Monday Close

S&P 500 1,124.39 +.20%
NASDAQ 1,928.76 +.46%

Leading Sectors
Biotech +1.08%
Internet +.73%
Software +.72%

Lagging Sectors
Energy -.95%
Airlines -.99%
Oil Service -2.62%

Other
Crude Oil 53.56 +.47%
Natural Gas 6.85 -4.30%
Gold 423.30 -.28%
Base Metals 125.26 -.11%
U.S. Dollar 87.54 +.03%
10-Yr. T-note Yield 4.13% +.05%
VIX 14.71 -2.26%
Put/Call .77 -23.0%
NYSE Arms 1.21 -49.79%

After-hours Movers
CTV -20.7% after reaffirming 3Q and lowering 4Q forecasts.

Recommendations
Goldman Sachs reiterated Outperform on BBY, ALK and SRE.

After-hours News
U.S. stocks finished quietly higher today on short-covering after Friday's Presidential debate. Motorola canceled a plan to develop televisions based on liquid crystal display technology for sale in China and North America, CNet said. General Motors plans to say Thursday that it will cut as many as 12,000 jobs from its European workforce to reduce costs by $500 million a year, the Financial Times reported. Computer Sciences won a $1.35 billion contract to manage phone and computer networks for Ascension Health, the biggest Catholic and non-profit heath system in the U.S. The dollar fell to a one-month low against the yen on speculation the Fed will skip an increase to it interest-rate target at one of two remaining meetings this year, Bloomberg reported. President Bush and Senator Kerry's second debate on Oct. 8 was watched by about 46.7 million tv viewers, Bloomberg said. The U.S. may need to coordinate flu vaccine supplies with other countries as the consolidation of the industry leaves nations reliant on a few companies, the FDA said.

BOTTOM LINE: The Portfolio finished slightly higher today as my rising alternative energy and networking longs more than offset my declining copper and security longs. I exited a copper long in the afternoon and added PMCS long, thus leaving the Portfolio 75% net long. I am using an $8.70 stop-loss on PMCS. Today's action was pretty non-eventful for the most part. Volume was about 25% lower than recent averages. It is good to see natural gas beginning to fall, however measures of investor complacency rose. Oil Service stocks will likely remain under pressure for the next several weeks as some traders incorrectly anticipate that high oil prices will lead the U.S. economy into recession next year, thus resulting in a significant fall in crude prices.

Monday Close

S&P 500 1,124.39 +.20%
NASDAQ 1,928.76 +.46%

Leading Sectors
Biotech +1.08%
Internet +.73%
Software +.72%

Lagging Sectors
Energy -.95%
Airlines -.99%
Oil Service -2.62%

Other
Crude Oil 53.56 +.47%
Natural Gas 6.85 -4.30%
Gold 423.30 -.28%
Base Metals 125.26 -.11%
U.S. Dollar 87.54 +.03%
10-Yr. T-note Yield 4.13% +.05%
VIX 14.71 -2.26%
Put/Call .77 -23.0%
NYSE Arms 1.21 -49.79%

After-hours Movers
CTV -20.7% after reaffirming 3Q and lowering 4Q forecasts.

Recommendations
Goldman Sachs reiterated Outperform on BBY, ALK and SRE.

After-hours News
U.S. stocks finished quietly higher today on short-covering after Friday's Presidential debate. Motorola canceled a plan to develop televisions based on liquid crystal display technology for sale in China and North America, CNet said. General Motors plans to say Thursday that it will cut as many as 12,000 jobs from its European workforce to reduce costs by $500 million a year, the Financial Times reported. Computer Sciences won a $1.35 billion contract to manage phone and computer networks for Ascension Health, the biggest Catholic and non-profit heath system in the U.S. The dollar fell to a one-month low against the yen on speculation the Fed will skip an increase to it interest-rate target at one of two remaining meetings this year, Bloomberg reported. President Bush and Senator Kerry's second debate on Oct. 8 was watched by about 46.7 million tv viewers, Bloomberg said. The U.S. may need to coordinate flu vaccine supplies with other countries as the consolidation of the industry leaves nations reliant on a few companies, the FDA said.

BOTTOM LINE: The Portfolio finished slightly higher today as my rising alternative energy and networking longs more than offset my declining copper and security longs. I exited a copper long in the afternoon and added PMCS long, thus leaving the Portfolio 75% net long. I am using an $8.70 stop-loss on PMCS. Today's action was pretty non-eventful for the most part. Volume was about 25% lower than recent averages. It is good to see natural gas beginning to fall, however measures of investor complacency rose. Oil Service stocks will likely remain under pressure for the next several weeks as some traders incorrectly anticipate that high oil prices will lead the U.S. economy into recession next year, thus resulting in a significant fall in crude prices.

Mid-day Update

S&P 500 1,223.30 +.10%
NASDAQ 1,924.08 +.21%

Leading Sectors
Biotech +.85%
I-Banks +.64%
Software +.56%

Lagging Sectors
Airlines -.73%
Energy -1.36%
Oil Service -2.59%

Other
Crude Oil 53.27 -.02%
Natural Gas 7.00 -2.21%
Gold 423.00 -.35%
Base Metals 125.07 -.26%
U.S. Dollar 87.58 +.08%
10-Yr. T-note Yield 4.13% +.05%
VIX 15.06 +.07%
Put/Call .79 -21.0%
NYSE Arms 1.23 -48.96%

Market Movers
SNDK -4.67% on profit-taking.
MVK -5.9% on LSS report and boosting 3Q earnings.
SNDA +9.8% after saying it acquired a leading Chinese original entertainment literature portal.
SFCC +6.6% after Jeffries upgrade to Buy, target $33.
LSS -18.8% after lowering 3Q estimates and multiple downgrades.
TNP -5.6% after Hibernia Southcoast downgrade to Hold.
LDG -6.3% after JP Morgan downgrade to Neutral.

Economic Data
None of note.

Recommendations
Citi SmithBarney cut NWAC to Sell, target $6. Citi reiterated Buy on CNET, target $13. Citi reiterated Sell on ELNK, target $9. Citi reiterated Buy on MNST, target $29. Citi reiterated Buy on NFLX, target $26. Citi reiterated Buy on NWS, target $40. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on GE, target $38. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on INTC, target $25.50. Goldman Sachs reiterated Outperform on RCL, MSFT, INTC, IGT, HOT, FS, KO, BAX, AVP, PFE, JNPR and GE. Goldman reiterated Underperform on INFA and TLAB. MU cut to Sell at Deutsche Bank, target $9. TXN cut to Sell at Deutsche Bank, target $18. MXO raised to Buy at Deutsche Bank, target $7. Legg Mason raised FLYR to Buy, target $25.

Mid-day News
U.S. stocks are quietly higher mid-day on short-covering after Friday's Presidential debate. The use of fingerprints may soon replace cash and passwords in retail transactions and other uses with the spread of more effective and affordable readers, the Wall Street Journal reported. Sheikh Mohammed bin Zayed Al-Nahyan, the deputy crown prince of the UAE, said crude oil prices have to fall to a "normal" level of about $30/bbl. in the near future, Deutsche Welle tv reported. The average vacancy rate of U.S. apartments fell to 6.6%, declining for the second straight quarter, the Wall Street Journal reported. The coffee brands Eight O'Clock Coffee and Chock full o'Nuts Coffee are unveiling advertising campaigns with hopes of taking some of Starbucks' supermarket sales, USA Today reported. Dunkin' Donuts plans to spend $25 million on ads in 60 markets promoting its coffee, the Boston Herald reported. Afghan President Karzai's main election rival, Yunus Qanooni, said he would accept the voting results after a UN panel looks into accusations of fraud, Agence France-Presse reported. President Bush gained 2 percentage points and now leads Senator Kerry by 5 percentage points after Friday's debate, according to Washington Post's daily tracking poll. SunTrust Banks said it will restate results for the first and second quarters of this year, increasing profit, because the company incorrectly calculated loan losses, Bloomberg reported. Phelps Dodge said its board approved an $850 million mine expansion project in Peru and agreed to sell equity stakes that may raise as much as $500 million, Bloomberg said.

BOTTOM LINE: The Portfolio is unchanged mid-day as my rising alternative energy and steel longs are being offset by my declining copper and medical technology longs. I have not traded today and the Portfolio is still 75% net long. The tone of the market is slightly positive, however volume is light. Stock prices will likely follow oil once again this afternoon as there is a lack of news today.

Chart of the Week

Inflation-adjusted Price of Oil


Bottom Line: Crude prices have remained higher for longer than I expected. As the effects of the record-setting hurricanes diminish at the end of this month and more supply hits U.S. shores, oil should begin heading to around $40/bbl.

Monday Watch

Earnings of Note
Company/Estimate
IFIN/.51
JBHT/.55
MDC/2.73
TSCO/.22

Splits
None of note.

Economic Data
None of note.

Weekend Recommendations
Forbes on Fox had guests that were positive on SLB and COST. Barron's had positive comments on HD and negative comments on NEW and AAPL.

Weekend News
Followers of Shiite Muslim cleric Moqtada al-Sadr reached an agreement with the Iraqi interim government to end attacks in Baghdad's Sadr City district, AFP reported. The FDA considers it unlikely that enough flu vaccinations will be available for use this winter after a bacterial contamination at Chiron's U.K. plant that makes the vaccine, the NY Times said. The report by Charles Duelfer, the top U.S. arms inspector in Iraq, that said French companies and high-ranking government officials profited from former Iraqi dictator Saddam Hussein's efforts to buy weapons and influence policy through the UN oil-for-food program has damaged U.S.-French relations, the NY Times reported. Defense Secretary Rumsfeld said the U.S. may start pulling troops out of Iraq after the country's national elections in January, Reuters reported. The U.S. Chamber of Commerce will target Democratic VP nominee John Edwards in a new ad campaign that seeks to portray the former trial lawyer as contributing to a crisis in U.S. medical care, Time magazine reported. Howard Stern, host of the top-rated radio show for young men in NY and LA, may earn about $65 million annually with Sirius Satellite Radio, Barron's reported. New York City employment will rise by about 50,000 jobs this year, the first increase since the stock market bubble burst in early 2000, Crain's New York said. Merck KGaA is selling more of its Erbitux colon-cancer treatment than it expected, CEO Scheuble told Financial Times Deutschland newspaper. Merck & Co. may avoid costly legal damages related to the Vioxx painkiller, because lawyers will have a hard time proving that the drug harmed the health of users, the Star-Ledger reported. The U.S. Environmental Protection Agency has had success in convincing oil companies to cut pollution levels, as 41% of refiners agreed to settlements with the agency over the past four years, the NY Times reported. Major U.S. pharmaceutical companies "without question" are a group that would see intense regulatory pressure under a Kerry presidency, Morgan Stanley analyst Rubin told the NY Times. Negotiators for both chambers of the U.S. Congress approved $11.6 billion in aid for hurricane victims in Florida and other eastern states, Bloomberg said. Afghans turned out in "massive" numbers for the nation's first direct presidential election, a UN spokesman said. French President Chirac told his Chinese counterpart Hu Jintao he wants to end the European Union's 15-year embargo on arms sales to China, introduced after troops killed student demonstrators in Tiananmen Square in 1989, Bloomberg reported. Australian Prime Minister Howard, one of the United States' strongest allies in the Iraq war, won a stunning fourth term in office with an increased majority after pledging to extend 13 years of economic growth, keep interest rates low and cut taxes, Bloomberg reported. Howard's government may also become the first since 1981 to control the upper house Senate, which would allow him to pass previously stalled legislation, Bloomberg said.

Late-Night Trading
Asian indices are quietly mixed, unch. to +.25% on average.
S&P 500 indicated +.22%.
NASDAQ 100 indicated +.38%

BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on short-covering after Friday's Presidential debate. The Portfolio is 75% net long heading into the week.

Weekly Outlook

There are a number of important economic reports and significant corporate earnings reports scheduled for release this week. Economic reports include Trade Balance, Import Price Index, Initial Jobless Claims, Monthly Budget Statement, Producer Price Index, Advance Retail Sales, Empire Manufacturing, Industrial Production, Capacity Utilization, U. of Mich. Consumer Confidence and Business Inventories. Producer Price Index, Advance Retail Sales, Industrial Production and Consumer Confidence all have market-moving potential.

Tractor Supply(TSCO), JB Hunt Transport(JBHT), Fastenal(FAST), Gannett Co.(GCI), Intel Corp.(INTC), Johnson & Johnson(JNJ), Merrill Lynch(MER), Apple Computer(AAPL), Yahoo!(YHOO), Harley-Davidson(HDI), Lam Research(LRCX), Bank of America(BAC), Citigroup(C), General Motors(GM), Juniper Networks(JNPR), Southwest Airlines(LUV), UnitedHealth Group(UNH) and Veritas Software(VRTS) are some of the more important companies that release quarterly earnings this week. There are also some other events that have market-moving potential. The Advanced Energy and Fuel Cell Conference, Fed's Bernanke speaking, Fed's Geithner speaking and Fed's Kohn speaking could also impact trading this week.

Bottom Line: I expect U.S. stocks to finish the week mixed-to-lower as worries over earnings and profit-taking offset better economic reports. A further rise by Senator Kerry in the polls or another move higher in oil prices would likely send stocks lower for the week. I continue to believe the major indices are consolidating recent gains before another more significant move higher, beginning in the later part of the month. My short-term trading indicators are still giving Buy signals and the Portfolio is 75% net long heading into the week.