Earnings of Note
Company/Estimate
CHS/.38
DG/.20
MCRS/.60
KKD/.22
SFD/.47
TSA/.44
TECD/.49
VIP/1.69
Splits
WOOF 2-for-1
ZBRA 3-for-2
Economic Data
Initial Jobless Claims for last week are estimated at 335K versus 331K the prior week.
Continuing Claims are estimated at 2885K versus 2904K prior.
Help Wanted Index for July estimated at 38 versus 38 in June.
Recommendations
Goldman Sachs reiterated Underperform on CMOS.
Late-Night News
Asian indices are mostly higher as crude oil futures had their steepest decline in three months. Career Education is the subject of a grand jury investigation by the U.S. Justice Department and could face criminal charges, the Financial Times reported. Toronto-Dominion Bank, Canada's second-largest bank by assets, may announce a deal as early as tomorrow to buy a majority stake of Banknorth Group, the Wall Street Journal reported. Taiwan's Nanya Technology Corp., ProMOS Technologies Inc. and Powerchip Semiconductor Corp. are expected to make a combined $440 million in the third quarter because a typhoon caused a worldwide shortage of dynamic random access memory chips and pushed up prices, the Economic Daily News said. Russian President Putin ordered security controls at the country's airports to be taken over by the Interior Ministry, Interfax reported.
Late-Night Trading
Asian Indices are -.25% to +1.0% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated -.14%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on continuing optimism over falling energy prices and short-covering. It is likely the rally in U.S. stocks will pause sometime during the next 2 days as apprehension rises on terrorism fears ahead of the Republican Convention. However, barring any domestic terror acts, equities should resume their rise next week. The Portfolio is 100% net long heading into tomorrow.
Wednesday, August 25, 2004
Wednesday Close
S&P 500 1,104.96 +.80%
NASDAQ 1,860.72 +1.30%
Leading Sectors
Networking +2.52%
Internet +2.06%
I-Banks +2.04%
Lagging Sectors
Papers -.15%
Fashion -.30%
Homebuilders -.93%
Other
Crude Oil 43.63 +.37%
Natural Gas 5.31 +.32
Gold 409.20 -.20%
Base Metals 107.90 -1.18%
U.S. Dollar 89.42 -.03%
10-Yr. T-note Yield 4.26% -.14%
VIX 14.98 -2.28%
Put/Call .78 -1.27%
NYSE Arms .79 -35.77%
After-hours Movers
CECO -9.71% after saying Robert McNamara Jr., former general counsel to the CIA, will be the company's first senior v.p. of compliance.
CWTR +10.01% after beating 2Q estimates.
SBUX -4.11% after saying August same-store-sales rose 8%, less than the 11% average gain in the first 11 months of its fiscal year.
CYBX -4.48% after raising 2Q profit forecast and lowering 2Q sales guidance.
ZIGO +17.62% after reporting strong 4Q and saying it had entered into an agreement to sell its vacant Westborough, Mass., facility.
Recommendations
Goldman Sachs reiterated Outperform on TU and UNH. Goldman reiterated Underperform on BA.
After-hours News
U.S. stocks finished higher today as the Dow hit a six-week high on optimism over falling oil prices. After the close, Microsoft was fined by Brazil's antitrust regulator the equivalent of 10% of its 1998 sales to the federal government for illegal practices, Bloomberg reported. Iraqi police rounded up dozens of journalists in a Najaf hotel today and took them to the station. "You are brought here because I want to tell you that you never publish the truth," Najaf police Chief Ghaleb al-Jezari told the reporters, Agence France-Presse reported. Crude oil futures plunged 3.9% to $43.47/bbl., the biggest decline in almost three months, after a government reported showed that U.S. gasoline supplies were higher-than-expected. Former Enron director of investor relations, Mark Koenig, pleaded guilty in federal court in Houston to aiding and abetting securities fraud and has agreed to cooperate with prosecutors, Bloomberg reported. Militiamen loyal to Moqtada al-Sadr will suspend fighting in Iraq to market the return of the nation's leading Shiite Muslim cleric, Grand Ayatollah Ali al-Sistani, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly higher today as my falling steel shorts and rising alternative energy longs more than offset my declining homebuilding longs. I added a few new technology and restaurant longs in the afternoon, leaving the Portfolio 100% net long. One of my new longs is OSTK and I am using a $30.75 stop-loss on the position. The action in the unleaded gasoline and oil futures is very encouraging and will provide further stimuli to economic demand in the fourth quarter. Many large investors are vacationing this week and many more are planning on leaving NYC during the Republican Convention next week. This leads me to conclude this rally has further to go, barring an act of terror at the convention. The market is also anticipating pro-business political rhetoric and a bounce in the polls for President Bush, which the majority of investors view favorably.
NASDAQ 1,860.72 +1.30%
Leading Sectors
Networking +2.52%
Internet +2.06%
I-Banks +2.04%
Lagging Sectors
Papers -.15%
Fashion -.30%
Homebuilders -.93%
Other
Crude Oil 43.63 +.37%
Natural Gas 5.31 +.32
Gold 409.20 -.20%
Base Metals 107.90 -1.18%
U.S. Dollar 89.42 -.03%
10-Yr. T-note Yield 4.26% -.14%
VIX 14.98 -2.28%
Put/Call .78 -1.27%
NYSE Arms .79 -35.77%
After-hours Movers
CECO -9.71% after saying Robert McNamara Jr., former general counsel to the CIA, will be the company's first senior v.p. of compliance.
CWTR +10.01% after beating 2Q estimates.
SBUX -4.11% after saying August same-store-sales rose 8%, less than the 11% average gain in the first 11 months of its fiscal year.
CYBX -4.48% after raising 2Q profit forecast and lowering 2Q sales guidance.
ZIGO +17.62% after reporting strong 4Q and saying it had entered into an agreement to sell its vacant Westborough, Mass., facility.
Recommendations
Goldman Sachs reiterated Outperform on TU and UNH. Goldman reiterated Underperform on BA.
After-hours News
U.S. stocks finished higher today as the Dow hit a six-week high on optimism over falling oil prices. After the close, Microsoft was fined by Brazil's antitrust regulator the equivalent of 10% of its 1998 sales to the federal government for illegal practices, Bloomberg reported. Iraqi police rounded up dozens of journalists in a Najaf hotel today and took them to the station. "You are brought here because I want to tell you that you never publish the truth," Najaf police Chief Ghaleb al-Jezari told the reporters, Agence France-Presse reported. Crude oil futures plunged 3.9% to $43.47/bbl., the biggest decline in almost three months, after a government reported showed that U.S. gasoline supplies were higher-than-expected. Former Enron director of investor relations, Mark Koenig, pleaded guilty in federal court in Houston to aiding and abetting securities fraud and has agreed to cooperate with prosecutors, Bloomberg reported. Militiamen loyal to Moqtada al-Sadr will suspend fighting in Iraq to market the return of the nation's leading Shiite Muslim cleric, Grand Ayatollah Ali al-Sistani, Bloomberg reported.
BOTTOM LINE: The Portfolio finished slightly higher today as my falling steel shorts and rising alternative energy longs more than offset my declining homebuilding longs. I added a few new technology and restaurant longs in the afternoon, leaving the Portfolio 100% net long. One of my new longs is OSTK and I am using a $30.75 stop-loss on the position. The action in the unleaded gasoline and oil futures is very encouraging and will provide further stimuli to economic demand in the fourth quarter. Many large investors are vacationing this week and many more are planning on leaving NYC during the Republican Convention next week. This leads me to conclude this rally has further to go, barring an act of terror at the convention. The market is also anticipating pro-business political rhetoric and a bounce in the polls for President Bush, which the majority of investors view favorably.
Mid-day Update
S&P 500 1,099.48 +.30%
NASDAQ 1,845.68 +.48%
Leading Sectors
Networking +1.24%
Oil Service +.99%
Semis +.88%
Lagging Sectors
Papers -.94%
Iron/Steel -1.21%
Homebuilders -1.73%
Other
Crude Oil 45.12 -.20%
Natural Gas 5.34 +.04%
Gold 409.20 +1.06%
Base Metals 107.78 -1.29%
U.S. Dollar 89.36 -.10%
10-Yr. T-note Yield 4.24% -.73%
VIX 15.0 -2.15%
Put/Call .66 -16.46%
NYSE Arms 1.05 -14.63%
Market Movers
DITC +20.8% after beating 1Q estimates and raising 2Q forecast.
SMTC +7.3% after beating 2Q estimates, reiterating 3Q forecast and Legg Mason upgrade to Buy.
BNK +10.5% after disclosing it is in talks with Toronto-Dominion Bank for "a possible transaction."
WSM +10.2% after beating 2Q estimates and raising 3Q/4Q forecasts.
TZOO +5.3% on continuing short-squeeze.
EYET +4.7% after saying they will learn Friday whether their drug for treating blindness will move closer to FDA approval.
SEAC -10.4% after beating 2Q forecast and reiterating 3Q guidance.
HRB -7.6% after missing 1Q estimates and giving weak 05 guidance.
CNX -6.9% after lowering 3Q estimates substantially.
Economic Data
Durable Goods Orders for July rose 1.7% versus estimates of a 1.0% increase and an upwardly revised 1.1% rise in June.
Durable Goods Less Transportation rose .1% versus estimates of a 1.3% increase and a .3% fall in June.
New Home Sales for July came in at 1.13M versus estimates of 1.3M and a downwardly revised 1.21M in June.
Recommendations
Goldman Sachs reiterated Outperform on GDT, STLD, CVD, IACI, WAG and FSL. Goldman reiterated Underperform on HRB. Citi SmithBarney reiterated Buy on GIS, target $51.50. Citi reiterated Buy on AVO, target $46. Citi reiterated Buy on COO, target $70. CFSI rated Overweight at JP Morgan. PIR rated Sell at Deutsche, target $14. JWN rated Buy at Deutsche Bank, target $47. NMG/A rated Buy at Deutsche Bank, target $67. FD rated Buy at Deutsche Bank, target $55. SKS rated Sell at Deutsche Bank, target $10. DDS rated Sell at Deutsche Bank, target $15. SMTC raised to Buy at Legg Mason, target $23. PPC raised to Outperform at CSFB, target $30. CFSI rated Outperform at CSFB, target $16. Merrill Lynch rated COO Focus 1 stock of the week.
Mid-day News
U.S. stocks are higher mid-day on another fall in oil prices and mixed economic reports. Senator Kerry's campaign promises conflict with his pledge to reduce the federal budget deficit, the Washington Post said, citing its review of the four-term senator's tax cut and spending proposals. Scientists at a Becton, Dickinson unit and the U.S. Army have developed an inhaled vaccine that could potentially protect against anthrax infection and be more easily stockpiled for emergencies, Reuters reported. Viacom may enter the video game business and is eyeing Electronic Arts as a purchase target, the New York Post said. GM, Ford and Chrysler are offering rebates and financing deals that lower the value of their vehicles in the minds of consumers, the AP reported. California may surpass Nevada in annual revenue from gambling by the end of the decade, the LA Times said. Sprint and Mediacom agreed to provide phone service to more than 2 million Mediacom cable customers starting next year, the companies said. The UN appealed for $434 million to provide for humanitarian needs in Sudan's western Darfur region, and other areas of the African country, Bloomberg reported. U.S. orders for durable goods rose 1.7% in July, more than forecast, as bookings surged for commercial aircraft and demand increased for business equipment, Bloomberg reported. U.S. new home sales in July fell more than forecast to a 1.13 million annual rate, the slowest pace of the year, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher mid-day as my declining homebuilding longs are more than offset by my falling steel shorts and rising alternative energy longs. I have not traded today and the Portfolio is still 50% net long. The tone of the market is improving again today as oil continues to fall. While the new home sales numbers were disappointing, they were still relatively strong and will likely accelerate as mortgage rates fall further and energy prices decline. I expect U.S. stocks to rise modestly into the close.
NASDAQ 1,845.68 +.48%
Leading Sectors
Networking +1.24%
Oil Service +.99%
Semis +.88%
Lagging Sectors
Papers -.94%
Iron/Steel -1.21%
Homebuilders -1.73%
Other
Crude Oil 45.12 -.20%
Natural Gas 5.34 +.04%
Gold 409.20 +1.06%
Base Metals 107.78 -1.29%
U.S. Dollar 89.36 -.10%
10-Yr. T-note Yield 4.24% -.73%
VIX 15.0 -2.15%
Put/Call .66 -16.46%
NYSE Arms 1.05 -14.63%
Market Movers
DITC +20.8% after beating 1Q estimates and raising 2Q forecast.
SMTC +7.3% after beating 2Q estimates, reiterating 3Q forecast and Legg Mason upgrade to Buy.
BNK +10.5% after disclosing it is in talks with Toronto-Dominion Bank for "a possible transaction."
WSM +10.2% after beating 2Q estimates and raising 3Q/4Q forecasts.
TZOO +5.3% on continuing short-squeeze.
EYET +4.7% after saying they will learn Friday whether their drug for treating blindness will move closer to FDA approval.
SEAC -10.4% after beating 2Q forecast and reiterating 3Q guidance.
HRB -7.6% after missing 1Q estimates and giving weak 05 guidance.
CNX -6.9% after lowering 3Q estimates substantially.
Economic Data
Durable Goods Orders for July rose 1.7% versus estimates of a 1.0% increase and an upwardly revised 1.1% rise in June.
Durable Goods Less Transportation rose .1% versus estimates of a 1.3% increase and a .3% fall in June.
New Home Sales for July came in at 1.13M versus estimates of 1.3M and a downwardly revised 1.21M in June.
Recommendations
Goldman Sachs reiterated Outperform on GDT, STLD, CVD, IACI, WAG and FSL. Goldman reiterated Underperform on HRB. Citi SmithBarney reiterated Buy on GIS, target $51.50. Citi reiterated Buy on AVO, target $46. Citi reiterated Buy on COO, target $70. CFSI rated Overweight at JP Morgan. PIR rated Sell at Deutsche, target $14. JWN rated Buy at Deutsche Bank, target $47. NMG/A rated Buy at Deutsche Bank, target $67. FD rated Buy at Deutsche Bank, target $55. SKS rated Sell at Deutsche Bank, target $10. DDS rated Sell at Deutsche Bank, target $15. SMTC raised to Buy at Legg Mason, target $23. PPC raised to Outperform at CSFB, target $30. CFSI rated Outperform at CSFB, target $16. Merrill Lynch rated COO Focus 1 stock of the week.
Mid-day News
U.S. stocks are higher mid-day on another fall in oil prices and mixed economic reports. Senator Kerry's campaign promises conflict with his pledge to reduce the federal budget deficit, the Washington Post said, citing its review of the four-term senator's tax cut and spending proposals. Scientists at a Becton, Dickinson unit and the U.S. Army have developed an inhaled vaccine that could potentially protect against anthrax infection and be more easily stockpiled for emergencies, Reuters reported. Viacom may enter the video game business and is eyeing Electronic Arts as a purchase target, the New York Post said. GM, Ford and Chrysler are offering rebates and financing deals that lower the value of their vehicles in the minds of consumers, the AP reported. California may surpass Nevada in annual revenue from gambling by the end of the decade, the LA Times said. Sprint and Mediacom agreed to provide phone service to more than 2 million Mediacom cable customers starting next year, the companies said. The UN appealed for $434 million to provide for humanitarian needs in Sudan's western Darfur region, and other areas of the African country, Bloomberg reported. U.S. orders for durable goods rose 1.7% in July, more than forecast, as bookings surged for commercial aircraft and demand increased for business equipment, Bloomberg reported. U.S. new home sales in July fell more than forecast to a 1.13 million annual rate, the slowest pace of the year, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly higher mid-day as my declining homebuilding longs are more than offset by my falling steel shorts and rising alternative energy longs. I have not traded today and the Portfolio is still 50% net long. The tone of the market is improving again today as oil continues to fall. While the new home sales numbers were disappointing, they were still relatively strong and will likely accelerate as mortgage rates fall further and energy prices decline. I expect U.S. stocks to rise modestly into the close.
Wednesday Watch
Earnings of Note
Company/Estimate
CWTR/.00
DLTR/.26
SJM/.56
MIK/.40
TOL/1.19
WSM/.19
Splits
IVX 5-for-4
Economic Data
Durable Goods Orders for July estimated up 1.0% versus an increase of .9% in June.
Durable Goods Less Transportation for July estimated up 1.3% versus a decrease of .4% in June.
New Home Sales for July estimated at 1.3M versus 1.33M in June.
Recommendations
Goldman Sachs reiterated Outperform on NFP.
Late-Night News
Asian indices are mostly higher as exporters rise after oil prices remained near a 2-week low. General Motors is cutting back production of its Hummer H2 sport-utility vehicle because of lower consumer demand for the large vehicles, the Wall Street Journal reported. Boeing won a $3.7 billion order from Singapore Airlines for 18 long-range 777s, beating out Airbus SAS, Bloomberg reported. Shareholders of Wal-Mart Stores say the world's biggest retailer should proceed with a plan to buy stores from Daiei, a Japanese supermarket chain that is trying to restructure more than $9 billion in debt, Bloomberg said. Two Russian airliners crashed nearly simultaneously late Tuesday, purportedly killing all 86 people on board. Authorities suspect terrorism, CNN reported. A resurgence of capital spending by companies such as Boeing, Caterpillar and Verizon Communications may create jobs and strengthen the U.S. economy after a mid-year lull, economists say.
Late-Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated -.11%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on strength in Asia and continuing optimism over falling oil prices. The Portfolio is 50% net long heading into tomorrow.
Company/Estimate
CWTR/.00
DLTR/.26
SJM/.56
MIK/.40
TOL/1.19
WSM/.19
Splits
IVX 5-for-4
Economic Data
Durable Goods Orders for July estimated up 1.0% versus an increase of .9% in June.
Durable Goods Less Transportation for July estimated up 1.3% versus a decrease of .4% in June.
New Home Sales for July estimated at 1.3M versus 1.33M in June.
Recommendations
Goldman Sachs reiterated Outperform on NFP.
Late-Night News
Asian indices are mostly higher as exporters rise after oil prices remained near a 2-week low. General Motors is cutting back production of its Hummer H2 sport-utility vehicle because of lower consumer demand for the large vehicles, the Wall Street Journal reported. Boeing won a $3.7 billion order from Singapore Airlines for 18 long-range 777s, beating out Airbus SAS, Bloomberg reported. Shareholders of Wal-Mart Stores say the world's biggest retailer should proceed with a plan to buy stores from Daiei, a Japanese supermarket chain that is trying to restructure more than $9 billion in debt, Bloomberg said. Two Russian airliners crashed nearly simultaneously late Tuesday, purportedly killing all 86 people on board. Authorities suspect terrorism, CNN reported. A resurgence of capital spending by companies such as Boeing, Caterpillar and Verizon Communications may create jobs and strengthen the U.S. economy after a mid-year lull, economists say.
Late-Night Trading
Asian Indices are -.25% to +.75% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated -.11%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on strength in Asia and continuing optimism over falling oil prices. The Portfolio is 50% net long heading into tomorrow.
Tuesday, August 24, 2004
Tuesday Close
S&P 500 1,096.19 +.05%
NASDAQ 1,836.89 -.10%
Leading Sectors
Airlines +2.44%
Restaurants +1.07%
Transports +.84%
Lagging Sectors
Broadcasting -.79%
Networking -1.15%
Semis -2.52%
Other
Crude Oil 45.15 -1.95%
Natural Gas 5.36 +1.04%
Gold 405.50 -1.77%
Base Metals 109.19 +.26%
U.S. Dollar 89.43 +.42%
10-Yr. T-note Yield 4.27% -.36%
VIX 15.33 -3.46%
Put/Call .79 unch.
NYSE Arms 1.23 +21.78%
After-hours Movers
DITC +27.07% after beating 1Q estimates and raising 2Q forecast.
SMTC +7.2% after beating 2Q estimates and reiterating 3Q forecast.
SEAC -3.62% after beating 2Q forecast and reiterating 3Q guidance.
APPB -4.45% after saying the Olympics will hurt sales first week in Sept.
HRB -7.87% after missing 1Q estimates and giving weak 05 guidance.
Recommendations
Goldman Sachs reiterated Outperform on BBY, HD, SPLS, PETC, JTX and MDT.
After-hours News
U.S. stocks finished mixed today as falling oil prices offset weaker economic data and terrorism fears ahead of the Republican Convention. Hedge funds, pension funds and other buyers of bonds are planning to hire more fixed-income professionals even as U.S. bond markets are enduring a lackluster year, Reuters reported. Rapid advancements in biotechnology in the past five years have created demand for more lawyers in the field, the New York Law Journal reported. Sunoco, the largest oil refiner in the U.S. Northeast, will shut much of its plant in Marcus Hook, Pennsylvania, on Sept. 5 for two to three weeks of maintenance, Reuters said. Alan Greenspan said the case has not been made to monitor hedge funds and that China's slowing economy should rebound, Bloomberg reported. H&R Block had a $44.1 million loss in its fiscal first quarter as earnings from mortgage loans fell and an office expansion increased costs, Bloomberg said. Sugar-rich soft drinks and fruit punch are fueling twin surges in U.S. obesity and diabetes, according to a U.S. study in the Aug. 25 Journal of the American Medical Association. California's credit rating on $42.7 billion of bonds was raised three levels by S&P after the state's economy improved and Governor Schwarzenegger engineered a bond sale to avert a cast shortage, Bloomberg reported. Viacom, signaling that investors are shunning its plan to split off home-video unit Blockbuster, said it may once again have to write down the value of the video rental chain's assets, Bloomberg said.
BOTTOM LINE: The Portfolio finished slightly lower today as my shorts were mixed and technology longs fell. I added a few new longs in the afternoon, bringing the Portfolio's market exposure to 50% net long. One of my new longs is AMXC and I am using a stop-loss of $16 on this position. The tone of the market was pretty good today, considering last week's run-up. The market appears to be consolidating before another move higher next week.
NASDAQ 1,836.89 -.10%
Leading Sectors
Airlines +2.44%
Restaurants +1.07%
Transports +.84%
Lagging Sectors
Broadcasting -.79%
Networking -1.15%
Semis -2.52%
Other
Crude Oil 45.15 -1.95%
Natural Gas 5.36 +1.04%
Gold 405.50 -1.77%
Base Metals 109.19 +.26%
U.S. Dollar 89.43 +.42%
10-Yr. T-note Yield 4.27% -.36%
VIX 15.33 -3.46%
Put/Call .79 unch.
NYSE Arms 1.23 +21.78%
After-hours Movers
DITC +27.07% after beating 1Q estimates and raising 2Q forecast.
SMTC +7.2% after beating 2Q estimates and reiterating 3Q forecast.
SEAC -3.62% after beating 2Q forecast and reiterating 3Q guidance.
APPB -4.45% after saying the Olympics will hurt sales first week in Sept.
HRB -7.87% after missing 1Q estimates and giving weak 05 guidance.
Recommendations
Goldman Sachs reiterated Outperform on BBY, HD, SPLS, PETC, JTX and MDT.
After-hours News
U.S. stocks finished mixed today as falling oil prices offset weaker economic data and terrorism fears ahead of the Republican Convention. Hedge funds, pension funds and other buyers of bonds are planning to hire more fixed-income professionals even as U.S. bond markets are enduring a lackluster year, Reuters reported. Rapid advancements in biotechnology in the past five years have created demand for more lawyers in the field, the New York Law Journal reported. Sunoco, the largest oil refiner in the U.S. Northeast, will shut much of its plant in Marcus Hook, Pennsylvania, on Sept. 5 for two to three weeks of maintenance, Reuters said. Alan Greenspan said the case has not been made to monitor hedge funds and that China's slowing economy should rebound, Bloomberg reported. H&R Block had a $44.1 million loss in its fiscal first quarter as earnings from mortgage loans fell and an office expansion increased costs, Bloomberg said. Sugar-rich soft drinks and fruit punch are fueling twin surges in U.S. obesity and diabetes, according to a U.S. study in the Aug. 25 Journal of the American Medical Association. California's credit rating on $42.7 billion of bonds was raised three levels by S&P after the state's economy improved and Governor Schwarzenegger engineered a bond sale to avert a cast shortage, Bloomberg reported. Viacom, signaling that investors are shunning its plan to split off home-video unit Blockbuster, said it may once again have to write down the value of the video rental chain's assets, Bloomberg said.
BOTTOM LINE: The Portfolio finished slightly lower today as my shorts were mixed and technology longs fell. I added a few new longs in the afternoon, bringing the Portfolio's market exposure to 50% net long. One of my new longs is AMXC and I am using a stop-loss of $16 on this position. The tone of the market was pretty good today, considering last week's run-up. The market appears to be consolidating before another move higher next week.
Mid-day Update
S&P 500 1,096.21 +.05%
NASDAQ 1,836.85 -.16%
Leading Sectors
Airlines +2.31%
Restaurants +1.17%
Transports +.61%
Lagging Sectors
Commodity -.71%
Oil Service -1.03%
Semis -2.11%
Other
Crude Oil 45.20 -1.89%
Natural Gas 5.27 -.66%
Gold 405.70 -1.72%
Base Metals 109.19 +.26%
U.S. Dollar 89.47 +.47%
10-Yr. T-note Yield 4.29% +.32%
VIX 15.54 -2.14%
Put/Call .76 -3.80%
NYSE Arms 1.29 +27.72%
Market Movers
POSS -37.4% after reiterating 4Q outlook, lowering 05 guidance and saying a study showed its AngioJet medical device shouldn't be routinely used to reduce blood vessel clots in heart attack patients.
BRCM -6.4% after CSFB lowered its 3Q/4Q estimates and price target.
PCP +6.7% after Bank of America upgrade to Buy.
DLP +9.8% after saying it will enter a long-term agreement with Syngenta AG to develop and sell new biotechnology products for cotton.
PERY +5.5% after exceeding 2Q estimates.
SAFM -23.2% after missing 3Q estimates and lowering 04 outlook.
AD -13.9% after lowering 04 guidance and multiple downgrades.
TTC -5.6% after exceeding 3Q estimates and lowering 04 guidance.
GOOG -4.4% on profit-taking after IPO run-up.
Economic Data
Existing Home Sales for July were 6.72M versus estimates of 6.81M and 6.92M in June.
Recommendations
OTEX rated Buy at Merrill, target $28. POT raised to Buy at Merrill. CLS raised to Outperform at Thomas Weisel. SANM raised to Outperform at Thomas Weisel. BEC raised to Outperform at Thomas Weisel. PCP raised to Buy at Bank of America, target $64. VSAT rated Buy at Oppenheimer, target $25. Goldman Sachs reiterated Outperform on A, IP, DTC, ALK, CAL and SPP. Goldman raised CAT to Outperform. Citi SmithBarney reiterated Buy on MWD, target $72. Citi reiterated Buy on PTP, target $34. Citi reiterated Buy on MXRE, target $24. Citi reiterated Buy on FLEX, target $22. Citi reiterated Buy on TOY, target $23.
Mid-day News
U.S. stocks are mixed mid-day as falling energy prices offset weaker economic data. Bioenvision expects as much as $300 million in sales from its clofarabine drug, which treats acute and chronic leukemia, CEO Wood told CNBC. The European Commission plans to extend its probe into plans by Microsoft and Time Warner to buy control of ContentGuard, a U.S. maker of anti-piracy software, Reuters said. Osama bin Laden's chauffeur was arraigned today on terrorism charges before a military tribunal at the U.S. naval base at Guantanamo Bay, Cuba, the AP said. California's Senate yesterday passed a bill aimed at keeping companies from moving jobs to other countries, the LA Times reported. The measure was passed even though an unreleased report commissioned by the leadership of the California State Assembly found the measure would cost more jobs than it would save, the newspaper said. Iraqi Vice-President Ibrahim al-Jafari made a surprise visit to neighboring Iran to meet President Mohammad Khatami and other members of the leadership, Agence France-Presse reported. U.S. 10-year Treasury notes declined for a third day, the longest drop in a month, after Federal Reserve Governor Bernanke said oil prices near record highs won't derail growth in the world's largest economy, Bloomberg reported. The U.S. Chamber of Commerce, the nation's largest business organization, said it will help pay for ads suggesting the economic "dangers" associated with having trial lawyers aligned with the White House, Bloomberg reported. Crude oil futures fell for a third session, dropping as low as $44.95 a barrel, on speculation that increased Iraqi shipments will help meet global needs, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower mid-day as my shorts are mixed and my technology longs are falling. I took profits in a few longs this morning and added a new short, bringing the Portfolio's market exposure to 25% net long. My new short is ERTS and I am using a $51.25 stop-loss on the position. I now believe oil has seen its highs for the intermediate-term. Another move up to test the highs could occur during September, however I believe it will fail and the price of crude will head relentlessly towards the mid-30's by year's end. This is a very positive development and was necessary for the strong rally I envision during the fourth quarter. Stocks will likely remain mixed into the close, however with oil falling I am not ruling out another leg up.
NASDAQ 1,836.85 -.16%
Leading Sectors
Airlines +2.31%
Restaurants +1.17%
Transports +.61%
Lagging Sectors
Commodity -.71%
Oil Service -1.03%
Semis -2.11%
Other
Crude Oil 45.20 -1.89%
Natural Gas 5.27 -.66%
Gold 405.70 -1.72%
Base Metals 109.19 +.26%
U.S. Dollar 89.47 +.47%
10-Yr. T-note Yield 4.29% +.32%
VIX 15.54 -2.14%
Put/Call .76 -3.80%
NYSE Arms 1.29 +27.72%
Market Movers
POSS -37.4% after reiterating 4Q outlook, lowering 05 guidance and saying a study showed its AngioJet medical device shouldn't be routinely used to reduce blood vessel clots in heart attack patients.
BRCM -6.4% after CSFB lowered its 3Q/4Q estimates and price target.
PCP +6.7% after Bank of America upgrade to Buy.
DLP +9.8% after saying it will enter a long-term agreement with Syngenta AG to develop and sell new biotechnology products for cotton.
PERY +5.5% after exceeding 2Q estimates.
SAFM -23.2% after missing 3Q estimates and lowering 04 outlook.
AD -13.9% after lowering 04 guidance and multiple downgrades.
TTC -5.6% after exceeding 3Q estimates and lowering 04 guidance.
GOOG -4.4% on profit-taking after IPO run-up.
Economic Data
Existing Home Sales for July were 6.72M versus estimates of 6.81M and 6.92M in June.
Recommendations
OTEX rated Buy at Merrill, target $28. POT raised to Buy at Merrill. CLS raised to Outperform at Thomas Weisel. SANM raised to Outperform at Thomas Weisel. BEC raised to Outperform at Thomas Weisel. PCP raised to Buy at Bank of America, target $64. VSAT rated Buy at Oppenheimer, target $25. Goldman Sachs reiterated Outperform on A, IP, DTC, ALK, CAL and SPP. Goldman raised CAT to Outperform. Citi SmithBarney reiterated Buy on MWD, target $72. Citi reiterated Buy on PTP, target $34. Citi reiterated Buy on MXRE, target $24. Citi reiterated Buy on FLEX, target $22. Citi reiterated Buy on TOY, target $23.
Mid-day News
U.S. stocks are mixed mid-day as falling energy prices offset weaker economic data. Bioenvision expects as much as $300 million in sales from its clofarabine drug, which treats acute and chronic leukemia, CEO Wood told CNBC. The European Commission plans to extend its probe into plans by Microsoft and Time Warner to buy control of ContentGuard, a U.S. maker of anti-piracy software, Reuters said. Osama bin Laden's chauffeur was arraigned today on terrorism charges before a military tribunal at the U.S. naval base at Guantanamo Bay, Cuba, the AP said. California's Senate yesterday passed a bill aimed at keeping companies from moving jobs to other countries, the LA Times reported. The measure was passed even though an unreleased report commissioned by the leadership of the California State Assembly found the measure would cost more jobs than it would save, the newspaper said. Iraqi Vice-President Ibrahim al-Jafari made a surprise visit to neighboring Iran to meet President Mohammad Khatami and other members of the leadership, Agence France-Presse reported. U.S. 10-year Treasury notes declined for a third day, the longest drop in a month, after Federal Reserve Governor Bernanke said oil prices near record highs won't derail growth in the world's largest economy, Bloomberg reported. The U.S. Chamber of Commerce, the nation's largest business organization, said it will help pay for ads suggesting the economic "dangers" associated with having trial lawyers aligned with the White House, Bloomberg reported. Crude oil futures fell for a third session, dropping as low as $44.95 a barrel, on speculation that increased Iraqi shipments will help meet global needs, Bloomberg said.
BOTTOM LINE: The Portfolio is slightly lower mid-day as my shorts are mixed and my technology longs are falling. I took profits in a few longs this morning and added a new short, bringing the Portfolio's market exposure to 25% net long. My new short is ERTS and I am using a $51.25 stop-loss on the position. I now believe oil has seen its highs for the intermediate-term. Another move up to test the highs could occur during September, however I believe it will fail and the price of crude will head relentlessly towards the mid-30's by year's end. This is a very positive development and was necessary for the strong rally I envision during the fourth quarter. Stocks will likely remain mixed into the close, however with oil falling I am not ruling out another leg up.
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