
Goldman Sachs reiterated Outperform on MDT, A, GE, CCL, RCL and AMLN. MATK will benefit from the fastest-growing baby-food market, Business Week reported.
Late-Night News
Asian indices are mixed on weakness in Japan and strength in Korea. The U.S. SEC has looked at an interview the co-founders of Google did with Playboy magazine to see whether it violates the quiet period on the stock, the Wall Street Journal reported. Goldman Sachs won final regulatory approval in China to set up a joint venture investment bank, the South China Morning Post reported. Japan's GDP expanded at a less-than-expected 1.7% annual pace in the second quarter, as slowing Chinese growth curtailed exports, Bloomberg said. Moqtada al-Sadar, the Shiite Muslim cleric leading an insurgency in southern Iraqi cities, was wounded in three places during fighting in Najaf, Agence France-Presse reported.
Late-Night Trading
Asian Indices are -1.25% to +.75% on average.
S&P 500 indicated +.09%.
NASDAQ 100 indicated +.27%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a bounce in the technology sector. However, gains will likely be tempered by terrorism fears ahead of the Olympics. The Portfolio is 25% net long heading into tomorrow.
Friday, August 13, 2004
Thursday, August 12, 2004
Thursday Close
S&P 500 1,063.23 -1.17%
NASDAQ 1,752.49 -1.68%
Leading Sectors
Broadcasting +.22%
Utilities -.28%
Drugs -.39%
Lagging Sectors
Computer Boxmakers -2.89%
Networking -3.26%
Disk Drives -3.87%
Other
Crude Oil 45.40 -.22%
Natural Gas 5.43 -.13%
Gold 396.90 +.08%
Base Metals 109.72 +.32%
U.S. Dollar 88.74 -.12%
10-Yr. T-note Yield 4.24% -.63%
VIX 19.08 +5.76%
Put/Call 1.04 +26.83%
NYSE Arms 2.78 +113.85%
After-hours Movers
ADI -6.53% after missing 3Q estimates and lowering 4Q outlook.
A +8.74% after beating 3Q forecast and giving positive 4Q guidance.
Recommendations
None of note.
After-hours News
U.S. stocks finished lower today after a Some Canadian cattle ranchers plan to sue the U.S. government for as much as $750 million, claiming it unfairly blocked exports of live cattle after the discovery of mad cow disease in Alberta last year, Canadian Press reported. New Jersey Democratic Governor McGreevey plans to resign in November after acknowledging he hid a homosexual affair from his family, Bloomberg reported. Dell Inc. said second-quarter net income rose 29% as it bolstered sales of servers and printers and expanded outside the U.S., Bloomberg said. The California Supreme Court ruled San Francisco Democratic Mayor Gavin Newsom didn't have the authority to issue wedding licenses to same-sex couples and voided more than 4,000 gay marriages the city performed earlier this year, Bloomberg reported. Google will begin taking bids in its auction-style initial share sale tomorrow, moving founders Brin and Page closer to a test of whether investors will pay the $108-$115/share the company is seeking, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I exited a few of these positions in the afternoon as they hit stop-losses, leaving the Portfolio 25% net long. It was another disappointing day for the Bulls. However, the Put/Call, Arms and VIX continue to rise as investor psychology is reaching much healthier levels. Moreover, interest rates and the CRB Index continue to fall, which is a positive. Finally, stocks are responding favorably to Dell's report after the close.
NASDAQ 1,752.49 -1.68%
Leading Sectors
Broadcasting +.22%
Utilities -.28%
Drugs -.39%
Lagging Sectors
Computer Boxmakers -2.89%
Networking -3.26%
Disk Drives -3.87%
Other
Crude Oil 45.40 -.22%
Natural Gas 5.43 -.13%
Gold 396.90 +.08%
Base Metals 109.72 +.32%
U.S. Dollar 88.74 -.12%
10-Yr. T-note Yield 4.24% -.63%
VIX 19.08 +5.76%
Put/Call 1.04 +26.83%
NYSE Arms 2.78 +113.85%
After-hours Movers
ADI -6.53% after missing 3Q estimates and lowering 4Q outlook.
A +8.74% after beating 3Q forecast and giving positive 4Q guidance.
Recommendations
None of note.
After-hours News
U.S. stocks finished lower today after a Some Canadian cattle ranchers plan to sue the U.S. government for as much as $750 million, claiming it unfairly blocked exports of live cattle after the discovery of mad cow disease in Alberta last year, Canadian Press reported. New Jersey Democratic Governor McGreevey plans to resign in November after acknowledging he hid a homosexual affair from his family, Bloomberg reported. Dell Inc. said second-quarter net income rose 29% as it bolstered sales of servers and printers and expanded outside the U.S., Bloomberg said. The California Supreme Court ruled San Francisco Democratic Mayor Gavin Newsom didn't have the authority to issue wedding licenses to same-sex couples and voided more than 4,000 gay marriages the city performed earlier this year, Bloomberg reported. Google will begin taking bids in its auction-style initial share sale tomorrow, moving founders Brin and Page closer to a test of whether investors will pay the $108-$115/share the company is seeking, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today on weakness in my technology longs. I exited a few of these positions in the afternoon as they hit stop-losses, leaving the Portfolio 25% net long. It was another disappointing day for the Bulls. However, the Put/Call, Arms and VIX continue to rise as investor psychology is reaching much healthier levels. Moreover, interest rates and the CRB Index continue to fall, which is a positive. Finally, stocks are responding favorably to Dell's report after the close.
Mid-day Update
S&P 500 1,071.13 -.73%
NASDAQ 1,771.70 -2.05%
Leading Sectors
Broadcasting +1.06%
Drugs +.33%
Airlines -.19%
Lagging Sectors
Networking -2.86%
Disk Drives -3.03%
Computer Boxmakers -3.10%
Other
Crude Oil 45.23 +1.0%
Natural Gas 5.48 -2.39%
Gold 396.70 -.30%
Base Metals 109.11 -.24%
U.S. Dollar 88.85 +.02%
10-Yr. T-note Yield 4.28% +.18%
VIX 18.80 +4.32%
Put/Call .82 unch.
NYSE Arms 1.81 +39.23%
Market Movers
HPQ -16.2% after missing 3Q estimates and lowering 4Q forecast.
CYBX -44.5% after it failed to win U.S. regulatory approval to market its implantable nerve-stimulation device as a treatment for severe depression.
DIGE -34.5% after missing 4Q estimates and lowering 1Q guidance.
MICU +19.2% after announcing positive phase III results for Dalbavancin in skin and soft tissue infections.
WGII +10.0% after beating 2Q estimates.
TGT +6.4% after miss 2Q estimates, but maintaining 3Q guidance.
ANN +6.1% after meeting 2Q estimates and maintaining 3Q and 4Q forecasts.
PBY -25.0% after missing 2Q estimates substantially.
Economic Data
Import Price Index for July rose .2% versus estimates of a .4% rise and a .1% decline in June.
Advance Retail Sales for July rose .7% versus estimates of a 1.2% increase and an upwardly revised .5% decline in June.
Retail Sales Less Autos for July rose .2% versus estimates of a .4% increase and an upwardly revised .3% increase in June.
Initial Jobless Claims for last week fell to 333K versus estimates of 340K and 337K the prior week.
Continuing Claims fell to 2896K versus estimates of 2895K and 2901K prior.
Business Inventories for June rose .9% versus estimates of a .6% rise and an upwardly revised .7% increase in June.
Recommendations
Goldman Sachs reiterated Outperform on MER, CZN and AMD. Citi SmithBarney upgraded TPX to Buy, target $19. Citi said to Buy COGN, target $41. Citi reiterated Buy on AMAT, target $21. Citi reiterated Buy on FD, target $58. UBS raised MAR to Buy, target $57. UBS raised FHR to Buy, target $30.25. RFMD downgraded to Sell at Deutsche Bank, target $3.50. EAT cut to Sector Underperform at CIBC World Markets. KYPH cut to Sell at Bank of America, target $21. EAT cut to Underweight at Prudential, target $32. GET rated Overweight at JP Morgan. ADRX raised to Buy at Merrill Lynch, target $25.
Mid-day News
U.S. stocks are lower mid-day on disappointment over Hewlett Packard's quarterly report and rising oil prices. Russia may announce by early September terms for auctioning exploration licenses for Sukhoi Log, its biggest untapped gold field, with a starting price of at least $250 million, Interfax reported. U.S. National Security Adviser Condoleezza Rice called Dmitry Medvedev, Russian President Putin's chief of staff, to express concern about the country's handling of OAO Yukos Oil and its effect on the oil markets, the Wall Street Journal reported. OAO Yukos Oil's appeal to defer some of its tax payments was rejected by the Moscow Arbitration Court, Interfax reported. IBM plans to hire 18,000 workers in 2004, up from previous estimates of 10,000, Bloomberg reported. California Governor Schwarzenegger said he might campaign out of state for President Bush, the LA Times reported. Wal-Mart said second-quarter profit rose 16%, helped by new stores and sales at international outlets. The company also boosted its annual earnings forecast, Bloomberg reported. The U.S. State Department said that the potential for violence exists in Venezuela where voters go to the polls Sunday to cast ballots in recall referendum on President Chavez, Bloomberg reported. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, for the second straight decline, Bloomberg said. Hewlett-Packard said third-quarter profit rose to $586 million, less than analysts expected, as sales of its server and storage computers fell, Bloomberg reported. Target said second-quarter earnings almost quadrupled because of a gain from the sale of the company's Marshall Field's chain, Bloomberg reported. U.S. retail sales rose .7% in July after a decrease in June that was less than initially reported, Bloomberg said. Hurricane Charley moved toward the Cayman Islands and Cuba, while Tropical Storm Bonnie weakened as it approached the Florida panhandle this morning, the U.S. National Hurricane Center said. The average rate on a 30-year fixed mortgage in the U.S. fell this week to 5.85%, the seventh decline in eight weeks, Bloomberg reported. Crude oil futures rose to records in New York and London on continuing worries over supply disruptions, Bloomberg reported. Iraqi and U.S.-led coalition forces in Najaf have captured weapons and about 1,200 militiamen as they battle with rebels loyal to cleric al-Sadr for an eighth day, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today on declines in my internet and computer longs. I have not traded today and the Portfolio is still 75% net long. Another disappointing day for the Bulls as the technology sector takes it on the chin once again. As well, investors remain fixated on oil, notwithstanding another drop today in the CRB Index(a broad measure of commodity prices). The VIX continues to move higher and the Arms is spiking again, which are positives. Stratfor.com, a well-respected global intelligence firm, said on a conference call today that the strategic situation in Iraq is much improved since April. They also believe that if terrorists are to hit domestically, it will occur this month. However, they said the odds of this happening have diminished considerably since August 1st. Finally, they believe there is as much as a $10/bbl. terror premium in oil. I expect U.S. stocks to rise slightly into the close, barring a significant change in oil prices.
NASDAQ 1,771.70 -2.05%
Leading Sectors
Broadcasting +1.06%
Drugs +.33%
Airlines -.19%
Lagging Sectors
Networking -2.86%
Disk Drives -3.03%
Computer Boxmakers -3.10%
Other
Crude Oil 45.23 +1.0%
Natural Gas 5.48 -2.39%
Gold 396.70 -.30%
Base Metals 109.11 -.24%
U.S. Dollar 88.85 +.02%
10-Yr. T-note Yield 4.28% +.18%
VIX 18.80 +4.32%
Put/Call .82 unch.
NYSE Arms 1.81 +39.23%
Market Movers
HPQ -16.2% after missing 3Q estimates and lowering 4Q forecast.
CYBX -44.5% after it failed to win U.S. regulatory approval to market its implantable nerve-stimulation device as a treatment for severe depression.
DIGE -34.5% after missing 4Q estimates and lowering 1Q guidance.
MICU +19.2% after announcing positive phase III results for Dalbavancin in skin and soft tissue infections.
WGII +10.0% after beating 2Q estimates.
TGT +6.4% after miss 2Q estimates, but maintaining 3Q guidance.
ANN +6.1% after meeting 2Q estimates and maintaining 3Q and 4Q forecasts.
PBY -25.0% after missing 2Q estimates substantially.
Economic Data
Import Price Index for July rose .2% versus estimates of a .4% rise and a .1% decline in June.
Advance Retail Sales for July rose .7% versus estimates of a 1.2% increase and an upwardly revised .5% decline in June.
Retail Sales Less Autos for July rose .2% versus estimates of a .4% increase and an upwardly revised .3% increase in June.
Initial Jobless Claims for last week fell to 333K versus estimates of 340K and 337K the prior week.
Continuing Claims fell to 2896K versus estimates of 2895K and 2901K prior.
Business Inventories for June rose .9% versus estimates of a .6% rise and an upwardly revised .7% increase in June.
Recommendations
Goldman Sachs reiterated Outperform on MER, CZN and AMD. Citi SmithBarney upgraded TPX to Buy, target $19. Citi said to Buy COGN, target $41. Citi reiterated Buy on AMAT, target $21. Citi reiterated Buy on FD, target $58. UBS raised MAR to Buy, target $57. UBS raised FHR to Buy, target $30.25. RFMD downgraded to Sell at Deutsche Bank, target $3.50. EAT cut to Sector Underperform at CIBC World Markets. KYPH cut to Sell at Bank of America, target $21. EAT cut to Underweight at Prudential, target $32. GET rated Overweight at JP Morgan. ADRX raised to Buy at Merrill Lynch, target $25.
Mid-day News
U.S. stocks are lower mid-day on disappointment over Hewlett Packard's quarterly report and rising oil prices. Russia may announce by early September terms for auctioning exploration licenses for Sukhoi Log, its biggest untapped gold field, with a starting price of at least $250 million, Interfax reported. U.S. National Security Adviser Condoleezza Rice called Dmitry Medvedev, Russian President Putin's chief of staff, to express concern about the country's handling of OAO Yukos Oil and its effect on the oil markets, the Wall Street Journal reported. OAO Yukos Oil's appeal to defer some of its tax payments was rejected by the Moscow Arbitration Court, Interfax reported. IBM plans to hire 18,000 workers in 2004, up from previous estimates of 10,000, Bloomberg reported. California Governor Schwarzenegger said he might campaign out of state for President Bush, the LA Times reported. Wal-Mart said second-quarter profit rose 16%, helped by new stores and sales at international outlets. The company also boosted its annual earnings forecast, Bloomberg reported. The U.S. State Department said that the potential for violence exists in Venezuela where voters go to the polls Sunday to cast ballots in recall referendum on President Chavez, Bloomberg reported. The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, for the second straight decline, Bloomberg said. Hewlett-Packard said third-quarter profit rose to $586 million, less than analysts expected, as sales of its server and storage computers fell, Bloomberg reported. Target said second-quarter earnings almost quadrupled because of a gain from the sale of the company's Marshall Field's chain, Bloomberg reported. U.S. retail sales rose .7% in July after a decrease in June that was less than initially reported, Bloomberg said. Hurricane Charley moved toward the Cayman Islands and Cuba, while Tropical Storm Bonnie weakened as it approached the Florida panhandle this morning, the U.S. National Hurricane Center said. The average rate on a 30-year fixed mortgage in the U.S. fell this week to 5.85%, the seventh decline in eight weeks, Bloomberg reported. Crude oil futures rose to records in New York and London on continuing worries over supply disruptions, Bloomberg reported. Iraqi and U.S.-led coalition forces in Najaf have captured weapons and about 1,200 militiamen as they battle with rebels loyal to cleric al-Sadr for an eighth day, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today on declines in my internet and computer longs. I have not traded today and the Portfolio is still 75% net long. Another disappointing day for the Bulls as the technology sector takes it on the chin once again. As well, investors remain fixated on oil, notwithstanding another drop today in the CRB Index(a broad measure of commodity prices). The VIX continues to move higher and the Arms is spiking again, which are positives. Stratfor.com, a well-respected global intelligence firm, said on a conference call today that the strategic situation in Iraq is much improved since April. They also believe that if terrorists are to hit domestically, it will occur this month. However, they said the odds of this happening have diminished considerably since August 1st. Finally, they believe there is as much as a $10/bbl. terror premium in oil. I expect U.S. stocks to rise slightly into the close, barring a significant change in oil prices.
Thursday Watch
Earnings of Note
Company/Estimate
A/.27
ADI/.45
AEOS/.38
BEAS/.07
DELL/.31
KSS/.44
TGT/.47
TIF/.29
URBN/.22
WMT/.60
WTW/.49
Splits
None of note.
Economic Data
Import Price Index for July estimated +.4% versus -.2% in June.
Advance Retail Sales for July estimated +1.2% versus -1.1% in June.
Retail Sales Less Autos for July estimated +.4% versus -.2% in June.
Initial Jobless Claims for last week estimated at 340K versus 336K prior week.
Continuing Claims estimated at 2895K versus 2911K prior.
Business Inventories for June estimated +.6% versus +.4% in May.
Release of minutes from June 30 FOMC meeting.
Recommendations
Goldman Sachs reiterated their Attractive view of Paper sector, favorites are IP, DTC and SPP. Goldman reiterated Outperform on BSX and MDT.
Late-Night News
Asian indices are mixed on strength in Korea and weakness in China. Television Broadcasts Ltd., Hong Kong's biggest broadcaster, said it expects by month's end to sign an agreement with China that will give it legal access to the mainland, the South China Morning Post reported. U.S. coal prices have risen following growth in demand and declining domestic production, the Financial Times reported. Human trials of a pill that could prevent transmission of the HIV virus are in jeopardy after some prostitutes in Cambodia refused to take part because of the terms of the trials, the Wall Street Journal reported. Hurricane Charley rolled toward the southwestern coast of Florida and Tropical Storm Bonnie aimed to hit the Panhandle by morning, prompting Florida's governor to issue a statewide emergency, Bloomberg reported. Dan Benton's Andor Capital Management LLC, the eighth-biggest hedge fund at the end of 2003, lost almost half its assets in July, people familiar with the New York-based fund said.
Late-Night Trading
Asian Indices are -.75% to +.50% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.04%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on better economic data and a follow-through from today's afternoon rally. The Portfolio is 75% net long heading into tomorrow.
Company/Estimate
A/.27
ADI/.45
AEOS/.38
BEAS/.07
DELL/.31
KSS/.44
TGT/.47
TIF/.29
URBN/.22
WMT/.60
WTW/.49
Splits
None of note.
Economic Data
Import Price Index for July estimated +.4% versus -.2% in June.
Advance Retail Sales for July estimated +1.2% versus -1.1% in June.
Retail Sales Less Autos for July estimated +.4% versus -.2% in June.
Initial Jobless Claims for last week estimated at 340K versus 336K prior week.
Continuing Claims estimated at 2895K versus 2911K prior.
Business Inventories for June estimated +.6% versus +.4% in May.
Release of minutes from June 30 FOMC meeting.
Recommendations
Goldman Sachs reiterated their Attractive view of Paper sector, favorites are IP, DTC and SPP. Goldman reiterated Outperform on BSX and MDT.
Late-Night News
Asian indices are mixed on strength in Korea and weakness in China. Television Broadcasts Ltd., Hong Kong's biggest broadcaster, said it expects by month's end to sign an agreement with China that will give it legal access to the mainland, the South China Morning Post reported. U.S. coal prices have risen following growth in demand and declining domestic production, the Financial Times reported. Human trials of a pill that could prevent transmission of the HIV virus are in jeopardy after some prostitutes in Cambodia refused to take part because of the terms of the trials, the Wall Street Journal reported. Hurricane Charley rolled toward the southwestern coast of Florida and Tropical Storm Bonnie aimed to hit the Panhandle by morning, prompting Florida's governor to issue a statewide emergency, Bloomberg reported. Dan Benton's Andor Capital Management LLC, the eighth-biggest hedge fund at the end of 2003, lost almost half its assets in July, people familiar with the New York-based fund said.
Late-Night Trading
Asian Indices are -.75% to +.50% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.04%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on better economic data and a follow-through from today's afternoon rally. The Portfolio is 75% net long heading into tomorrow.
Wednesday, August 11, 2004
Wednesday Close
S&P 500 1,075.79 -.30%
NASDAQ 1,782.42 -1.45%
Leading Sectors
Airlines +2.21%
Biotech +1.99%
Drugs +.98%
Lagging Sectors
Internet -3.99%
Networking -4.68%
Semis -5.16%
Other
Crude Oil 44.77 -.07%
Natural Gas 5.63 +.29%
Gold 398.40 +.13%
Base Metals 109.37 +.82%
U.S. Dollar 88.85 +.07%
10-Yr. T-note Yield 4.27% -.41%
VIX 18.04 +3.26%
Put/Call .82 -20.39%
NYSE Arms 1.30 +170.83%
After-hours Movers
MAMA +5.76% after reporting strong 2Q results.
BOBE -10.47% after missing 1Q forecast and lowering 05 outlook.
AAP -4.39% after beating 2Q estimates, lowering 3Q/4Q forecast and announcing $200M stock buyback.
Recommendations
Goldman Sachs reiterated Outperform on FD, PFE and Underperform on RA, NSM.
After-hours News
U.S. stocks finished lower today after a late-afternoon rally pushed shares well off their lows for the day. After the close, Sony Corp. is being investigated by the U.S. International Trade Commission to determine if they company's digital cameras and cellular phones violate an Ampex Corp. patent, Kydo News Service. Crude oil rose after the Energy Department said that U.S. inventories declined and Tropical Storm Bonnie caused companies to reduce oil production in the Gulf of Mexico, Bloomberg reported. The U.S. government doesn't have to pay damages for destroying a pharmaceutical plant in Sudan that allegedly supplied chemical weapons to Osama bin Laden's al-Qaeda terror network, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today as my declining technology longs more than offset my falling Chinese and Russian ADR shorts. I added a few new longs in the afternoon, bringing the Portfolio's market exposure to 75% net long. One of my new longs is TKLC and I am using a stop-loss of $16.50 on this position. Today's action was encouraging despite the damage in the technology sector. Most stocks finished well off their daily lows and the advance/decline line improved significantly in the afternoon. As well, the Arms Index spiked and the VIX rose, which is also positive. Finally, the CRB Index finished near its lows for the day which continues to point towards at least an intermediate-term peak in inflation worries. With demand for oil decelerating from the slowing U.S. and Chinese economies and supply increasing from OPEC and others, it is only a matter of time before oil heads back towards $35/bbl. in my opinion. As terrorism fears diminish somewhat over the next couple of months, it is likely the current terror premium will fall. I expect this to begin to happen within the next 6 weeks.
NASDAQ 1,782.42 -1.45%
Leading Sectors
Airlines +2.21%
Biotech +1.99%
Drugs +.98%
Lagging Sectors
Internet -3.99%
Networking -4.68%
Semis -5.16%
Other
Crude Oil 44.77 -.07%
Natural Gas 5.63 +.29%
Gold 398.40 +.13%
Base Metals 109.37 +.82%
U.S. Dollar 88.85 +.07%
10-Yr. T-note Yield 4.27% -.41%
VIX 18.04 +3.26%
Put/Call .82 -20.39%
NYSE Arms 1.30 +170.83%
After-hours Movers
MAMA +5.76% after reporting strong 2Q results.
BOBE -10.47% after missing 1Q forecast and lowering 05 outlook.
AAP -4.39% after beating 2Q estimates, lowering 3Q/4Q forecast and announcing $200M stock buyback.
Recommendations
Goldman Sachs reiterated Outperform on FD, PFE and Underperform on RA, NSM.
After-hours News
U.S. stocks finished lower today after a late-afternoon rally pushed shares well off their lows for the day. After the close, Sony Corp. is being investigated by the U.S. International Trade Commission to determine if they company's digital cameras and cellular phones violate an Ampex Corp. patent, Kydo News Service. Crude oil rose after the Energy Department said that U.S. inventories declined and Tropical Storm Bonnie caused companies to reduce oil production in the Gulf of Mexico, Bloomberg reported. The U.S. government doesn't have to pay damages for destroying a pharmaceutical plant in Sudan that allegedly supplied chemical weapons to Osama bin Laden's al-Qaeda terror network, Bloomberg reported.
BOTTOM LINE: The Portfolio finished lower today as my declining technology longs more than offset my falling Chinese and Russian ADR shorts. I added a few new longs in the afternoon, bringing the Portfolio's market exposure to 75% net long. One of my new longs is TKLC and I am using a stop-loss of $16.50 on this position. Today's action was encouraging despite the damage in the technology sector. Most stocks finished well off their daily lows and the advance/decline line improved significantly in the afternoon. As well, the Arms Index spiked and the VIX rose, which is also positive. Finally, the CRB Index finished near its lows for the day which continues to point towards at least an intermediate-term peak in inflation worries. With demand for oil decelerating from the slowing U.S. and Chinese economies and supply increasing from OPEC and others, it is only a matter of time before oil heads back towards $35/bbl. in my opinion. As terrorism fears diminish somewhat over the next couple of months, it is likely the current terror premium will fall. I expect this to begin to happen within the next 6 weeks.
Mid-day Update
S&P 500 1,071.13 -.73%
NASDAQ 1,771.70 -2.05%
Leading Sectors
Biotech +1.73%
Airlines +1.19%
Drugs +.95%
Lagging Sectors
Internet -4.45%
Networking -4.96%
Semis -6.28%
Other
Crude Oil 44.45 -.25%
Natural Gas 5.64 -2.61%
Gold 397.90 -1.09%
Base Metals 109.37 +.82%
U.S. Dollar 88.72 -.07%
10-Yr. T-note Yield 4.27% -.41%
VIX 18.33 +4.92%
Put/Call .85 -17.48%
NYSE Arms 1.45 +200.0%
Market Movers
CSCO -9.8% after beating 4Q estimates, giving cautious outlook and multiple downgrades.
NSM -14.9% after cutting revenues estimates for 1Q and multiple downgrades.
UTSI -13.1% after requesting a five-day extension with respect to the filing of its quarterly report and Oppenheimer downgrade to Sell.
RSTI +18.0% after beating 3Q forecasts.
ELK +9.4% after missing 4Q estimates, lowering 1Q guidance and raising 05 outlook.
CYD -20.1% after disappointing 2Q results.
ANF -11.3% after meeting 2Q estimates, lowering 3Q forecast and multiple downgrades.
EAT -7.8% after meeting 4Q estimates, lowering 1Q forecast and Legg Mason downgrade to Hold.
OSIP +5.9% on bargain-hunting after missing 3Q estimates.
*Semis and Networkers down across the board on CSCO/NSM reports.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Underperform on CL. Goldman reiterated Outperform on CSCO, DIS, COH, FD, NSM and SYMC. Citi SmithBarney cut NSM to Sell before earnings report, target $35. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on AAP, target $50. Citi reiterated Buy on DIS, target $30. Merrill Lynch named MTD Focus 1 stock of the week. MCIP cut to Underperform at CSFB, target $11. WCG rated Buy at UBS, target $22. LSTR raised to Outperform at CSFB, target $60. UTSI cut to Sell at Oppenheimer.
Mid-day News
U.S. stocks are lower mid-day on weakness in the technology sector after disappointing comments from Cisco Systems. The U.K. approved the use of human cloning for medical research, allowing university scientists to clone embryos, Agence France-Presse reported. Donald Trump, who is seeking Chapter 11 bankruptcy protection for his hotel and casino company, wants to run gambling operations in Pennsylvania, the Philadelphia Inquirer reported. Motorola said it may have to pay an extra $500 million in tax after the U.S. IRS examined the company's payments between 1996 and 2000, Bloomberg reported. OAO Yukos Oil may soon have to cut output because cash is dangerously short after Russia froze bank accounts at the parent company over a $3.4 billion tax claim, Bloomberg said. Toys "R" Us is exploring the possible sale of its global toy business and spin-off of its Babies "R" Us chain, Bloomberg reported. The U.S.-led military coalition in Iraq said it was readying for "major assaults" on fighters backing the renegade Shiite cleric al-Sadr in the holy city of Najaf, Bloomberg said. Gold Fields, the world's fourth-largest gold producer, agreed to buy Iamgold Corp in a stock swap valued at about $2.1 billion, fending off a competing bid from Golden Star Resources to expand outside South Africa, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today as my technology longs are falling more than my Chinese and Russian ADR shorts. I exited a few semiconductor longs as they hit stop-losses and added some new Chinese ADR shorts, thus leaving the Portfolio with 50% net long market exposure. One of my new shorts is PKX and I am using a stop-loss of $36.75 on the position. While today is definitely a bad day for the Bulls, it could be worse. Most of the damage is concentrated in the technology sector. As I anticipated a few weeks ago, the CRB Index(a broad measure of commodity prices) is finally breaking down through its 200-day moving-average. Rising commodity prices have been the main source of recent inflation fears. This is a very positive development and the mainstream press is completely ignoring it in favor of negative stories on high oil prices. I continue to believe oil will break down within the next 6 weeks and head back towards $35/bbl. I expect U.S. stocks to rise modestly into the close.
NASDAQ 1,771.70 -2.05%
Leading Sectors
Biotech +1.73%
Airlines +1.19%
Drugs +.95%
Lagging Sectors
Internet -4.45%
Networking -4.96%
Semis -6.28%
Other
Crude Oil 44.45 -.25%
Natural Gas 5.64 -2.61%
Gold 397.90 -1.09%
Base Metals 109.37 +.82%
U.S. Dollar 88.72 -.07%
10-Yr. T-note Yield 4.27% -.41%
VIX 18.33 +4.92%
Put/Call .85 -17.48%
NYSE Arms 1.45 +200.0%
Market Movers
CSCO -9.8% after beating 4Q estimates, giving cautious outlook and multiple downgrades.
NSM -14.9% after cutting revenues estimates for 1Q and multiple downgrades.
UTSI -13.1% after requesting a five-day extension with respect to the filing of its quarterly report and Oppenheimer downgrade to Sell.
RSTI +18.0% after beating 3Q forecasts.
ELK +9.4% after missing 4Q estimates, lowering 1Q guidance and raising 05 outlook.
CYD -20.1% after disappointing 2Q results.
ANF -11.3% after meeting 2Q estimates, lowering 3Q forecast and multiple downgrades.
EAT -7.8% after meeting 4Q estimates, lowering 1Q forecast and Legg Mason downgrade to Hold.
OSIP +5.9% on bargain-hunting after missing 3Q estimates.
*Semis and Networkers down across the board on CSCO/NSM reports.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Underperform on CL. Goldman reiterated Outperform on CSCO, DIS, COH, FD, NSM and SYMC. Citi SmithBarney cut NSM to Sell before earnings report, target $35. Citi reiterated Buy on CSCO, target $30. Citi reiterated Buy on AAP, target $50. Citi reiterated Buy on DIS, target $30. Merrill Lynch named MTD Focus 1 stock of the week. MCIP cut to Underperform at CSFB, target $11. WCG rated Buy at UBS, target $22. LSTR raised to Outperform at CSFB, target $60. UTSI cut to Sell at Oppenheimer.
Mid-day News
U.S. stocks are lower mid-day on weakness in the technology sector after disappointing comments from Cisco Systems. The U.K. approved the use of human cloning for medical research, allowing university scientists to clone embryos, Agence France-Presse reported. Donald Trump, who is seeking Chapter 11 bankruptcy protection for his hotel and casino company, wants to run gambling operations in Pennsylvania, the Philadelphia Inquirer reported. Motorola said it may have to pay an extra $500 million in tax after the U.S. IRS examined the company's payments between 1996 and 2000, Bloomberg reported. OAO Yukos Oil may soon have to cut output because cash is dangerously short after Russia froze bank accounts at the parent company over a $3.4 billion tax claim, Bloomberg said. Toys "R" Us is exploring the possible sale of its global toy business and spin-off of its Babies "R" Us chain, Bloomberg reported. The U.S.-led military coalition in Iraq said it was readying for "major assaults" on fighters backing the renegade Shiite cleric al-Sadr in the holy city of Najaf, Bloomberg said. Gold Fields, the world's fourth-largest gold producer, agreed to buy Iamgold Corp in a stock swap valued at about $2.1 billion, fending off a competing bid from Golden Star Resources to expand outside South Africa, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower today as my technology longs are falling more than my Chinese and Russian ADR shorts. I exited a few semiconductor longs as they hit stop-losses and added some new Chinese ADR shorts, thus leaving the Portfolio with 50% net long market exposure. One of my new shorts is PKX and I am using a stop-loss of $36.75 on the position. While today is definitely a bad day for the Bulls, it could be worse. Most of the damage is concentrated in the technology sector. As I anticipated a few weeks ago, the CRB Index(a broad measure of commodity prices) is finally breaking down through its 200-day moving-average. Rising commodity prices have been the main source of recent inflation fears. This is a very positive development and the mainstream press is completely ignoring it in favor of negative stories on high oil prices. I continue to believe oil will break down within the next 6 weeks and head back towards $35/bbl. I expect U.S. stocks to rise modestly into the close.
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