S&P 500 1,125.82 +.17%
NASDAQ 1,910.38 +.85%
Leading Sectors
Semis +2.47%
Fashion +1.69%
Disk Drives +1.53%
Lagging Sectors
Banks -.27%
Utilities -.64%
Tobacco -.76%
Other
Crude Oil 43.73 -.32%
Natural Gas 4.84 -.21%
Gold 405.80 -.05%
Base Metals 108.16 -.09%
U.S. Dollar 88.54 +.17%
10-Yr. T-note Yield 4.15% -.92%
VIX 13.17 -4.29%
Put/Call .67 -19.28%
NYSE Arms .85 +14.86%
After-hours Movers
PGR +4.23% after saying it plans to buy back as many as 17.1 million shares. The purchase will be structured like a Dutch auction in which shareholders can tender their shares at any price between $78 and $88 a share.
LSI -6.29% after lowering 3Q forecast.
Recommendations
Goldman reiterated Attractive View of Energy sector.
After-hours News
U.S. stocks finished higher today, notwithstanding afternoon profit-taking, boosted by optimism over future economic growth, falling interest rates and diminishing terrorism fears. After the close, about 84% of registered Wisconsin voters said they have given "quite a lot of thought" to the presidential election, compared with about 76% in a similar survey taken two weeks ago, CNN reported. Douglas Parker, CEO of America West doesn't expect large carriers that have filed for bankruptcy protection to liquidate, Bloomberg reported. Hurricane Ivan devastated the Caymans, tearing off roofs and washing away parts of houses and apartment buildings on the tiny islands know for international banking, Bloomberg said. Bondholders of Trump Hotels & Casino Resorts requested $39 million more for their debt than Trump's company offered last month, Bloomberg reported. The U.S. had a $41.1 billion budget deficit in August, smaller than the same month a year earlier, as tax receipts increased with a strengthening economy, Bloomberg said. Orange-juice prices in New York fell the most in six weeks on speculation that most citrus groves in Florida will escape damage from Hurricane Ivan, Bloomberg reported. Federated Department Stores will change the names of all 184 of its regional department stores to Macy's, dropping such brands as Rich's and Burdines, to expand the chain nationally, Bloomberg said.
BOTTOM LINE: The Portfolio finished substantially higher today on strength in my software, semi/semi-equipment and internet longs. I took profits in a few semi/semi-equipment longs and added some consumer-oriented shorts, leaving the Portfolio 75% net long. One of my new shorts is ERTS and I am using a $49.75 stop-loss on this position. The Portfolio is substantially higher for the year and near highs set a few months ago, thus I am locking in some gains. While U.S. stocks may head marginally higher over the next 10 days, measures of investor complacency reached levels today normally associated with short-term tops. My trading model is still giving buy signals but has deteriorated recently. I will likely stay a little more conservatively positioned over the next month as earnings pre-announcement season begins.
Monday, September 13, 2004
Mid-day Update
S&P 500 1,128.80 +.43%
NASDAQ 1,917.24 +1.21%
Leading Sectors
Semis +3.51%
Disk Drives +2.20%
Biotech +1.61%
Lagging Sectors
Banks -.16%
Utilities -.50%
Tobacco -.75%
Other
Crude Oil 44.04 +2.87%
Natural Gas 4.85 +6.13%
Gold 405.30 +.40%
Base Metals 107.83 -.40%
U.S. Dollar 88.52 +.15%
10-Yr. T-note Yield 4.15% -.88%
VIX 13.25 -3.71%
Put/Call .68 -18.07%
NYSE Arms .55 -25.68%
Market Movers
BRCM +10.6% on bargain-hunting after lowering 3Q estimates.
NSM +8.0% after Sanford C. Bernstein raised it to Outperform, target $20.
DNET +26.5% after BAE Systems Plc agreed to acquire it for $494.4 million.
MSTR +16.3% after First Albany raised it to Strong Buy, target $56.
MKSI +16.2% after positive mention in Barron's.
TZOO +12.2% on continuing short-squeeze.
IMCL +7.33% after SunTrust Robinson upgrade to Buy, target $66.
APSG -7.8% after Advest downgrade to Neutral from Buy.
Economic Data
None of note.
Recommendations
UBS cut EQR, HME and AIV to Reduce. SHW raised to Outperform at CSFB, target $46. PHCC cut to Underweight at JP Morgan. MERQ raised to Buy at Bank of America, target $42.00. ENS raised to Buy at Bank of America, target $16. CHS raised to Buy at Bank of America, target $44. JRC was raised to Buy at Bank of America, target $21. LEA raised to Buy at Bank of America, target $66. MCO added to Focus List at Morgan Stanley. Goldman Sachs reiterated Outperform on KMI, ADP, KMR, IP, FS, IGT, HD, AMGN, AET and KMP. Goldman rated Outperform on DEX, target mid-upper 20's. Goldman reiterated Underperform on SGP.
Mid-day News
U.S. stocks are higher mid-day, led by technology shares, on optimism over falling interest rates, declining inflation fears, falling terrorism concerns and future economic growth. The FDA approved an implantable corrective lens made by Dutch company Ophtec BV, which can correct nearsightedness without laser surgery, the Wall Street Journal reported. Small U.S. mutual funds are considering leaving the business as they struggle with the costs of complying with new rules designed to curb abuse, the Wall Street Journal reported. IBM will give some of its speech-recognition software to two open-source software groups as it promotes wider use and development of such applications, the NY Times reported. The National Highway Traffic Safety Administration is expected to mandate safety power window switches in all vehicles within four years, USA Today reported. Gun dealers say a 1994 federal assault weapons ban that is set to expire at midnight didn't prevent many of the firearms from reaching the streets, the Washington Post reported. The U.S. crime rate last year held at the lowest level since the government began surveying crime victims in 1973, the Washington Post reported. Krispy Kreme Doughnuts said its auditor won't complete its review of the company's financial statements for the latest quarter until it gets more information from an outside investigator, Bloomberg reported. Wal-Mart said September same-store sales are rising within forecast for a gain of 2-4% as shoppers bought back to school supplies, Bloomberg said. US Airways must rely on daily revenue and cash to operate during its bankruptcy reorganization, leaving it vulnerable to liquidation should the funds run out or a creditor seeks court permission for payment, Bloomberg reported. Rogers Communications plans to buy AT&T Wireless Services' 34% stake in Rogers Wireless for $1.37 billion, Bloomberg said. Hurricane Ivan was heading toward Cuba today on a track that will bring it ashore in Florida or Alabama sometime Thursday, Bloomberg reported. Crude oil rose and natural gas soared in New York as the approach of Hurricane Ivan disrupted production and tanker shipments in the Gulf of Mexico, where a quarter of U.S. oil and natural gas is pumped, Bloomberg reported. Time Warner withdrew its bid for MGM, saying it couldn't reach agreement on the price of the film studio, Bloomberg said.
BOTTOM LINE: The Portfolio is substantially higher mid-day on strength in my software, semi/semi-equipment, steel and internet longs. I have not traded today and the Portfolio is still 125% net long. The tone of the market is positive again today as most sectors and stocks are rising, notwithstanding the rise in energy prices related to Hurricane Ivan. Interest rates are falling again on Fed comments and declining inflation fears. On the negative side, measures of investor anxiety are falling again and are near levels normally associated with short-term tops. I expect U.S. stocks to trade mixed into the close on a consolidation of recent gains.
NASDAQ 1,917.24 +1.21%
Leading Sectors
Semis +3.51%
Disk Drives +2.20%
Biotech +1.61%
Lagging Sectors
Banks -.16%
Utilities -.50%
Tobacco -.75%
Other
Crude Oil 44.04 +2.87%
Natural Gas 4.85 +6.13%
Gold 405.30 +.40%
Base Metals 107.83 -.40%
U.S. Dollar 88.52 +.15%
10-Yr. T-note Yield 4.15% -.88%
VIX 13.25 -3.71%
Put/Call .68 -18.07%
NYSE Arms .55 -25.68%
Market Movers
BRCM +10.6% on bargain-hunting after lowering 3Q estimates.
NSM +8.0% after Sanford C. Bernstein raised it to Outperform, target $20.
DNET +26.5% after BAE Systems Plc agreed to acquire it for $494.4 million.
MSTR +16.3% after First Albany raised it to Strong Buy, target $56.
MKSI +16.2% after positive mention in Barron's.
TZOO +12.2% on continuing short-squeeze.
IMCL +7.33% after SunTrust Robinson upgrade to Buy, target $66.
APSG -7.8% after Advest downgrade to Neutral from Buy.
Economic Data
None of note.
Recommendations
UBS cut EQR, HME and AIV to Reduce. SHW raised to Outperform at CSFB, target $46. PHCC cut to Underweight at JP Morgan. MERQ raised to Buy at Bank of America, target $42.00. ENS raised to Buy at Bank of America, target $16. CHS raised to Buy at Bank of America, target $44. JRC was raised to Buy at Bank of America, target $21. LEA raised to Buy at Bank of America, target $66. MCO added to Focus List at Morgan Stanley. Goldman Sachs reiterated Outperform on KMI, ADP, KMR, IP, FS, IGT, HD, AMGN, AET and KMP. Goldman rated Outperform on DEX, target mid-upper 20's. Goldman reiterated Underperform on SGP.
Mid-day News
U.S. stocks are higher mid-day, led by technology shares, on optimism over falling interest rates, declining inflation fears, falling terrorism concerns and future economic growth. The FDA approved an implantable corrective lens made by Dutch company Ophtec BV, which can correct nearsightedness without laser surgery, the Wall Street Journal reported. Small U.S. mutual funds are considering leaving the business as they struggle with the costs of complying with new rules designed to curb abuse, the Wall Street Journal reported. IBM will give some of its speech-recognition software to two open-source software groups as it promotes wider use and development of such applications, the NY Times reported. The National Highway Traffic Safety Administration is expected to mandate safety power window switches in all vehicles within four years, USA Today reported. Gun dealers say a 1994 federal assault weapons ban that is set to expire at midnight didn't prevent many of the firearms from reaching the streets, the Washington Post reported. The U.S. crime rate last year held at the lowest level since the government began surveying crime victims in 1973, the Washington Post reported. Krispy Kreme Doughnuts said its auditor won't complete its review of the company's financial statements for the latest quarter until it gets more information from an outside investigator, Bloomberg reported. Wal-Mart said September same-store sales are rising within forecast for a gain of 2-4% as shoppers bought back to school supplies, Bloomberg said. US Airways must rely on daily revenue and cash to operate during its bankruptcy reorganization, leaving it vulnerable to liquidation should the funds run out or a creditor seeks court permission for payment, Bloomberg reported. Rogers Communications plans to buy AT&T Wireless Services' 34% stake in Rogers Wireless for $1.37 billion, Bloomberg said. Hurricane Ivan was heading toward Cuba today on a track that will bring it ashore in Florida or Alabama sometime Thursday, Bloomberg reported. Crude oil rose and natural gas soared in New York as the approach of Hurricane Ivan disrupted production and tanker shipments in the Gulf of Mexico, where a quarter of U.S. oil and natural gas is pumped, Bloomberg reported. Time Warner withdrew its bid for MGM, saying it couldn't reach agreement on the price of the film studio, Bloomberg said.
BOTTOM LINE: The Portfolio is substantially higher mid-day on strength in my software, semi/semi-equipment, steel and internet longs. I have not traded today and the Portfolio is still 125% net long. The tone of the market is positive again today as most sectors and stocks are rising, notwithstanding the rise in energy prices related to Hurricane Ivan. Interest rates are falling again on Fed comments and declining inflation fears. On the negative side, measures of investor anxiety are falling again and are near levels normally associated with short-term tops. I expect U.S. stocks to trade mixed into the close on a consolidation of recent gains.
Monday Watch
Earnings of Note
Company/Estimate
CPB/.18
CKR/.20
Splits
CVX 2-for-1
CHZ 5-for-4
POOL 3-for-2
SSP 2-for-1
Economic Data
Monthly Budget Statement for August estimated at -$40.0B versus -$76.6B in July.
Weekend Recommendations
Louis Rukeyser's Wall Street had guests that were positive on APD, WAG, BBV, CVX, BA and VZ. Wall St. Week w/Fortune had guests that were positive on DVY, ENDP, DIS, FOX, CVX, MGM, C, MLS, PFE, MDT, JNJ, GE, WFC and BR. Barron's had a positive column on MKSI and negative column on SPX. Goldman Sachs reiterated Outperform on AMGN.
Weekend News
Iraq will create an independent oil company to run its oil and gas industry and invite international companies to develop fields, Middle East Economic Survey said. Saudi Arabia boosted output from two oilfields by a third in August as the country seeks to add 800,000 barrels a day to its oil output capacity, Middle East Economic Survey said. The first U.S. military intelligence soldier to stand trial for prisoner abuse at Iraq's Abu Gharaib prison was sentenced to eight months in jail, Agence France-Presse reported. SAP AG expects to gain customers if Oracle's hostile takeover bid for PeopleSoft succeeds, CEO Kagermann told newspaper Welt am Sonntag. Iran, holder of the world's second largest gas reserves, would reject any limits on the development of its "peaceful" nuclear technology program imposed by the UN, Bloomberg said. A former Texas National Guard commander, whom CBS News cited as vouching for the authenticity of memos that suggested President Bush received preferential treatment in his service, said he believes the documents are falsified, the NY Times reported. Vodafone Group may delay so-called third-generation services because of a handset shortage, the Sunday Times reported. More than 70,000 al-Qaeda terrorists who received training in camps in Afghanistan are still at large, the Independent on Sunday said, citing Daniel Benjamin, former counter-terrorism adviser to Bill Clinton. Toys "R" Us may be driven out of business by lower-cost competition led by Wal-Mart, the NY Times reported. Bill Rammell, the first U.K. government minister to visit North Korea, said he will ask North Korea today to explain a blast last week that created a mushroom cloud, the BBC said. NTL Inc. the U.K.'s biggest cable-tv operator, plans to sell its tv and radio broadcasting business for at least $2.16 billion, the Financial Times said. Families of World Trade Center victims returned to where New York's twin towers once stood to market the third anniversary of the Sept. 11 attacks and hear parents and grandparents who lost loved ones recite the names of the 2,749 people who died there, Bloomberg said. Hurricane Ivan, with winds speeds near 155 mph, is approaching Grand Cayman and moving toward Cuba, as Florida residents brace for a third storm to hit the state in a month, Bloomberg reported. Federal Reserve Governor Susan Bies said the central bank faces "no urgency" to lift the benchmark U.S. interest rate while awaiting more evidence that economic growth is steady, Bloomberg reported. US Airways, which failed to wrest a critical $800 million in concessions from workers, filed today for Chapter 11 bankruptcy protection for the second time since 2002, Bloomberg said. Crude oil futures are up 1.9% in New York on speculation Hurricane Ivan could disrupt output from platforms in the Gulf of Mexico, Bloomberg reported. Copper futures may fall this week amid speculation that China's government may step up moves to slow the economy, curbing demand from the world's biggest user of the metal, Bloomberg said. Broadcom said third-quarter sales won't meet its previous forecast because some customers are delaying deliveries, Bloomberg reported. U.S. orders for machine tools surged 77% to $243.1 million in July over the same month a year earlier as factories boosted investment in equipment to meet rising demand, Bloomberg said.
Late-Night Trading
Asian indices are higher, +.50% to +1.50% on average.
S&P 500 indicated -.04%.
NASDAQ indicated -.14%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on fears over damage from Hurricane Ivan, rising energy prices and Broadcom's negative pre-announcement. However, equities should rise later in the day on optimism over decelerating inflation, diminishing terrorism fears, future U.S. economic growth and short-covering. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
CPB/.18
CKR/.20
Splits
CVX 2-for-1
CHZ 5-for-4
POOL 3-for-2
SSP 2-for-1
Economic Data
Monthly Budget Statement for August estimated at -$40.0B versus -$76.6B in July.
Weekend Recommendations
Louis Rukeyser's Wall Street had guests that were positive on APD, WAG, BBV, CVX, BA and VZ. Wall St. Week w/Fortune had guests that were positive on DVY, ENDP, DIS, FOX, CVX, MGM, C, MLS, PFE, MDT, JNJ, GE, WFC and BR. Barron's had a positive column on MKSI and negative column on SPX. Goldman Sachs reiterated Outperform on AMGN.
Weekend News
Iraq will create an independent oil company to run its oil and gas industry and invite international companies to develop fields, Middle East Economic Survey said. Saudi Arabia boosted output from two oilfields by a third in August as the country seeks to add 800,000 barrels a day to its oil output capacity, Middle East Economic Survey said. The first U.S. military intelligence soldier to stand trial for prisoner abuse at Iraq's Abu Gharaib prison was sentenced to eight months in jail, Agence France-Presse reported. SAP AG expects to gain customers if Oracle's hostile takeover bid for PeopleSoft succeeds, CEO Kagermann told newspaper Welt am Sonntag. Iran, holder of the world's second largest gas reserves, would reject any limits on the development of its "peaceful" nuclear technology program imposed by the UN, Bloomberg said. A former Texas National Guard commander, whom CBS News cited as vouching for the authenticity of memos that suggested President Bush received preferential treatment in his service, said he believes the documents are falsified, the NY Times reported. Vodafone Group may delay so-called third-generation services because of a handset shortage, the Sunday Times reported. More than 70,000 al-Qaeda terrorists who received training in camps in Afghanistan are still at large, the Independent on Sunday said, citing Daniel Benjamin, former counter-terrorism adviser to Bill Clinton. Toys "R" Us may be driven out of business by lower-cost competition led by Wal-Mart, the NY Times reported. Bill Rammell, the first U.K. government minister to visit North Korea, said he will ask North Korea today to explain a blast last week that created a mushroom cloud, the BBC said. NTL Inc. the U.K.'s biggest cable-tv operator, plans to sell its tv and radio broadcasting business for at least $2.16 billion, the Financial Times said. Families of World Trade Center victims returned to where New York's twin towers once stood to market the third anniversary of the Sept. 11 attacks and hear parents and grandparents who lost loved ones recite the names of the 2,749 people who died there, Bloomberg said. Hurricane Ivan, with winds speeds near 155 mph, is approaching Grand Cayman and moving toward Cuba, as Florida residents brace for a third storm to hit the state in a month, Bloomberg reported. Federal Reserve Governor Susan Bies said the central bank faces "no urgency" to lift the benchmark U.S. interest rate while awaiting more evidence that economic growth is steady, Bloomberg reported. US Airways, which failed to wrest a critical $800 million in concessions from workers, filed today for Chapter 11 bankruptcy protection for the second time since 2002, Bloomberg said. Crude oil futures are up 1.9% in New York on speculation Hurricane Ivan could disrupt output from platforms in the Gulf of Mexico, Bloomberg reported. Copper futures may fall this week amid speculation that China's government may step up moves to slow the economy, curbing demand from the world's biggest user of the metal, Bloomberg said. Broadcom said third-quarter sales won't meet its previous forecast because some customers are delaying deliveries, Bloomberg reported. U.S. orders for machine tools surged 77% to $243.1 million in July over the same month a year earlier as factories boosted investment in equipment to meet rising demand, Bloomberg said.
Late-Night Trading
Asian indices are higher, +.50% to +1.50% on average.
S&P 500 indicated -.04%.
NASDAQ indicated -.14%.
BOTTOM LINE: I expect U.S. stocks to open modestly lower in the morning on fears over damage from Hurricane Ivan, rising energy prices and Broadcom's negative pre-announcement. However, equities should rise later in the day on optimism over decelerating inflation, diminishing terrorism fears, future U.S. economic growth and short-covering. The Portfolio is 125% net long heading into tomorrow.
Sunday, September 12, 2004
Chart of the Week
iShares Lehman 20+ Year Treasury Bond Fund
Bottom Line: One way to play the acceleration in economic growth I envision during the fourth quarter would be to short TLT as long-term interest rates should rise from current levels. There are also options available on this security.
Bottom Line: One way to play the acceleration in economic growth I envision during the fourth quarter would be to short TLT as long-term interest rates should rise from current levels. There are also options available on this security.
Weekly Outlook
There are several important economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports include the Monthly Budget Statement, Current Account Balance, Advance Retail Sales, Empire Manufacturing, Business Inventories, Industrial Production, Capacity Utilization, Consumer Price Index, Initial Jobless Claims, Philly Fed and Univ. of Mich. Consumer Confidence. Retail Sales, CPI, Philly Fed and Consumer Confidence all have market-moving potential.
Oracle Corp.(ORCL), Best Buy(BBY), Cintas(CTAS), General Mills(GIS), AG Edwards(AGE), Carnival Corp.(CCL), Circuit City(CC) and Jabil Circuit(JBL) are some of the more important companies that release quarterly earnings this week. There are also a couple of other events that have market-moving potential. Rosh Hashanah and an OPEC meeting could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week modestly higher as traders and investors boost shares on optimism over diminishing terrorism fears, more merger activity, declining energy prices, falling inflation/interest rate concerns and economic data showing stabilizing sustainable growth. With measures of investor anxiety beginning to reach excessively complacent levels, I expect U.S. equities to put in a shot-term top during the next 2 weeks. However, I continue to believe stocks will resume their rally during the latter part of October and move meaningfully higher during the fourth quarter. My short-term trading indicators are still giving Buy signals and the Portfolio is 125% net long heading into the week.
Oracle Corp.(ORCL), Best Buy(BBY), Cintas(CTAS), General Mills(GIS), AG Edwards(AGE), Carnival Corp.(CCL), Circuit City(CC) and Jabil Circuit(JBL) are some of the more important companies that release quarterly earnings this week. There are also a couple of other events that have market-moving potential. Rosh Hashanah and an OPEC meeting could also impact trading this week.
Bottom Line: I expect U.S. stocks to finish the week modestly higher as traders and investors boost shares on optimism over diminishing terrorism fears, more merger activity, declining energy prices, falling inflation/interest rate concerns and economic data showing stabilizing sustainable growth. With measures of investor anxiety beginning to reach excessively complacent levels, I expect U.S. equities to put in a shot-term top during the next 2 weeks. However, I continue to believe stocks will resume their rally during the latter part of October and move meaningfully higher during the fourth quarter. My short-term trading indicators are still giving Buy signals and the Portfolio is 125% net long heading into the week.
Market Week in Review
S&P 500 1,123.92 +.50%
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: Last week's action was positive for the Bulls as the overall market consolidated recent gains and most sectors/stocks rose. The technology and steel sectors led the way. Technology investors bid shares higher from very oversold levels after a few bell-weathers made positive comments with respect to future growth and traders speculated the bad news had already been discounted in the stocks. Steel stocks broke higher from their recent consolidation on earnings optimism, low valuations and speculation that energy prices would fall further in coming weeks. Falling interest rates, after better-than-expected inflation readings and positive comments from Greenspan, also helped lift shares. Finally, the comments by Judge Walker, who ruled against the Justice Dept. in the Oracle/PeopleSoft case, were a big positive for technology stocks towards week's end. This should provide the catalyst for imminent consolidation within this sector still burdened by the overcapacity generated during the bubble of the late 90's. On the negative side, most measures of investor anxiety are now approaching levels of complacency normally associated with short-term tops.
Click here for the Weekly Wrap by Briefing.com.
Bottom Line: Last week's action was positive for the Bulls as the overall market consolidated recent gains and most sectors/stocks rose. The technology and steel sectors led the way. Technology investors bid shares higher from very oversold levels after a few bell-weathers made positive comments with respect to future growth and traders speculated the bad news had already been discounted in the stocks. Steel stocks broke higher from their recent consolidation on earnings optimism, low valuations and speculation that energy prices would fall further in coming weeks. Falling interest rates, after better-than-expected inflation readings and positive comments from Greenspan, also helped lift shares. Finally, the comments by Judge Walker, who ruled against the Justice Dept. in the Oracle/PeopleSoft case, were a big positive for technology stocks towards week's end. This should provide the catalyst for imminent consolidation within this sector still burdened by the overcapacity generated during the bubble of the late 90's. On the negative side, most measures of investor anxiety are now approaching levels of complacency normally associated with short-term tops.
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