S&P 500 1,103.23 -.97%
NASDAQ 1,922.90 -.70%
Leading Sectors
Semis +1.03%
I-Banks +.97%
Computer Boxmakers +.71%
Lagging Sectors
Insurance -3.30%
Iron/Steel -5.47%
HMOs -9.38%
Other
Crude Oil 53.25 -.08%
Natural Gas 7.25 +1.78%
Gold 421.40 -.05%
Base Metals 113.21 +.08%
U.S. Dollar 86.82 -.23%
10-Yr. T-note Yield 4.03% -.24%
VIX 15.13 +2.86%
Put/Call .93 +22.37%
NYSE Arms 1.36 +37.37%
After-hours Movers
MOT -5.59% after missing 3Q estimates slightly and reiterating 4Q outlook.
ERTS -4.31% after meeting 2Q estimates and lowering 3Q guidance.
SGTL +10.1% after beating 3Q estimates and raising 4Q outlook.
JAKK -5.58% after World Wrestling Entertainment sued the maker of its action figures, alleging the company violated anti-bribery laws.
MKSI -5.98% after beating 3Q estimates and lowering 4Q outlook.
Recommendations
Goldman Sachs reiterated Outperform on INTC, GLK, AMD and WFC.
After-hours News
U.S. stocks finished modestly lower today led by significant declines in the insurance sector related to NY Attorney General Spitzer's probes. After the close, the family that controls Cox Communications will take the company private after raising its offer to buy out shareholders to $8.5 billion. MRIs may be a better guide for stroke treatment than CT scans, according to a study in the Oct. 20 Journal of the American Medical Association. A winter of lower-than-average temperatures and above-normal snowfall is expected in many parts of the eastern U.S., AccuWeather predicted. Motorola said third-quarter profit quadrupled to the highest level for the period in four years as new handset models revived sales, Bloomberg reported. The World Trade Center likely collapsed because jetliners that slammed into the twin towers knocked fireproofing loose, not because of missing or inadequate fire protection, according to findings released today by U.S. investigators, Bloomberg said. Bank of America said Jonathon Sandelman, who became president of the company's securities unit in February, is quitting to start a hedge fund, Bloomberg reported. Sinclair Broadcast Group said it will not broadcast in its entirety the documentary "Stolen Honor," a film by Vietnam Veterans critical of Senator Kerry's actions after the war, Bloomberg reported.
BOTTOM LINE: The Portfolio finished higher today on gains in my security, internet and retail longs. I exited a few longs in the steel and software sectors in the afternoon, bringing the Portfolio's market exposure to 100% net long. While the tone of the market was mostly negative, losses were contained mostly to insurance and base metal stocks. The Semiconductor Index, the most important sub-sector of technology, actually rose 1.03%. It is also good to see the spikes in some measures of investor anxiety. I will closely watch the market's reaction to tomorrow's oil inventory data and earnings reports before further shifting the Portfolio's market exposure.
Tuesday, October 19, 2004
Mid-day Update
S&P 500 1,106.75 -.65%
NASDAQ 1,930.36 -.32%
Leading Sectors
Semis +1.55%
I-Banks +1.11%
Boxmakers +1.02%
Lagging Sectors
Insurance -3.01%
Iron/Steel -5.06%
HMOs -7.82%
Other
Crude Oil 53.20 -.88%
Natural Gas 7.05 +3.66%
Gold 421.60 +.96%
Base Metals 113.21 +.08%
U.S. Dollar 86.83 -.22%
10-Yr. T-note Yield 4.04% -.05%
VIX 14.91 +1.36%
Put/Call .94 +23.68%
NYSE Arms 1.18 +19.19%
Market Movers
TASR +8.5% after beating 3Q estimates and raising 04 forecast.
MMC -4.8% on lingering worries over Spitzer probe.
UNH -8.5% after the NY Post reported that New York Attorney General Spitzer is widening a probe of insurance brokers' fees to include HMOs.
TXN +7.9% after beating 3Q estimates, reiterating 4Q guidance and making positive comments.
UNM -9.8% on Spitzer probe.
MOND +31.0% after Constellation Brands offered $1.3 billion in cash to acquire it.
SSNC +19.2% after beating 3Q estimates, raising 4Q guidance and Suntrust upgrade to Buy.
PH +8.6% after beating 1Q estimates and raising 2Q outlook.
SWK +9.2% after beating 3Q estimates and raising 4Q/04 guidance.
CKFR +10.4% after beating 1Q estimates and raising 2Q forecast.
RTRSY +7.9% after meeting 3Q estimates and giving positive outlook.
STN +4.4% after beating 3Q estimates and raising 4Q outlook.
ETH +7.2% after beating 1Q estimates and making positive comments on 05.
JEF +8.3% after substantially beating 3Q estimates.
AET -10.3% on Spitzer probe.
WLP -6.7% on Spitzer probe.
BCC -11.5% on profit-taking after beating 3Q estimates.
NUE -8.22% on continuing worries over slowing demand from China.
Economic Data
Consumer Price Index for September rose .2% versus estimates of a .2% increase and a .1% gain in August.
CPI Ex Food & Energy for September rose .3% versus estimates of a .2% gain and a .1% rise in August.
Housing Starts for September were 1898K versus estimates of 1950K and 2020K in August.
Building Permits for September were 2005K versus estimates of 1950K and 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on IBM, EMC, CMA, DO, RIG and STN. Goldman reiterated Underperform on FRX. Citi SmithBarney said to Sell WEN and Buy MCD. Citi also said to Sell CSX and Buy CNI. Citi reiterated Buy on MSFT, target $33. Citi reiterated Sell on LF, target $10. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on MMM, target $86. Citi reiterated Buy on ASD, target $46. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on CKFR, target $39. FST rated Buy at UBS, target $38. KWK rated Buy at UBS, target $48. WGR rated Buy at UBS, target $37. FLYI cut to Reduce at UBS, target $1.50. DAL cut to Reduce at UBS, target $2. SGU cut to Reduce at UBS, target $8. BHE rated Buy at Bank of America, target $37. PLXS rated Sell at Bank of America, target $9.
Mid-day News
U.S. stocks are modestly lower mid-day on worries over mounting legal duress in the insurance industry. New York Attorney General Spitzer began investigating health insurance policies sold by brokers to individuals, large corporations and local government, the NY Post reported. U.S. hedge funds opposed to a plan to require them to register as financial advisers have asked U.S. regulators to explore other ways to improve disclosure, the NY Post said. Canadian health-lobby organizations are pressuring their government to prohibit Internet-based pharmacies from selling drugs to the U.S., because they say the sales will lead to higher pharmaceutical prices and shortages in Canada, the Wall Street Journal reported. Senator Kerry is wrong when he says the 2001 battle of Tora Bora in Afghanistan was a "missed opportunity" in which the U.S. had al-Qaeda leader Osama bin Laden surrounded and let him escape, retired General Tommy Franks wrote in today's NY Times. The U.S. Army has been ordered to prepare a plan to shorten the 12-month tours of duty soldiers now serve in Afghanistan and Iraq, the NY Times reported. Google's new free search tool that indexes a computer's content for easy retrieval could allow public PC users to see other people's e-mails, passwords and data, the AP reported. Senator Kerry may have overstated President Bush's positions on Social Security and the draft as well as his responsibility for a shortage of flu shots, the NY Times reported, citing experts and candidate statements. The NHL, which has missed six days of its regular season because of a labor dispute, is now canceling games 45 days in the future instead of 30, TSN network of Canada reported. General Motors may face costs of $38 million per day if strikes bring its plants across Europe to a standstill, Reuters reported. Iraq is on course to hold its first free elections in January, UN Secretary General Annan said, calling on all nations to support the country, Bloomberg reported. EMC, the world's largest maker of data storage computers and software, said third-quarter profit rose as the company snatched sales from competitors and clients spent more on storage to meet government regulations, Bloomberg said. Boston Scientific, the world's largest maker of heart stents, said third-quarter net income more than doubled to $258 million after the company stemmed damage from three recalls of its top-selling product in the U.S., Bloomberg said. Merck said Vioxx's planned successor, Arcoxia, didn't elevate the risk of heart disease compared with a generic pain pill in a one-year study, Bloomberg reported. McDonald's started selling New York Reuben and Turkey BLT sandwiches at some U.S. and Canadian locations last quarter to take sales from Subway Restaurants, Bloomberg reported. Crude oil futures are falling for a second day in NY on speculation that high prices may dent the growth in oil demand and prompt development of increased production capacity, Bloomberg said. U.S. consumer prices accelerated in September, a gain that may strengthen the Fed's resolve to increase interest rates, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day on strength in my security, internet and retail longs. I have not traded and the Portfolio is still 125% net long. The tone of the market has deteriorated today as major U.S. insurance companies continue to fall substantially as a result of the Spitzer probes. As well, oil has risen from its lows for the day. On the positive-side, measures of investor anxiety are rising, technology stocks are mostly higher, leaders are beginning to break-out, interest rates are lower and another measure of consumer inflation remained relatively tame. I expect U.S. stocks to rise modestly into the close from current levels on short-covering and bargain-hunting.
NASDAQ 1,930.36 -.32%
Leading Sectors
Semis +1.55%
I-Banks +1.11%
Boxmakers +1.02%
Lagging Sectors
Insurance -3.01%
Iron/Steel -5.06%
HMOs -7.82%
Other
Crude Oil 53.20 -.88%
Natural Gas 7.05 +3.66%
Gold 421.60 +.96%
Base Metals 113.21 +.08%
U.S. Dollar 86.83 -.22%
10-Yr. T-note Yield 4.04% -.05%
VIX 14.91 +1.36%
Put/Call .94 +23.68%
NYSE Arms 1.18 +19.19%
Market Movers
TASR +8.5% after beating 3Q estimates and raising 04 forecast.
MMC -4.8% on lingering worries over Spitzer probe.
UNH -8.5% after the NY Post reported that New York Attorney General Spitzer is widening a probe of insurance brokers' fees to include HMOs.
TXN +7.9% after beating 3Q estimates, reiterating 4Q guidance and making positive comments.
UNM -9.8% on Spitzer probe.
MOND +31.0% after Constellation Brands offered $1.3 billion in cash to acquire it.
SSNC +19.2% after beating 3Q estimates, raising 4Q guidance and Suntrust upgrade to Buy.
PH +8.6% after beating 1Q estimates and raising 2Q outlook.
SWK +9.2% after beating 3Q estimates and raising 4Q/04 guidance.
CKFR +10.4% after beating 1Q estimates and raising 2Q forecast.
RTRSY +7.9% after meeting 3Q estimates and giving positive outlook.
STN +4.4% after beating 3Q estimates and raising 4Q outlook.
ETH +7.2% after beating 1Q estimates and making positive comments on 05.
JEF +8.3% after substantially beating 3Q estimates.
AET -10.3% on Spitzer probe.
WLP -6.7% on Spitzer probe.
BCC -11.5% on profit-taking after beating 3Q estimates.
NUE -8.22% on continuing worries over slowing demand from China.
Economic Data
Consumer Price Index for September rose .2% versus estimates of a .2% increase and a .1% gain in August.
CPI Ex Food & Energy for September rose .3% versus estimates of a .2% gain and a .1% rise in August.
Housing Starts for September were 1898K versus estimates of 1950K and 2020K in August.
Building Permits for September were 2005K versus estimates of 1950K and 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on IBM, EMC, CMA, DO, RIG and STN. Goldman reiterated Underperform on FRX. Citi SmithBarney said to Sell WEN and Buy MCD. Citi also said to Sell CSX and Buy CNI. Citi reiterated Buy on MSFT, target $33. Citi reiterated Sell on LF, target $10. Citi reiterated Sell on WTW, target $31. Citi reiterated Buy on FITB, target $58. Citi reiterated Buy on MMM, target $86. Citi reiterated Buy on ASD, target $46. Citi reiterated Buy on MATK, target $90. Citi reiterated Buy on CKFR, target $39. FST rated Buy at UBS, target $38. KWK rated Buy at UBS, target $48. WGR rated Buy at UBS, target $37. FLYI cut to Reduce at UBS, target $1.50. DAL cut to Reduce at UBS, target $2. SGU cut to Reduce at UBS, target $8. BHE rated Buy at Bank of America, target $37. PLXS rated Sell at Bank of America, target $9.
Mid-day News
U.S. stocks are modestly lower mid-day on worries over mounting legal duress in the insurance industry. New York Attorney General Spitzer began investigating health insurance policies sold by brokers to individuals, large corporations and local government, the NY Post reported. U.S. hedge funds opposed to a plan to require them to register as financial advisers have asked U.S. regulators to explore other ways to improve disclosure, the NY Post said. Canadian health-lobby organizations are pressuring their government to prohibit Internet-based pharmacies from selling drugs to the U.S., because they say the sales will lead to higher pharmaceutical prices and shortages in Canada, the Wall Street Journal reported. Senator Kerry is wrong when he says the 2001 battle of Tora Bora in Afghanistan was a "missed opportunity" in which the U.S. had al-Qaeda leader Osama bin Laden surrounded and let him escape, retired General Tommy Franks wrote in today's NY Times. The U.S. Army has been ordered to prepare a plan to shorten the 12-month tours of duty soldiers now serve in Afghanistan and Iraq, the NY Times reported. Google's new free search tool that indexes a computer's content for easy retrieval could allow public PC users to see other people's e-mails, passwords and data, the AP reported. Senator Kerry may have overstated President Bush's positions on Social Security and the draft as well as his responsibility for a shortage of flu shots, the NY Times reported, citing experts and candidate statements. The NHL, which has missed six days of its regular season because of a labor dispute, is now canceling games 45 days in the future instead of 30, TSN network of Canada reported. General Motors may face costs of $38 million per day if strikes bring its plants across Europe to a standstill, Reuters reported. Iraq is on course to hold its first free elections in January, UN Secretary General Annan said, calling on all nations to support the country, Bloomberg reported. EMC, the world's largest maker of data storage computers and software, said third-quarter profit rose as the company snatched sales from competitors and clients spent more on storage to meet government regulations, Bloomberg said. Boston Scientific, the world's largest maker of heart stents, said third-quarter net income more than doubled to $258 million after the company stemmed damage from three recalls of its top-selling product in the U.S., Bloomberg said. Merck said Vioxx's planned successor, Arcoxia, didn't elevate the risk of heart disease compared with a generic pain pill in a one-year study, Bloomberg reported. McDonald's started selling New York Reuben and Turkey BLT sandwiches at some U.S. and Canadian locations last quarter to take sales from Subway Restaurants, Bloomberg reported. Crude oil futures are falling for a second day in NY on speculation that high prices may dent the growth in oil demand and prompt development of increased production capacity, Bloomberg said. U.S. consumer prices accelerated in September, a gain that may strengthen the Fed's resolve to increase interest rates, Bloomberg said.
BOTTOM LINE: The Portfolio is higher mid-day on strength in my security, internet and retail longs. I have not traded and the Portfolio is still 125% net long. The tone of the market has deteriorated today as major U.S. insurance companies continue to fall substantially as a result of the Spitzer probes. As well, oil has risen from its lows for the day. On the positive-side, measures of investor anxiety are rising, technology stocks are mostly higher, leaders are beginning to break-out, interest rates are lower and another measure of consumer inflation remained relatively tame. I expect U.S. stocks to rise modestly into the close from current levels on short-covering and bargain-hunting.
Tuesday Watch
Earnings of Note
Company/Estimate
MO/1.25
BSX/.46
CDWC/.74
CAKE/.30
CYMI/.39
EMC/.09
ERTS/.35
DO/.04
F/.14
MCD/.61
MNST/.16
MOT/.19
RSH/.39
STX/.04
FON/.21
TASR/.15
TER/.23
WFC/1.06
Splits
None of note.
Economic Data
Consumer Price Index for September estimated to rise .2% versus a .1% increase in August.
CPI Ex Food & Energy for September estimated to rise .2% versus a .1% gain in August.
Housing Starts for September estimated at 1950K versus 2000K in August.
Building Permits for September estimated at 1950K versus 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on PXD, GDT, STLD, TPX, MMM, RE and ACN.
Late-Night News
Asian indices are higher, led by technology shares, after IBM, Texas Instruments and Fujitsu Ltd. beat earnings expectations. U.S. regulators may force all of the nation's insurance brokers to return commission payments even if there is no evidence individual clients were harmed, the Financial Times reported. General Motor's Cadillac Escalade EXT is more likely to get stolen than any other vehicle in the U.S., the Wall Street Journal reported. Wal-Mart Stores for the first time will move an annual meeting to decide purchases of electronics goods to China from the U.S., the Commercial Times said. California Governor Schwarzenegger endorsed a proposal to sell $3 billion of bonds to fund stem-cell research, two weeks before a vote that may make California the biggest U.S. sponsor of such studies, Bloomberg reported. Google's share price has risen 75% since the company's IPO in August, enriching founders, employees and investors, Bloomberg said.
Late-Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.41%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on short-covering, bargain-hunting, declining energy prices and President Bush's lead in the polls. The Portfolio is 125% net long heading into tomorrow.
Company/Estimate
MO/1.25
BSX/.46
CDWC/.74
CAKE/.30
CYMI/.39
EMC/.09
ERTS/.35
DO/.04
F/.14
MCD/.61
MNST/.16
MOT/.19
RSH/.39
STX/.04
FON/.21
TASR/.15
TER/.23
WFC/1.06
Splits
None of note.
Economic Data
Consumer Price Index for September estimated to rise .2% versus a .1% increase in August.
CPI Ex Food & Energy for September estimated to rise .2% versus a .1% gain in August.
Housing Starts for September estimated at 1950K versus 2000K in August.
Building Permits for September estimated at 1950K versus 1969K in August.
Recommendations
Goldman Sachs reiterated Outperform on PXD, GDT, STLD, TPX, MMM, RE and ACN.
Late-Night News
Asian indices are higher, led by technology shares, after IBM, Texas Instruments and Fujitsu Ltd. beat earnings expectations. U.S. regulators may force all of the nation's insurance brokers to return commission payments even if there is no evidence individual clients were harmed, the Financial Times reported. General Motor's Cadillac Escalade EXT is more likely to get stolen than any other vehicle in the U.S., the Wall Street Journal reported. Wal-Mart Stores for the first time will move an annual meeting to decide purchases of electronics goods to China from the U.S., the Commercial Times said. California Governor Schwarzenegger endorsed a proposal to sell $3 billion of bonds to fund stem-cell research, two weeks before a vote that may make California the biggest U.S. sponsor of such studies, Bloomberg reported. Google's share price has risen 75% since the company's IPO in August, enriching founders, employees and investors, Bloomberg said.
Late-Night Trading
Asian Indices are +.50% to +1.0% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.41%
BOTTOM LINE: I expect U.S. equities to open higher in the morning on short-covering, bargain-hunting, declining energy prices and President Bush's lead in the polls. The Portfolio is 125% net long heading into tomorrow.
Monday, October 18, 2004
Monday Close
S&P 500 1,114.02 +.53%
NASDAQ 1,936.52 +1.31%
Leading Sectors
Software +2.37%
Boxmakers +1.93%
Biotech +1.69%
Lagging Sectors
Iron/Steel -1.46%
Oil Service -1.71%
Airlines -2.25%
Other
Crude Oil 53.54 -.24%
Natural Gas 6.80 -.09%
Gold 418.40 +.19%
Base Metals 113.12 -1.23%
U.S. Dollar 87.02 -.08%
10-Yr. T-note Yield 4.05% -.14%
VIX 14.71 -2.19%
Put/Call .77 -12.50%
NYSE Arms 1.03 -26.43%
After-hours Movers
CKFR +5.63% after beating 1Q estimates and raising 2Q forecast.
TXN +5.07% after beating 3Q estimates, reiterating 4Q guidance and making positive comments.
LF -36.81% after cutting 3Q/04 forecast.
CGNX -7.03% after meeting 3Q estimates and lowering 4Q outlook.
Recommendations
Goldman Sachs upgraded MMM to Outperform. Goldman reiterated Underperform on DJ and Outperform on DEX, BBY, KO.
After-hours News
U.S. stocks finished higher today as energy prices declined and investors became more optimistic on technology shares. After the close, International Business Machines said third-quarter sales rose to $23.4 billion from $21.5 billion in the same period a year earlier, Bloomberg said. Texas Instruments said profit rose to $563 million as third-quarter sales reached their highest point for the period in nine years, Bloomberg reported. Lockheed Martin called on the U.S. Air Force to cancel at least four contracts worth more than $6 billion awarded to Boeing after a former Pentagon official told federal prosecutors she improperly favored Boeing, Bloomberg said. The FDA plans to meet with outside medical advisers as early as January to discuss any questions about the safety of Pfizer's painkillers, Celebrex and Bextra, Bloomberg said. Robert Mondavi said it is considering an unsolicited offer to buy the company, Bloomberg reported. Marsh & McLennan said the payments it will forgo because of a lawsuit by New York Attorney General Spitzer amounted to $845 million, or 7% of revenue last year, Bloomberg reported.
BOTTOM LINE: The Portfolio finished substantially higher today on strength in my wireless, internet and telecom equipment longs. I added a few new longs from various sectors in the afternoon, leaving the Portfolio 125% net long. One of my new longs is KMRT and I am using a $89.25 stop-loss on this position. The tone of the market improved throughout the afternoon as technology stocks outperformed and the advance/decline line improved. It is quite possible the large 4Q rally I thought would begin within the next 10 days has already begun. However, I am not ruling out the possibility of one more pull-back in the near-term. I continue to believe the major U.S. indices will post double digit returns for the quarter as economic growth accelerates, political uncertainty and negativity subsides, domestic terrorism fears diminish, interest rates remain low, inflation stays contained and energy prices fall. Technology stocks should continue to outperform in this environment.
NASDAQ 1,936.52 +1.31%
Leading Sectors
Software +2.37%
Boxmakers +1.93%
Biotech +1.69%
Lagging Sectors
Iron/Steel -1.46%
Oil Service -1.71%
Airlines -2.25%
Other
Crude Oil 53.54 -.24%
Natural Gas 6.80 -.09%
Gold 418.40 +.19%
Base Metals 113.12 -1.23%
U.S. Dollar 87.02 -.08%
10-Yr. T-note Yield 4.05% -.14%
VIX 14.71 -2.19%
Put/Call .77 -12.50%
NYSE Arms 1.03 -26.43%
After-hours Movers
CKFR +5.63% after beating 1Q estimates and raising 2Q forecast.
TXN +5.07% after beating 3Q estimates, reiterating 4Q guidance and making positive comments.
LF -36.81% after cutting 3Q/04 forecast.
CGNX -7.03% after meeting 3Q estimates and lowering 4Q outlook.
Recommendations
Goldman Sachs upgraded MMM to Outperform. Goldman reiterated Underperform on DJ and Outperform on DEX, BBY, KO.
After-hours News
U.S. stocks finished higher today as energy prices declined and investors became more optimistic on technology shares. After the close, International Business Machines said third-quarter sales rose to $23.4 billion from $21.5 billion in the same period a year earlier, Bloomberg said. Texas Instruments said profit rose to $563 million as third-quarter sales reached their highest point for the period in nine years, Bloomberg reported. Lockheed Martin called on the U.S. Air Force to cancel at least four contracts worth more than $6 billion awarded to Boeing after a former Pentagon official told federal prosecutors she improperly favored Boeing, Bloomberg said. The FDA plans to meet with outside medical advisers as early as January to discuss any questions about the safety of Pfizer's painkillers, Celebrex and Bextra, Bloomberg said. Robert Mondavi said it is considering an unsolicited offer to buy the company, Bloomberg reported. Marsh & McLennan said the payments it will forgo because of a lawsuit by New York Attorney General Spitzer amounted to $845 million, or 7% of revenue last year, Bloomberg reported.
BOTTOM LINE: The Portfolio finished substantially higher today on strength in my wireless, internet and telecom equipment longs. I added a few new longs from various sectors in the afternoon, leaving the Portfolio 125% net long. One of my new longs is KMRT and I am using a $89.25 stop-loss on this position. The tone of the market improved throughout the afternoon as technology stocks outperformed and the advance/decline line improved. It is quite possible the large 4Q rally I thought would begin within the next 10 days has already begun. However, I am not ruling out the possibility of one more pull-back in the near-term. I continue to believe the major U.S. indices will post double digit returns for the quarter as economic growth accelerates, political uncertainty and negativity subsides, domestic terrorism fears diminish, interest rates remain low, inflation stays contained and energy prices fall. Technology stocks should continue to outperform in this environment.
Mid-day Update
S&P 500 1,111.48 +.28%
NASDAQ 1,925.82 +.75%
Leading Sectors
Software +1.73%
Biotech +1.4%
Retail +1.31%
Lagging Sectors
Papers -1.27%
Airlines -1.49%
Oil Service -1.81%
Other
Crude Oil 53.46 -2.69%
Natural Gas 6.79 +1.21%
Gold 417.60 -.60%
Base Metals 113.12 -1.23%
U.S. Dollar 87.10 +.01%
10-Yr. T-note Yield 4.06% +.14%
VIX 14.94 -.66%
Put/Call .79 -10.23%
NYSE Arms 1.16 -17.14%
Market Movers
MMC -8.8% on continuing worries over Spitzer probe.
CHKP +16.4% after beating 3Q estimates and raising 4Q/04 guidance.
MMM -4.4% after missing 3Q estimates, lowering 4Q guidance and Prudential downgrade to Neutral.
ODSY -43.0% after cutting 3Q/04 forecasts and announcing Dept. of Justice civil investigation.
SEM +23.0% after agreeing to be taken private for $1.82 billion excluding debt.
JQH +15.4% after saying it had received a proposal from Barcelo Crestline Corp. to acquire it for $13.00 in cash per class A share.
APOL +4.5% on Morgan Stanley upgrade to Overweight, target $85.
PLMO +7.9% on JP Morgan upgrade to Overweight.
ICUI -16.5% after missing 3Q estimates.
CHE -8.6% and HALTED, boosting forecast, indicated $53-56.
BGG -6.9% after lowering 1Q/05 forecast.
MNC -8.8% after cutting 3Q forecast.
TZOO -5.8% after American Technology downgrade to Sell.
ASD -4.2% after missing 3Q estimates and lowering 4Q forecast.
GIVN -3.7% on negative Barron's mention.
Economic Data
NAHB Housing Market Index for October rose to 72 versus estimates of 68 and a reading of 67 in September.
Recommendations
Goldman Sachs reiterated Outperform on INTC, AMD, MDT, MET, FS and IGT. Goldman reiterated Underperform on EK and FRX. Citi SmithBarney reiterated Buy on MDT, target $62. Citi reiterated Buy on GDT, target $55. Citi reiterated Buy on AMGN, target $90. Citi raised VECO to Buy, target $26. Citi reiterated Buy on FON, target $22. Citi reiterated Buy on L, target $11.50. Citi reiterated Buy on WB, target $53. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on PEG, target $45. OSUR raised to Outperform at Thomas Weisel, target $11. VRTS rated Outperform at CSFB, target $25. PLMO raised to Overweight at JP Morgan. VRX rated Buy at Merrill Lynch, target $32. PEP raised to Buy at Merrill, target $55. KZL raised to Outperform at Bear Stearns, target $54.
Mid-day News
U.S. stocks are mostly higher mid-day on a decline in energy prices. Kraft Foods is considering selling Oscar Mayer meats and Post cereals, the NY Post reported. Increased terrorist attacks in Iraq are aimed at U.S. President Bush personally, as terrorists seek to keep him from getting re-elected, Russian President Putin said, the Itar-Tass news agency reported. Blue Coat Systems, whose devices thwart computer viruses and filter Internet content, is enhancing its proxy servers with software to block spyware and adware programs, which disrupt computer users' Internet activity, the Wall Street Journal reported. Video-game makers have created a format that allows advertisers to insert changeable information into "virtual billboards" within the game, the Wall Street Journal reported. Fannie Mae's plan to report third quarter earnings by Nov. 15 instead of its typical mid-October timeframe suggests the company will have to restate profit, the Financial Times said. Kojo Annan, the son of United Nations Secretary-General Kofi Annan, is among people and companies under investigation by a federal grand jury looking into the massive corruption in Iraq's $64 billion UN oil-for-food program, the NY Post reported. Lexmark Intl., the No.2 maker of computer printers, said third-quarter profit rose 50% on a tax benefit and sales of higher-profit machines, Bloomberg reported. SynCardia Systems won FDA approval to sell an artificial heart, the first such device available for commercial use in the U.S., Bloomberg said. Kmart Holding named Yum! Brands executive Lewis as CEO, replacing Julian Day, to improve retail operations, Bloomberg said. Harmony Gold Mining made a hostile offer to buy Gold Fields for $8.2 billion in stock to create the world's largest producer of the precious metal, Bloomberg reported. Crude oil is dropping after reaching $55.33/bbl. in NY amid concern that rising prices will reduce the growth of demand for petroleum products, Bloomberg reported.
BOTTOM LINE: The Portfolio is higher mid-day on strength in my wireless, internet and retail longs. I added a few new longs this morning, bringing the Portfolio's market exposure to 100% net long. One of my new longs is ARO and I am using a stop-loss of $28 on this position. The tone of the market is mildly positive. I continue to expect technology stocks to outperform at least through year-end. It is a big positive to see gasoline futures with a significant decline. On the negative-side, measures of investor anxiety are falling and the advance/decline line is relatively weak. I expect U.S. stocks to rise modestly from currently levels into the afternoon on short-covering and optimism over a possible peak in energy prices.
NASDAQ 1,925.82 +.75%
Leading Sectors
Software +1.73%
Biotech +1.4%
Retail +1.31%
Lagging Sectors
Papers -1.27%
Airlines -1.49%
Oil Service -1.81%
Other
Crude Oil 53.46 -2.69%
Natural Gas 6.79 +1.21%
Gold 417.60 -.60%
Base Metals 113.12 -1.23%
U.S. Dollar 87.10 +.01%
10-Yr. T-note Yield 4.06% +.14%
VIX 14.94 -.66%
Put/Call .79 -10.23%
NYSE Arms 1.16 -17.14%
Market Movers
MMC -8.8% on continuing worries over Spitzer probe.
CHKP +16.4% after beating 3Q estimates and raising 4Q/04 guidance.
MMM -4.4% after missing 3Q estimates, lowering 4Q guidance and Prudential downgrade to Neutral.
ODSY -43.0% after cutting 3Q/04 forecasts and announcing Dept. of Justice civil investigation.
SEM +23.0% after agreeing to be taken private for $1.82 billion excluding debt.
JQH +15.4% after saying it had received a proposal from Barcelo Crestline Corp. to acquire it for $13.00 in cash per class A share.
APOL +4.5% on Morgan Stanley upgrade to Overweight, target $85.
PLMO +7.9% on JP Morgan upgrade to Overweight.
ICUI -16.5% after missing 3Q estimates.
CHE -8.6% and HALTED, boosting forecast, indicated $53-56.
BGG -6.9% after lowering 1Q/05 forecast.
MNC -8.8% after cutting 3Q forecast.
TZOO -5.8% after American Technology downgrade to Sell.
ASD -4.2% after missing 3Q estimates and lowering 4Q forecast.
GIVN -3.7% on negative Barron's mention.
Economic Data
NAHB Housing Market Index for October rose to 72 versus estimates of 68 and a reading of 67 in September.
Recommendations
Goldman Sachs reiterated Outperform on INTC, AMD, MDT, MET, FS and IGT. Goldman reiterated Underperform on EK and FRX. Citi SmithBarney reiterated Buy on MDT, target $62. Citi reiterated Buy on GDT, target $55. Citi reiterated Buy on AMGN, target $90. Citi raised VECO to Buy, target $26. Citi reiterated Buy on FON, target $22. Citi reiterated Buy on L, target $11.50. Citi reiterated Buy on WB, target $53. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on PEG, target $45. OSUR raised to Outperform at Thomas Weisel, target $11. VRTS rated Outperform at CSFB, target $25. PLMO raised to Overweight at JP Morgan. VRX rated Buy at Merrill Lynch, target $32. PEP raised to Buy at Merrill, target $55. KZL raised to Outperform at Bear Stearns, target $54.
Mid-day News
U.S. stocks are mostly higher mid-day on a decline in energy prices. Kraft Foods is considering selling Oscar Mayer meats and Post cereals, the NY Post reported. Increased terrorist attacks in Iraq are aimed at U.S. President Bush personally, as terrorists seek to keep him from getting re-elected, Russian President Putin said, the Itar-Tass news agency reported. Blue Coat Systems, whose devices thwart computer viruses and filter Internet content, is enhancing its proxy servers with software to block spyware and adware programs, which disrupt computer users' Internet activity, the Wall Street Journal reported. Video-game makers have created a format that allows advertisers to insert changeable information into "virtual billboards" within the game, the Wall Street Journal reported. Fannie Mae's plan to report third quarter earnings by Nov. 15 instead of its typical mid-October timeframe suggests the company will have to restate profit, the Financial Times said. Kojo Annan, the son of United Nations Secretary-General Kofi Annan, is among people and companies under investigation by a federal grand jury looking into the massive corruption in Iraq's $64 billion UN oil-for-food program, the NY Post reported. Lexmark Intl., the No.2 maker of computer printers, said third-quarter profit rose 50% on a tax benefit and sales of higher-profit machines, Bloomberg reported. SynCardia Systems won FDA approval to sell an artificial heart, the first such device available for commercial use in the U.S., Bloomberg said. Kmart Holding named Yum! Brands executive Lewis as CEO, replacing Julian Day, to improve retail operations, Bloomberg said. Harmony Gold Mining made a hostile offer to buy Gold Fields for $8.2 billion in stock to create the world's largest producer of the precious metal, Bloomberg reported. Crude oil is dropping after reaching $55.33/bbl. in NY amid concern that rising prices will reduce the growth of demand for petroleum products, Bloomberg reported.
BOTTOM LINE: The Portfolio is higher mid-day on strength in my wireless, internet and retail longs. I added a few new longs this morning, bringing the Portfolio's market exposure to 100% net long. One of my new longs is ARO and I am using a stop-loss of $28 on this position. The tone of the market is mildly positive. I continue to expect technology stocks to outperform at least through year-end. It is a big positive to see gasoline futures with a significant decline. On the negative-side, measures of investor anxiety are falling and the advance/decline line is relatively weak. I expect U.S. stocks to rise modestly from currently levels into the afternoon on short-covering and optimism over a possible peak in energy prices.
Monday Watch
Earnings of Note
Company/Estimate
MMM/.98
CHKP/.25
CKFR/.26
DPH/-.12
ET/.18
FRX/.76
IBM/1.14
ITT/1.15
LXK/.97
LNCR/.69
MCHP/.29
SWK/.71
TXN/.27
Splits
NUE 2-for-1
Economic Data
NAHB Housing Market Index for October estimated at 68 versus 68 in September.
Weekend Recommendations
Wall Street Week w/Fortune had guests that were positive on IMGC, CEG, ZMH and IACI. Cashin' In had guests that were positive on IPR, TROW, TXN and mixed on C. Louis Rukeyser's Wall Street had guests that were positive on NOVL, SIRI, XMSR, MSFT, TWX, SEE and IMA. Barron's had positive comments on NVS, ACN, ISTA, DOVP and negative comments on GIVN, MNKD, INTC. Goldman Sachs reiterated Outperform on AMGN, ALL, AIG, RE, ENG, UDR, ASN and MUR. Goldman reiterated Underperform on PPS, PSA, EQR and MMC.
Weekend News
Abercrombie & Fitch agreed to stop using Australian wool after being pressured by an animal rights group, People for the Ethical Treatment of Animals, the Australian Broadcasting Corp. said. Citigroup and American Express blocked their credit cards in the U.K. from being used to pay for online gambling to prevent fraud and reduce indebtedness, the Financial Times reported. Hundreds of British soldiers may be moved to Baghdad within a few weeks to help boost U.S.-led operations in the run-up to Iraq's elections in January, the London-based Times reported. About 70,000 refugees in Sudan's western Darfur region have died from malnutrition and disease, the NY Times reported, citing the World Health Organization. Senator Kerry and President Bush's campaign commercials use the most ominous imagery seen in presidential ads in a generation, the NY Times said, citing analysts and historians. California's Bay Area residents are experiencing the cleanest air quality in 35 years, the San Jose Mercury News reported. Iraq's power grid now has more megawatts than before the U.S.-led invasion, which should boost Iraqis trust in their government, the NY Times reported. South Korea plans to extend the deployment of its troops in Iraq by a year, Yonhap news reported. Airbus SAS CEO Forgeard said he is seeking a U.S. partner to help in a $23 billion bid to supply the U.S. Air Force with aircraft-refueling tanker planes, the Sunday Telegraph said. Merrill Lynch and Morgan Stanley may be forced to merge with larger commercial firms as the two investment banks' share prices have declined by 20% from their 2004 highs, the NY Times reported. More than 25,000 poll watchers are being mobilized across the U.S. to scrutinize the Nov.2 presidential election for voting irregularities, the LA Times reported. Ford will offer Sirius Satellite Radio as an option in more of its cars and trucks, the NY Times said. Afghan President Karzai maintained his lead over the main opposition candidate Qanooni in early results from the Oct. 9 presidential election, Bloomberg reported. An estimated 75% of the more than 10 million Afghans eligible to vote took part in the country's first direct presidential election, just three years after the Taliban were ousted in the U.S.-led war on terror, Bloomberg said. SBC Communications is offering new and existing customers of its high-speed Internet service free wireless Web access through April to boost demand for its offerings, Bloomberg reported.
Late-Night Trading
Asian indices are mostly lower, -.50% to +.25% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.21%
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on short-covering and follow-through on Friday's rally. The Portfolio is 75% net long heading into the week.
Company/Estimate
MMM/.98
CHKP/.25
CKFR/.26
DPH/-.12
ET/.18
FRX/.76
IBM/1.14
ITT/1.15
LXK/.97
LNCR/.69
MCHP/.29
SWK/.71
TXN/.27
Splits
NUE 2-for-1
Economic Data
NAHB Housing Market Index for October estimated at 68 versus 68 in September.
Weekend Recommendations
Wall Street Week w/Fortune had guests that were positive on IMGC, CEG, ZMH and IACI. Cashin' In had guests that were positive on IPR, TROW, TXN and mixed on C. Louis Rukeyser's Wall Street had guests that were positive on NOVL, SIRI, XMSR, MSFT, TWX, SEE and IMA. Barron's had positive comments on NVS, ACN, ISTA, DOVP and negative comments on GIVN, MNKD, INTC. Goldman Sachs reiterated Outperform on AMGN, ALL, AIG, RE, ENG, UDR, ASN and MUR. Goldman reiterated Underperform on PPS, PSA, EQR and MMC.
Weekend News
Abercrombie & Fitch agreed to stop using Australian wool after being pressured by an animal rights group, People for the Ethical Treatment of Animals, the Australian Broadcasting Corp. said. Citigroup and American Express blocked their credit cards in the U.K. from being used to pay for online gambling to prevent fraud and reduce indebtedness, the Financial Times reported. Hundreds of British soldiers may be moved to Baghdad within a few weeks to help boost U.S.-led operations in the run-up to Iraq's elections in January, the London-based Times reported. About 70,000 refugees in Sudan's western Darfur region have died from malnutrition and disease, the NY Times reported, citing the World Health Organization. Senator Kerry and President Bush's campaign commercials use the most ominous imagery seen in presidential ads in a generation, the NY Times said, citing analysts and historians. California's Bay Area residents are experiencing the cleanest air quality in 35 years, the San Jose Mercury News reported. Iraq's power grid now has more megawatts than before the U.S.-led invasion, which should boost Iraqis trust in their government, the NY Times reported. South Korea plans to extend the deployment of its troops in Iraq by a year, Yonhap news reported. Airbus SAS CEO Forgeard said he is seeking a U.S. partner to help in a $23 billion bid to supply the U.S. Air Force with aircraft-refueling tanker planes, the Sunday Telegraph said. Merrill Lynch and Morgan Stanley may be forced to merge with larger commercial firms as the two investment banks' share prices have declined by 20% from their 2004 highs, the NY Times reported. More than 25,000 poll watchers are being mobilized across the U.S. to scrutinize the Nov.2 presidential election for voting irregularities, the LA Times reported. Ford will offer Sirius Satellite Radio as an option in more of its cars and trucks, the NY Times said. Afghan President Karzai maintained his lead over the main opposition candidate Qanooni in early results from the Oct. 9 presidential election, Bloomberg reported. An estimated 75% of the more than 10 million Afghans eligible to vote took part in the country's first direct presidential election, just three years after the Taliban were ousted in the U.S.-led war on terror, Bloomberg said. SBC Communications is offering new and existing customers of its high-speed Internet service free wireless Web access through April to boost demand for its offerings, Bloomberg reported.
Late-Night Trading
Asian indices are mostly lower, -.50% to +.25% on average.
S&P 500 indicated +.01%.
NASDAQ 100 indicated +.21%
BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on short-covering and follow-through on Friday's rally. The Portfolio is 75% net long heading into the week.
Subscribe to:
Posts (Atom)