S&P 500 1,105.91 +.15%
NASDAQ 1,850.41 +.67%
Leading Sectors
Oil Service +2.29%
Biotech +1.47%
Homebuilders +1.44%
Lagging Sectors
Banks -.74%
Insurance -.92%
Airlines -1.99%
Other
Crude Oil 43.85 -.30%
Natural Gas 4.97 +.20%
Gold 410.40 -.10%
Base Metals 108.18 -.23%
U.S. Dollar 88.90 -.08%
10-Yr. T-note Yield 4.11% -.09%
VIX 14.91 -2.49%
Put/Call 1.04 +48.57%
NYSE Arms .96 -12.73%
After-hours Movers
AEOS +5.24% after reporting strong Aug. sales, raising 3Q forecast and initiating dividend.
ARO -6.95% after reporting disappointing Aug. sales.
VTS -16.65% after saying it will delay reporting fourth-quarter earnings as it reviews whether depreciation of equipment was accounted for properly.
Recommendations
Goldman Sachs reiterated Attractive view of Lodging sector. Goldman reiterated Outperform on BSX.
After-hours News
U.S. stocks finished mostly higher today as energy and interest-rate sensitive groups led stocks higher. After the close, crude-oil futures surged almost $2/bbl., the biggest increase in two months, after the Energy Department reported that U.S. oil supplies declined more than expected. Prosecutors will file a motion to dismiss sexual-assault charges against NBA All-Star Kobe Bryant later this afternoon, ABC News reported. Time Warner offered $4.5 billion to $4.6 billion in cash for MGM, the Wall Street Journal reported. U.S. textile makers are preparing to file dozens of trade complaints against China in a bid to cap imports of pants, shirts, towel and other items from the fastest growth apparel exporter, Bloomberg reported. President Bush's re-election campaign asked a federal court for help in shutting down independent groups that are raising unlimited funds to run political ads, Bloomberg reported. President Bush's job approval rating surveyed from Aug. 9-29 was 53%, compared with 50% in a July 5-25 survey, according to the National Annenberg Election Survey. Acclaim Entertainment filed for bankruptcy today and will liquidate its assets after it was unable to obtain a $30 million loan, Bloomberg said.
BOTTOM LINE: The Portfolio finished higher today as my alternative energy, homebuilding and internet longs rose more than my steel shorts. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The market's overall tone today was pretty good as volume improved and breadth measures were positive. The spike in oil and terrorism scare in D.C. likely prevented a better showing. Intel's mid-quarter update, President Bush's speech and the employment report will likely increase volatility over the near-term. Intel's comments shouldn't negatively affect trading as most investors expect the company to slightly lower guidance. President Bush's speech will likely be received positively by most investors. Finally, the employment report will probably not meet expectations due to the effects of Hurricane Charley. I will closely monitor the market's reaction to all these events and decide whether or not to scale back market exposure.
Wednesday, September 01, 2004
Mid-day Update
S&P 500 1,102.69 -.14%
NASDAQ 1,840.82 +.15%
Leading Sectors
Oil Service +2.33%
Broadcasting +1.13%
Homebuilding +1.02%
Lagging Sectors
Banks -.91%
Insurance -1.05%
Airlines -1.25%
Other
Crude Oil 43.60 +3.51%
Natural Gas 5.08 +.12%
Gold 410.10 -.56%
Base Metals 108.18 -.23%
U.S. Dollar 88.93 -.01%
10-Yr. T-note Yield 4.12% unch.
VIX 15.29 +.26%
Put/Call .92 +31.43%
NYSE Arms .89 -19.09%
Market Movers
COCO +15.2% after beating 4Q estimates and raising 1Q guidance.
BSX +5.6% on bargain hunting after slightly lowering 3Q and 4Q estimates.
FRX -8.1% after the maker of the first medicine in the U.S. for severe Alzheimer's disease said a separate, experimental treatment for the memory-robbing disease wasn't effective.
OTEX -23.3% after missing 4Q estimates, lowering 1Q guidance and multiple downgrades.
MGPI +19.7% after Roth Capital rated it Strong Buy.
MOGN +12.65% after saying it agreed to license SuperGen's Dacogen treatment for bond marrow disorders for as much as $85 million.
COO +8.25% after beating 3Q estimates and giving strong outlook.
Economic Data
Construction Spending for July rose .4% versus estimates of a .4% gain and an upwardly revised .3% decline in June.
ISM Manufacturing for August was 59.0 versus estimates of 60.0 and 62.0 in July.
ISM Prices Paid for August was 81.5 versus estimates of 79.0 and 77.0 in July.
Recommendations
Goldman Sachs reiterated Outperform on BBY, GCI, ALL and AET. Goldman reiterated Underperform on FRX. Citi SmithBarney reiterated Buy on FLEX and JBL. Citi said to Buy INTC on weakness. Citi reiterated Buy on BLS, target $32. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on PCG, target $33. Citi reiterated Buy on CHS, target $48. BUCY rate Buy at Legg Mason, target $35. APD raised to Buy at Bank of America, target $60.
Mid-day News
U.S. stocks are mixed mid-day on rising energy prices, terrorism concerns and short-covering. Video games sales are expected to stay at about $18.2 billion in 2004, the same as last year, because players are waiting for new consoles in 2005 and 2006, Reuters reported. Frontier Air's pilots agreed to be paid hourly rather than receiving a monthly salary, which may help the discount airline save millions of dollars a year, the Rocky Mountain News reported. Apple Computer expects a delivery bottleneck for the new version of its iMac computer because of high demand, Der Spiegel reported. A key cause of lagging U.S. job growth is higher productivity which is ultimately good and raises living standards in the long-run, said Washington Post columnist Robert Samuelson. Hurricane Frances was edging into the southeastern Bahamas today with winds of 140 mph and is poised to strike the Florida coast early Saturday, according to the National Hurricane Center. About 20 armed men and women wearing explosives seized a school in southern Russia and are holding at least 120 children hostage, the country's fourth terrorist attack in the past eight days, Bloomberg reported. California Governor Schwarzenegger's address to the Republican Convention may have drawn more tv viewers than Senator Kerry's acceptance speech, helping to boost support for President Bush among undecided voters, Bloomberg reported. The summer travel season, which comes to a close this weekend for many Americans, was the busiest for companies that own theme parks, resorts and cruise ships since the 9/11 terrorist attacks, Bloomberg said. Crude oil futures are rising after plunging from $49.40/bbl. on Aug. 20 on an Energy Department report that showed U.S. oil supplies declined more than expected, Bloomberg reported. New York police raised the arrest tally to more than 1,000 from marches and rallies held yesterday against President Bush, with more protests planned for today, Bloomberg reported.
BOTTOM LINE: The Portfolio is higher mid-day as my restaurant, alternative energy and technology longs are rising. I added a few new longs this morning, bringing the Portfolio's market exposure to 125% net long. One of my new longs is PSYS and I am using a $22.25 stop-loss on the position. Rising oil prices and terrorism fears are holding today's rally in check. The tone of the market is mostly positive and I expect stocks to trade modestly higher into the close as oil prices stabilize and terrorism fears subside.
NASDAQ 1,840.82 +.15%
Leading Sectors
Oil Service +2.33%
Broadcasting +1.13%
Homebuilding +1.02%
Lagging Sectors
Banks -.91%
Insurance -1.05%
Airlines -1.25%
Other
Crude Oil 43.60 +3.51%
Natural Gas 5.08 +.12%
Gold 410.10 -.56%
Base Metals 108.18 -.23%
U.S. Dollar 88.93 -.01%
10-Yr. T-note Yield 4.12% unch.
VIX 15.29 +.26%
Put/Call .92 +31.43%
NYSE Arms .89 -19.09%
Market Movers
COCO +15.2% after beating 4Q estimates and raising 1Q guidance.
BSX +5.6% on bargain hunting after slightly lowering 3Q and 4Q estimates.
FRX -8.1% after the maker of the first medicine in the U.S. for severe Alzheimer's disease said a separate, experimental treatment for the memory-robbing disease wasn't effective.
OTEX -23.3% after missing 4Q estimates, lowering 1Q guidance and multiple downgrades.
MGPI +19.7% after Roth Capital rated it Strong Buy.
MOGN +12.65% after saying it agreed to license SuperGen's Dacogen treatment for bond marrow disorders for as much as $85 million.
COO +8.25% after beating 3Q estimates and giving strong outlook.
Economic Data
Construction Spending for July rose .4% versus estimates of a .4% gain and an upwardly revised .3% decline in June.
ISM Manufacturing for August was 59.0 versus estimates of 60.0 and 62.0 in July.
ISM Prices Paid for August was 81.5 versus estimates of 79.0 and 77.0 in July.
Recommendations
Goldman Sachs reiterated Outperform on BBY, GCI, ALL and AET. Goldman reiterated Underperform on FRX. Citi SmithBarney reiterated Buy on FLEX and JBL. Citi said to Buy INTC on weakness. Citi reiterated Buy on BLS, target $32. Citi reiterated Buy on VRTS, target $24. Citi reiterated Buy on PCG, target $33. Citi reiterated Buy on CHS, target $48. BUCY rate Buy at Legg Mason, target $35. APD raised to Buy at Bank of America, target $60.
Mid-day News
U.S. stocks are mixed mid-day on rising energy prices, terrorism concerns and short-covering. Video games sales are expected to stay at about $18.2 billion in 2004, the same as last year, because players are waiting for new consoles in 2005 and 2006, Reuters reported. Frontier Air's pilots agreed to be paid hourly rather than receiving a monthly salary, which may help the discount airline save millions of dollars a year, the Rocky Mountain News reported. Apple Computer expects a delivery bottleneck for the new version of its iMac computer because of high demand, Der Spiegel reported. A key cause of lagging U.S. job growth is higher productivity which is ultimately good and raises living standards in the long-run, said Washington Post columnist Robert Samuelson. Hurricane Frances was edging into the southeastern Bahamas today with winds of 140 mph and is poised to strike the Florida coast early Saturday, according to the National Hurricane Center. About 20 armed men and women wearing explosives seized a school in southern Russia and are holding at least 120 children hostage, the country's fourth terrorist attack in the past eight days, Bloomberg reported. California Governor Schwarzenegger's address to the Republican Convention may have drawn more tv viewers than Senator Kerry's acceptance speech, helping to boost support for President Bush among undecided voters, Bloomberg reported. The summer travel season, which comes to a close this weekend for many Americans, was the busiest for companies that own theme parks, resorts and cruise ships since the 9/11 terrorist attacks, Bloomberg said. Crude oil futures are rising after plunging from $49.40/bbl. on Aug. 20 on an Energy Department report that showed U.S. oil supplies declined more than expected, Bloomberg reported. New York police raised the arrest tally to more than 1,000 from marches and rallies held yesterday against President Bush, with more protests planned for today, Bloomberg reported.
BOTTOM LINE: The Portfolio is higher mid-day as my restaurant, alternative energy and technology longs are rising. I added a few new longs this morning, bringing the Portfolio's market exposure to 125% net long. One of my new longs is PSYS and I am using a $22.25 stop-loss on the position. Rising oil prices and terrorism fears are holding today's rally in check. The tone of the market is mostly positive and I expect stocks to trade modestly higher into the close as oil prices stabilize and terrorism fears subside.
Wednesday Watch
Earnings of Note
Company/Estimate
COCO/.19
VTS/.26
Splits
None of note.
Economic Data
Construction Spending in July estimated up .4% versus a .3% fall in June.
ISM Manufacturing for August estimated at 60.0 versus 62.0 in July.
ISM Prices Paid for August estimated at 79.0 versus 77.0 in July.
Total Vehicle Sales for August estimated at 16.8M versus 17.3M in July.
Domestic Vehicle Sales for August estimated at 13.6M versus 14.1M in July.
Recommendations
Goldman Sachs reiterated Outperform on AET and GDT.
Late-Night News
Asian indices are higher on optimism over corporate earnings in the region. EachNet Inc., the Chinese unit of EBay Inc., expects a surge in the number of online sellers once it starts a service allowing them to trade directly with the U.S. auction site's worldwide membership, the Financial Times reported. Samsung Electronics, the world's largest maker of computer memory chips, expects prices of the product to rise in the fourth quarter, MoneyToday reported. U.S. companies are buying back their stock at almost double the pace they did last year, the Wall Street Journal reported. Asylum applications in industrialized countries fell in the second quarter to 86,800, the lowest level in 17 years, the Financial Times reported. Metro-Goldwyn-Mayer may announce as early as next week an agreement to be acquired for as much as $5 billion, Reuters reported. The Taiwan government may alter its polices toward China next near, the Economic Daily News reported, citing Joseph Wu, chairman of Taiwan's Mainland Affairs Council. The U.S. may have to drop 27% duties on $4.6 billion of Canadian lumber shipments after a trade tribunal ruled that the U.S. lumber industry isn't being harmed by imports from Canada, Bloomberg reported. Allstate said it expected to pay $425 million of claims from Hurricane Charley, Bloomberg said. Terrorist attacks in Russia that killed 99 people in the past week will strengthen joint efforts by the U.S. and Russian governments to fight the "scourge" of terrorism, the White House said. New York police arrested at least 550 people as protesters staged marches, rallies and street theater from Ground Zero to Sotheby's auction house on the Upper East Side to dramatize opposition to President Bush, Bloomberg reported. NYC Police Commissioner Raymond Kelly has said he expects a "major" unauthorized protest Thursday, Bloomberg said. Israeli Prime Minister Sharon will order a military offensive in the West Bank city of Hebron in response to two suicide bombings that killed at least 16 people in the Israeli city of Beersheba, Haaretz reported. Dow Chemical, the biggest U.S. chemical maker, forecast its China sales will grow 25% to exceed $2 billion this year, Bloomberg reported.
Late-Night Trading
Asian Indices are +.50% to +1.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on gains in Asia and a follow-through from today's strong close. The Portfolio is 100% net long. I will likely increase market exposure on any unexpected morning weakness related to economic reports.
Company/Estimate
COCO/.19
VTS/.26
Splits
None of note.
Economic Data
Construction Spending in July estimated up .4% versus a .3% fall in June.
ISM Manufacturing for August estimated at 60.0 versus 62.0 in July.
ISM Prices Paid for August estimated at 79.0 versus 77.0 in July.
Total Vehicle Sales for August estimated at 16.8M versus 17.3M in July.
Domestic Vehicle Sales for August estimated at 13.6M versus 14.1M in July.
Recommendations
Goldman Sachs reiterated Outperform on AET and GDT.
Late-Night News
Asian indices are higher on optimism over corporate earnings in the region. EachNet Inc., the Chinese unit of EBay Inc., expects a surge in the number of online sellers once it starts a service allowing them to trade directly with the U.S. auction site's worldwide membership, the Financial Times reported. Samsung Electronics, the world's largest maker of computer memory chips, expects prices of the product to rise in the fourth quarter, MoneyToday reported. U.S. companies are buying back their stock at almost double the pace they did last year, the Wall Street Journal reported. Asylum applications in industrialized countries fell in the second quarter to 86,800, the lowest level in 17 years, the Financial Times reported. Metro-Goldwyn-Mayer may announce as early as next week an agreement to be acquired for as much as $5 billion, Reuters reported. The Taiwan government may alter its polices toward China next near, the Economic Daily News reported, citing Joseph Wu, chairman of Taiwan's Mainland Affairs Council. The U.S. may have to drop 27% duties on $4.6 billion of Canadian lumber shipments after a trade tribunal ruled that the U.S. lumber industry isn't being harmed by imports from Canada, Bloomberg reported. Allstate said it expected to pay $425 million of claims from Hurricane Charley, Bloomberg said. Terrorist attacks in Russia that killed 99 people in the past week will strengthen joint efforts by the U.S. and Russian governments to fight the "scourge" of terrorism, the White House said. New York police arrested at least 550 people as protesters staged marches, rallies and street theater from Ground Zero to Sotheby's auction house on the Upper East Side to dramatize opposition to President Bush, Bloomberg reported. NYC Police Commissioner Raymond Kelly has said he expects a "major" unauthorized protest Thursday, Bloomberg said. Israeli Prime Minister Sharon will order a military offensive in the West Bank city of Hebron in response to two suicide bombings that killed at least 16 people in the Israeli city of Beersheba, Haaretz reported. Dow Chemical, the biggest U.S. chemical maker, forecast its China sales will grow 25% to exceed $2 billion this year, Bloomberg reported.
Late-Night Trading
Asian Indices are +.50% to +1.25% on average.
S&P 500 indicated +.10%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on gains in Asia and a follow-through from today's strong close. The Portfolio is 100% net long. I will likely increase market exposure on any unexpected morning weakness related to economic reports.
Tuesday, August 31, 2004
Tuesday Close
S&P 500 1,104.24 +.46%
NASDAQ 1,838.10 +.09%
Leading Sectors
Oil Service +2.00%
Energy +1.75%
Iron/Steel +1.63%
Lagging Sectors
Retail -.57%
Semis -.70%
Fashion -1.02%
Other
Crude Oil 42.22 +.24%
Natural Gas 5.07 -.08%
Gold 412.00 -.10%
Base Metals 108.43 +.21%
U.S. Dollar 88.94 -.84%
10-Yr. T-note Yield 4.12% -1.29%
VIX 15.29 -.97%
Put/Call .70 -16.67%
NYSE Arms 1.10 -57.53%
After-hours Movers
FRX -5.98% after saying that a clinical study of the experimental drug Neramexane showed the compound may be ineffective at treating Alzheimer's disease.
OTEX -18.17% after missing 4Q estimates and lowering 1Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on MDT, target $57. Goldman reiterated Outperform on BNS and CAT.
After-hours News
U.S. stocks finished modestly higher today as a late session rally in the S&P futures boosted shares. After the close, the U.S. Federal Trade Commission said it is seeking the first fines for breaches of a rule barring calls to people whose numbers are on a "do-not-call" registry, saying a Las Vegas telemarketer made more than 300,000 unwelcome pitches, Bloomberg reported. Boston Scientific may forecast a drop in third-quarter sales of its Taxus heart stent after three recalls cut demand for the device, the company's top-selling product, Bloomberg said. Microsoft co-founder Bill Gates' personal investment fund, which is the second-largest Six Flags shareholder, has become "increasingly dissatisfied" with the amusement park operator's financial performance and may seek a spot on the company's board, Bloomberg reported. Astronomers have found a new class of planets beyond our solar system that appear more similar to Earth than other comparable objects that have been discovered, NASA and university scientists said.
BOTTOM LINE: The Portfolio finished lower today, notwithstanding the late-afternoon rebound. I added a few new longs on the close, bringing the Portfolio's market exposure to 100% net long. One of my new longs is MICC and I am using a stop-loss of $15 on this position. The market's tone improved substantially in the afternoon as many stocks rose on good volume. I expect U.S. equities to continue to rally short-term as optimism over falling energy prices, declining interest rates, pro-business political rhetoric, improvements in Iraq and subsiding terrorism fears more than offsets worries over a slowing economy.
NASDAQ 1,838.10 +.09%
Leading Sectors
Oil Service +2.00%
Energy +1.75%
Iron/Steel +1.63%
Lagging Sectors
Retail -.57%
Semis -.70%
Fashion -1.02%
Other
Crude Oil 42.22 +.24%
Natural Gas 5.07 -.08%
Gold 412.00 -.10%
Base Metals 108.43 +.21%
U.S. Dollar 88.94 -.84%
10-Yr. T-note Yield 4.12% -1.29%
VIX 15.29 -.97%
Put/Call .70 -16.67%
NYSE Arms 1.10 -57.53%
After-hours Movers
FRX -5.98% after saying that a clinical study of the experimental drug Neramexane showed the compound may be ineffective at treating Alzheimer's disease.
OTEX -18.17% after missing 4Q estimates and lowering 1Q guidance.
Recommendations
Goldman Sachs reiterated Outperform on MDT, target $57. Goldman reiterated Outperform on BNS and CAT.
After-hours News
U.S. stocks finished modestly higher today as a late session rally in the S&P futures boosted shares. After the close, the U.S. Federal Trade Commission said it is seeking the first fines for breaches of a rule barring calls to people whose numbers are on a "do-not-call" registry, saying a Las Vegas telemarketer made more than 300,000 unwelcome pitches, Bloomberg reported. Boston Scientific may forecast a drop in third-quarter sales of its Taxus heart stent after three recalls cut demand for the device, the company's top-selling product, Bloomberg said. Microsoft co-founder Bill Gates' personal investment fund, which is the second-largest Six Flags shareholder, has become "increasingly dissatisfied" with the amusement park operator's financial performance and may seek a spot on the company's board, Bloomberg reported. Astronomers have found a new class of planets beyond our solar system that appear more similar to Earth than other comparable objects that have been discovered, NASA and university scientists said.
BOTTOM LINE: The Portfolio finished lower today, notwithstanding the late-afternoon rebound. I added a few new longs on the close, bringing the Portfolio's market exposure to 100% net long. One of my new longs is MICC and I am using a stop-loss of $15 on this position. The market's tone improved substantially in the afternoon as many stocks rose on good volume. I expect U.S. equities to continue to rally short-term as optimism over falling energy prices, declining interest rates, pro-business political rhetoric, improvements in Iraq and subsiding terrorism fears more than offsets worries over a slowing economy.
Mid-day Update
S&P 500 1,097.01 -.19%
NASDAQ 1,823.33 -.72%
Leading Sectors
Oil Service +1.40%
Iron/Steel +1.03%
Homebuilders +.85%
Lagging Sectors
Software -1.02%
Internet -1.21%
Semis -1.95%
Other
Crude Oil 41.95 -.78%
Natural Gas 5.10 -2.56%
Gold 412.00 +.49%
Base Metals 108.65 +.42%
U.S. Dollar 88.92 -.87%
10-Yr. T-note Yield 4.10% -1.70%
VIX 15.75 +2.01%
Put/Call .77 -8.33%
NYSE Arms 1.71 -33.98%
Market Movers
IPIX +13.8% after saying it signed an agreement with Soling Company to supply, install, and support Ipix systems in Russia.
UNFI +6.6% after beating 4Q estimates and raising 05 outlook.
POS +7.9% after saying it reached agreement on a five-year, $125 million revolving credit line.
SWIR -10.5% on worries over competition.
Economic Data
Chicago Purchasing Manager for August was 57.3 versus estimates of 60.0 and a reading of 64.7 in July.
Consumer Confidence for August was 98.2 versus estimates of 103.5 and a reading of 105.7 in July.
Recommendations
BLKB rated Overweight at JP Morgan. UPL raised to Overweight at JP Morgan, target $47. KSS raised to Buy at Merrill, target $58. DEX rated Buy at Deutsche Bank, target $24. DEX rated Buy at Merrill, target $25. RIG raised to Buy at Merrill, target $36. NE raised to BUY at Merrill and named Focus 1 stock of the week, target $47. GSF raised to Buy at Merrill, target $33. BLKB rated Outperform at Thomas Weisel. Goldman Sachs rated IDIX Outperform, target $23. Goldman reiterated Outperform on ROH, target $50. Goldman reiterated Outperform on PFE and Underperform on SGP, PNY. Citi SmithBarney rated TXU Buy, target $49.
Mid-day News
U.S. stocks are quietly lower mid-day on declines in technology shares after weaker-than-expected economic data. U.S. Senate and Defense Department computers were invaded by hackers who used them to send spam e-mail, USA Today reported. Senator John McCain speaking at the Republican Convention, described Michael Moore as "a disingenuous filmmaker" and Moore, who was in the convention hall with a press pass, responded with a wave an formed an "L," for loser, with his thumb and forefinger, the New York Times reported. Wal-Mart didn't renew a contract to build a second store in Chicago because of concerns over minimum wage and other standards the city is considering, the Chicago Sun-Times reported. Russian President Putin today said the explosions that brought down two airliners in Russia a week ago were the work of terrorists linked to the al-Qaeda terrorist network, Bloomberg said. Apple Computer will start shipping a new version of the iMac personal computer in the middle of September, missing the back-to-school shopping season, Bloomberg reported. U.S. Treasury notes rose, heading for their biggest monthly gain since September 2003, after indices measuring consumer confidence and Chicago-area manufacturing fell more than forecast this month, Bloomberg reported. Crude oil futures fell for the seventh session in eight as Iraqi exports rose to near-normal rates and Russia said it would increase production this year, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on declines in my technology longs and rising steel shorts. I exited a few technology longs as they hit my stop-losses, thus leaving the Portfolio 75% net long. Another disappointing day for the Bulls as technology shares continue to deteriorate on light volume. While today's economic releases were disappointing, they are not near worrisome levels. It is my belief the Bears are looking in the rear-view mirror as the economy should accelerate meaningfully in the fourth quarter. Energy prices are down 15-25% in a very short period of time, inflation fears are subsiding, long-term interest rates have fallen over 80 basis points just since June, the big picture in Iraq is improving, terrorism worries are diminishing the closer we get to the U.S. election, the uncertainty and negative political rhetoric associated with the election will end in the next couple of months and most stocks are at attractive valuations relative to interest rates and growth. I expect stocks to trade mixed into the afternoon as worries over slowing economic growth are offset by falling energy prices and plunging interest rates.
NASDAQ 1,823.33 -.72%
Leading Sectors
Oil Service +1.40%
Iron/Steel +1.03%
Homebuilders +.85%
Lagging Sectors
Software -1.02%
Internet -1.21%
Semis -1.95%
Other
Crude Oil 41.95 -.78%
Natural Gas 5.10 -2.56%
Gold 412.00 +.49%
Base Metals 108.65 +.42%
U.S. Dollar 88.92 -.87%
10-Yr. T-note Yield 4.10% -1.70%
VIX 15.75 +2.01%
Put/Call .77 -8.33%
NYSE Arms 1.71 -33.98%
Market Movers
IPIX +13.8% after saying it signed an agreement with Soling Company to supply, install, and support Ipix systems in Russia.
UNFI +6.6% after beating 4Q estimates and raising 05 outlook.
POS +7.9% after saying it reached agreement on a five-year, $125 million revolving credit line.
SWIR -10.5% on worries over competition.
Economic Data
Chicago Purchasing Manager for August was 57.3 versus estimates of 60.0 and a reading of 64.7 in July.
Consumer Confidence for August was 98.2 versus estimates of 103.5 and a reading of 105.7 in July.
Recommendations
BLKB rated Overweight at JP Morgan. UPL raised to Overweight at JP Morgan, target $47. KSS raised to Buy at Merrill, target $58. DEX rated Buy at Deutsche Bank, target $24. DEX rated Buy at Merrill, target $25. RIG raised to Buy at Merrill, target $36. NE raised to BUY at Merrill and named Focus 1 stock of the week, target $47. GSF raised to Buy at Merrill, target $33. BLKB rated Outperform at Thomas Weisel. Goldman Sachs rated IDIX Outperform, target $23. Goldman reiterated Outperform on ROH, target $50. Goldman reiterated Outperform on PFE and Underperform on SGP, PNY. Citi SmithBarney rated TXU Buy, target $49.
Mid-day News
U.S. stocks are quietly lower mid-day on declines in technology shares after weaker-than-expected economic data. U.S. Senate and Defense Department computers were invaded by hackers who used them to send spam e-mail, USA Today reported. Senator John McCain speaking at the Republican Convention, described Michael Moore as "a disingenuous filmmaker" and Moore, who was in the convention hall with a press pass, responded with a wave an formed an "L," for loser, with his thumb and forefinger, the New York Times reported. Wal-Mart didn't renew a contract to build a second store in Chicago because of concerns over minimum wage and other standards the city is considering, the Chicago Sun-Times reported. Russian President Putin today said the explosions that brought down two airliners in Russia a week ago were the work of terrorists linked to the al-Qaeda terrorist network, Bloomberg said. Apple Computer will start shipping a new version of the iMac personal computer in the middle of September, missing the back-to-school shopping season, Bloomberg reported. U.S. Treasury notes rose, heading for their biggest monthly gain since September 2003, after indices measuring consumer confidence and Chicago-area manufacturing fell more than forecast this month, Bloomberg reported. Crude oil futures fell for the seventh session in eight as Iraqi exports rose to near-normal rates and Russia said it would increase production this year, Bloomberg reported.
BOTTOM LINE: The Portfolio is lower mid-day on declines in my technology longs and rising steel shorts. I exited a few technology longs as they hit my stop-losses, thus leaving the Portfolio 75% net long. Another disappointing day for the Bulls as technology shares continue to deteriorate on light volume. While today's economic releases were disappointing, they are not near worrisome levels. It is my belief the Bears are looking in the rear-view mirror as the economy should accelerate meaningfully in the fourth quarter. Energy prices are down 15-25% in a very short period of time, inflation fears are subsiding, long-term interest rates have fallen over 80 basis points just since June, the big picture in Iraq is improving, terrorism worries are diminishing the closer we get to the U.S. election, the uncertainty and negative political rhetoric associated with the election will end in the next couple of months and most stocks are at attractive valuations relative to interest rates and growth. I expect stocks to trade mixed into the afternoon as worries over slowing economic growth are offset by falling energy prices and plunging interest rates.
Tuesday Watch
Earnings of Note
Company/Estimate
ABS/.33
COO/.67
DCI/.33
EASI/.75
FCEL/-.40
ZLC/.13
Splits
CFC 2-for-1
HOC 2-for-1
Economic Data
Chicago Purchasing Manager for August estimated at 60.0 versus 64.7 in July.
Consumer Confidence for August estimated at 103.5 versus 106.1 in July.
Recommendations
None of note.
Late-Night News
Asian indices are mixed as weakness in Japan is being offset by strength in China. AOL is testing an Internet telephone service to let customers place calls over the Web, Cnet News reported on its Web site, Bloomberg said. Cautious U.S. companies are holding $1.17 trillion of cash, much of it accumulated from improved profits they are choosing not to spend, the Financial Times reported. A group led by Colony Capital LLC is close to an agreement to buy four properties from Harrah's Entertainment and Caesars Entertainment for about $1.26 billion, Dow Jones Newswires reported. Apple Computer may unveil a new version of its iMax personal computer at the Apple Expo 2004 that starts tomorrow in Paris, the AP reported. A fund that has collected more than $540 million for victims of the Sept. 11, 2001, terrorist attacks will close in December, the AP reported. Senator John McCain told delegates at the Republican Convention that the U.S. mission in Iraq was "necessary, achievable and noble," saying the U.S. "couldn't afford the risk posed by an unconstrained Saddam in these dangerous times," Bloomberg reported.
Late-Night Trading
Asian Indices are -.75% to +.25% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a better-than-expected Consumer Confidence reading and no acts of terror on opening night at the Republican Convention. The Portfolio is 100% net long heading into tomorrow.
Company/Estimate
ABS/.33
COO/.67
DCI/.33
EASI/.75
FCEL/-.40
ZLC/.13
Splits
CFC 2-for-1
HOC 2-for-1
Economic Data
Chicago Purchasing Manager for August estimated at 60.0 versus 64.7 in July.
Consumer Confidence for August estimated at 103.5 versus 106.1 in July.
Recommendations
None of note.
Late-Night News
Asian indices are mixed as weakness in Japan is being offset by strength in China. AOL is testing an Internet telephone service to let customers place calls over the Web, Cnet News reported on its Web site, Bloomberg said. Cautious U.S. companies are holding $1.17 trillion of cash, much of it accumulated from improved profits they are choosing not to spend, the Financial Times reported. A group led by Colony Capital LLC is close to an agreement to buy four properties from Harrah's Entertainment and Caesars Entertainment for about $1.26 billion, Dow Jones Newswires reported. Apple Computer may unveil a new version of its iMax personal computer at the Apple Expo 2004 that starts tomorrow in Paris, the AP reported. A fund that has collected more than $540 million for victims of the Sept. 11, 2001, terrorist attacks will close in December, the AP reported. Senator John McCain told delegates at the Republican Convention that the U.S. mission in Iraq was "necessary, achievable and noble," saying the U.S. "couldn't afford the risk posed by an unconstrained Saddam in these dangerous times," Bloomberg reported.
Late-Night Trading
Asian Indices are -.75% to +.25% on average.
S&P 500 indicated -.03%.
NASDAQ 100 indicated +.07%
BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on a better-than-expected Consumer Confidence reading and no acts of terror on opening night at the Republican Convention. The Portfolio is 100% net long heading into tomorrow.
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