Wednesday Watch

Earnings of Note
Company/Estimate
PDCO/.32
HRL/.49

Splits
None of note.

Economic Data
Durable Goods Orders for October estimated to rise .5% versus a .2% increase in September.
Durable Goods Orders Less Transportation for October estimated to fall .2% versus a 1.8% increase in September.
Initial Jobless Claims for last week are estimated at 335K versus 334K the prior week.
Continuing Claims are estimated at 2795K versus 2792K prior.
Final Univ. of Michigan Consumer Confidence for November is estimated at 96.0 versus a prior estimate of 95.5.
New Home Sales for October are estimated at 1200K versus 1206K in September.
Help Wanted Index for October is estimated at 37 versus 36 in September.

Recommendations
Goldman Sachs reiterated Outperform on PFE, GE, NKE and ACN. Goldman reiterated Underperform on HRB and GCO.

Late-Night News
Asian indices are higher, led by financial, basic material and technology companies in the region. Newmont Mining will study Gold Fields' mines outside South Africa in case they are sold to defend against a hostile takeover bid, Reuters said. Shandong TV-net Media Development is preparing for China's first initial share sale of a business that directly controls tv channels, the Financial Times reported. South Korea's government will ask companies to refrain from aggressively selling dollars, Edaily reported. China's central bank considers growth in fixed-asset investment too fast and is monitoring the economy to gauge whether to boost interest rates again, the Financial Times said. China may relax the yuan's decade-old peg to the dollar by April 1 as the government attempts to slow inflation and cool economic growth, analysts at Banc of America and Merrill Lynch said. Intel said it's helping Chinese and Indian customers build personal computers that use the Linux operating system, an alternative to Microsoft's Windows software, Bloomberg reported. India's investment climate has improved over the past three years and it has overtaken China on "some indicators," the Financial Times reported, citing a World Bank study. The U.S. Postal Reserve will seek a bigger-than-expected increase in postage rates early next year, the Wall Street Journal reported. The Fed will raise the interest-rate target for overnight loans between banks a quarter point to 2.25% next month, said 20 of the 22 largest bond-trading firms. Russian President Putin's support for Ukrainian Prime Minister Yanukovych after Sunday's disputed presidential election may aggravate relations with the U.S. and Europe, Bloomberg reported.

Late-Night Trading
Asian Indices are +.25% to 1.0% on average.
S&P 500 indicated +.25%.
NASDAQ 100 indicated +.41%

BOTTOM LINE: I expect U.S. equities to open higher on better-than-expected economic reports, lower energy prices, short-covering and more optimism. The Portfolio is 125% net long heading into tomorrow.

Tuesday Close

S&P 500 1,176.94 -.03%
NASDAQ 2,084.28 -.04%

Leading Sectors
Restaurants +1.66%
Oil Service +1.16%
Airlines +1.11%

Lagging Sectors
Papers -.50%
Drugs -.59%
Semis -.73%

Other
Crude Oil 48.74 -.41%
Natural Gas 6.77 -.34%
Gold 447.00 -.20%
Base Metals 118.79 +1.19%
U.S. Dollar 82.94 -.30%
10-Yr. T-note Yield 4.18% +.09%
VIX 12.67 -2.31%
Put/Call .79 +11.27%
NYSE Arms 1.22 +23.23%

After-hours Movers
GOOG +5.4% after Goldman Sachs rated it Outperform, target $215.
CWTR +3.7% after beating 3Q estimates.
ELN +4.4% after winning FDA approval for its Tysabri drug to treat multiple sclerosis.
STCR +27.0% after Quantum Fuel Systems(QTWW) agreed to buy it for $185 million in stock and assumed debt.
TSA +7.8% after meeting 3Q estimates and reiterating 4Q guidance.
MIK -7.3% after meeting 3Q estimates and lowering 4Q outlook.
SEAC -9.1% after missing 3Q estimates and lowering 4Q guidance.

Recommendations
Goldman Sachs reiterated Underperform on DE and PVH. Goldman rated GOOG Outperform, target $215.

After-hours News
U.S. stocks finished quietly lower today, pressured by mild declines in semiconductor shares. After the close, the SEC and the NASD are starting an informal inquiry into gifts given to mutual fund executives by brokerage firms, CNBC reported. Users of Nokia's 7610 mobile phone are being warned about a virus that generates skull images and makes some functions on the so-called smartphone difficult to use, BBC reported. GM may use BMW's high-performance diesel engines in its Cadillac models in Europe, the Financial Times said. Sumner Redstone, CEO of Viacom, said his daughter is taking an increasingly important role at the media company, Bloomberg reported. Biogen and Elan won FDA approval of their multiple sclerosis drug, which will be called Tysabri, Bloomberg said. The U.S. said a screening test that last week indicated a possible case of mad cow disease was a "false positive," based on a more complete exam of the animal's brain tissue at a government lab, Bloomberg said. Women hold more top jobs on Wall Street than ever before, according to the Securities Industry Association. The NFL, undeterred by last week's brawl between NBA players and fans, will put spectators on the sidelines this weekend to test a new premium seating program, Bloomberg reported. Supporters of Ukraine's Viktor Yushchenko, who declared himself president after the Nov. 21 election, are surrounding the presidential office in Kiev demanding Yushchenko is allowed to begin managing the country, Bloomberg reported.

BOTTOM LINE: The Portfolio finished higher today on gains in my security, Chinese ADR, internet and retail longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The underlying tone of the market was pretty good today as most stocks advanced and volume increased. As well, energy prices fell from their daily highs into the afternoon. I expect U.S. stocks to rise tomorrow on better-than-expected economic reports, falling energy prices, strength in the tech sector, short-covering and more optimism.

Mid-day Report

S&P 500 1,172.29 -.42%
NASDAQ 2,071.72 -.65%

Leading Sectors
Oil Service +2.33%
Energy +1.13%
Restaurants +1.00%

Lagging Sectors
Broadcasting -.99%
Semis -1.14%
Biotech -1.18%

Other
Crude Oil 49.93 +2.65%
Natural Gas 6.82 +.93%
Gold 448.40 -.11%
Base Metals 118.79%
U.S. Dollar 82.86 -.40%
10-Yr. T-note Yield 4.14% -.87%
VIX 12.86 -.85%
Put/Call .86 +21.13%
NYSE Arms 1.14 +15.15%

Market Movers

Economic Data
Existing Home Sales for October were 6.75M versus estimates of 6.72M and 6.75M in September.

Recommendations

Mid-day News

Bottom Line: The Portfolio is modestly higher mid-day on strength in my security, internet, retail, oil service and Chinese ADR longs. I have not traded today and the Portfolio is still 125% net long. I will be looking to add semi, semi-equipment and networking stocks on any near-term weakness as these areas should outperform over the intermediate-term. The underlying tone of the market is mildly positive today considering losses in the major indices. I expect U.S. shares to rise modestly into the close on optimism over future economic growth.

Tuesday Watch

Earnings of Note
Company/Estimate
ADI/.33
DE/.99
DLTR/.28
EV/.52
HRB/-.16
HNZ/.59
MIK/.30
SEAC/.12
WIND/.03
TECD/.55

Splits
STJ 2-for-1
VIP 3-for-1

Economic Data
Existing Home Sales for October estimated at 6.72M versus 6.75M in September.

Recommendations
Goldman Sachs reiterated Outperform on EMC, GE, NUE, X, XRX and Underperform on MMC, ELX.

Late-Night News
Asian indices are higher, led by Hong Kong shares, as cyclicals in the region are advancing. Cendant Corp., the U.S. lodging and travel group, will build mid-priced hotels in Russia and other former Soviet Union states, the Financial Times said. Porsche AG has asked Toyota Motor for its gasoline-electric hybrid technology to use with its Cayenne sport-utility vehicles, the Asahi newspaper said. The Chicago Mercantile Exchange may be interested in buying Reuters Group Plc's Instinet Group, the Financial Times reported. The U.S. said terrorist attacks on U.S. interests may be "imminent" in the Indian cities of Mumbai and New Delhi, Agence France-Presse reported from Washington. McDonald's said CEO and President Charlie Bell has resigned, Bloomberg reported. U.K. authorities foiled a plan by al-Qaeda to carry out an attack on London's Canary Wharf similar to the Sept. 11, 2001 attacks on the World Trade Center, the Sun reported.

Late-Night Trading
Asian Indices are +.25% to +1.25% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.10%

BOTTOM LINE: I expect U.S. equities to open higher in the morning on declining energy prices, a strong home sales report and more optimism. The Portfolio is 125% net long heading into tomorrow.

Monday Close

S&P 500 1,177.24 +.59%
NASDAQ 2,085.19 +.70%

Leading Sectors
Boxmakers +2.59%
Utilities +1.78%
Iron/Steel +1.42%

Lagging Sectors
Drugs +.12%
Biotech +.04%
Telecom -.38%

Other
Crude Oil 48.30 -.70%
Natural Gas 6.67 -1.29%
Gold 449.20 +.04
Base Metals 117.39 -.97%
U.S. Dollar 83.10 -.25%
10-Yr. T-note Yield 4.17% -.60%
VIX 12.97 -3.93%
Put/Call .71 -11.25%
NYSE Arms .99 -20.80%

After-hours Movers
SGTL +6.0% after boosting 4Q estimates.
CMNT +18.7% after substantially beating 3Q estimates.
DY -20.5% after missing 1Q estimates and lowering 2Q guidance.

Recommendations
Goldman Sachs reiterated Underperform on HMT, MHX and IHR.

After-hours News
U.S. stocks finished modestly higher today on optimism over future U.S. economic growth, short-covering and bargain-hunting. After the close, New York Democratic Attorney General Spitzer has told people that he plans to run for governor in 2006, the AP reported. BT Group Plc would de-list from the U.S. stock market due to the "great burden" of the cost of the Sarbanes-Oxley corporate governance legislation, the Financial Times reported. Viacom Chairman and CEO Redstone said he has "reason to believe" other suitors may be interested in buying video-game maker Midway Games, Bloomberg reported. Childhood obesity leads to enlarged heart muscles and a higher risk for heart failure later in life, according to a study published today by the American Heart Assoc. Citigroup agreed to sell its transportation-finance business to GE for about $4.4 billion in cash, Bloomberg reported. Owens-Illinois said its biggest shareholder, KKR, plans to sell all or some of its shares in the company "shortly", Bloomberg said. ABC's "Desperate Housewives" drama, featured in a promotion before last week's "Monday Night Football" that is being reviewed by the FCC, drew the best big-city ratings in its seven-episode history last night, Bloomberg reported. Marsh & McLennan may settle claims of rigged bids and kickbacks with a month, CEO Cherkasky said. Oracle said it is at an impasse with PeopleSoft, signaling the two software makers will wage a proxy battle to resolve Oracle's $8.8 billion takeover bid, Bloomberg reported.

BOTTOM LINE: The Portfolio finished slightly higher today on strength in my steel, internet and nanotechnology longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The tone of the market improved throughout the day as and finished near their best levels. As well, small-caps and cyclicals outperformed and interest rates fell. Economic data should begin to exceed expectations over the next few weeks on more optimism, hurricane rebuilding, an end to the depressing effects of the election, larger year-end bonuses, lower commodity prices, pent-up demand, year-end budget flushes and corporate spending before tax incentives expire. I continue to expect U.S. stocks to rally at least through year-end with minor pullbacks along the way.

Mid-day Report

S&P 500 1,175.00 +.40%
NASDAQ 2,077.68 +.34%

Leading Sectors
Boxmakers +2.21%
Transports +1.36%
Iron/Steel +1.31%

Lagging Sectors
Semis -.14%
Telecom -.17%
Biotech -.33%

Other
Crude Oil 48.60 -.59%
Natural Gas 6.79 -4.57%
Gold 448.50 +.43%
Base Metals 117.39 -.97%
U.S. Dollar 83.16 -.18%
10-Yr. T-note Yield 4.16% -.83%
VIX 13.21 -2.15%
Put/Call .71 -11.25%
NYSE Arms 1.15 -8.0%

Market Movers
KKD -17.6% after missing 3Q estimates and BB&T downgrade to Underweight.
SIRI +11.0% on continued optimism over the hiring of Karmazin.
AAPL +10.3% after Piper Jaffray reiterated Outperform and raised target to $100 from $52.
AGIX -13.4% after the company said an experimental drug was ineffective in one of two tests.
TASR -6.8% on continued selling from worries over insider selling.
FRX -7.4% after BofA downgrade to Sell.
PCSA +22.4% after Alamosa Holdings offered to buy it for about $354.3 million in stock.
PTZ +15.2% after the company said it's considering a possible sale.
BTU +6.6% on continued optimism over demand for coal.
INCX +12.6% after announcing that it has licensed its Local Direct search and advertising platform to Internet Yellow Pages provider, MyePages.
ADBL +11.7% on Piper Jaffray upgrade to Outperform, target $35.
ACI +5.6% on continuing optimism over coal demand.

Economic Data
None of note.

Recommendations
-Goldman Sachs reiterated Outperform on AA and AMGN.
-Banc of America downgraded FRX to Sell, target $34.
-Citi SmithBarney reiterated Sell on SUP and GNTX. Citi reiterated Buy on BWA. Citi reiterated Buy on AIQ, target $12. Citi reiterated Sell on WOOF, target $18. Citi removed PBG, WMT and MDT from Recommended List and added JNJ, VIAB, L, DE and MAY. Citi reiterated Buy on DIS, target $31. Citi reiterated Sell on MYG, target $14. Citi reiterated Buy on UNM, target $20. Citi reiterated Attractive view of Oil Service sector, favorites remain RIG, DO, SII, SLB and BHI. Citi upgraded Semi/Semi Equipment sectors to Market Weight and raised Media sector to Overweight.
-UBS reiterated Reduce on GOOG.
-JP Morgan raised FO to Overweight.
-Deutsche Bank raised GCI to Buy, target $90. Deutsche rated HURN Buy, target $24.

Mid-day News
U.S. stocks are modestly higher mid-day on strength in computer and cyclical shares. Growth in U.S. employers' health-care costs rose 7.5% in 2004, the smallest such rise in five years, and may slow next year, the Wall Street Journal reported. U.S. local-telephone companies and satellite tv companies have been able to win customers from cable with packages combining phone and satellite service, the NY Times reported. NY's port is reversing a decades-long decline as Chinese imports increase, with container traffic up 65% from 1998, the NY Times reported. AOL will focus on increasing Internet ad revenue by promoting its free AOL.com Web site instead of primarily trying to build a subscriber base, the NY Times reported. EBay has begun using a direct-mail catalog to lure new customers to its Web site, hoping to duplicate the success of retailers such as Ice.com, which sells jewelry on the Internet, the NY Times reported. Advertising companies are expected to account for about $5.2 trillion, or 20%, of the U.S. economy in 2005, the Wall Street Journal reported. PIMCO last week sold some of its German government debt and bought U.S. Treasuries, Barron's reported. The third quarter's average one-way U.S. business airfare of $217, which is the lowest in five years of quarterly tracking, is also 11% less than the average fare for 2003, USA Today reported. Eastman Kodak shipped 990,000 consumer digital cameras in the third quarter, only 10,000 fewer than Sony, the U.S. market leader, the AP reported. California Democratic lawmakers plan to reintroduce bills to legalize same-sex marriages and allow illegal immigrants to get drivers' licenses when the legislative session begins Dec. 6, the San Jose Mercury News reported. Pfizer's Liptor, Merck's Zocor and Bristol-Myers' Pravachol carry low risk of a deadly side effect that led to the withdrawal of Bayer's Baycol, a FDA study found. The pentagon will open to new bidders a contract to provide aerial-refueling tankers to the U.S. Air Force after Congress withdrew an earlier proposal worth $23 billion to Boeing, Bloomberg reported.

Bottom Line: The Portfolio is slightly higher mid-day on gains in my steel, wireless and internet longs. I added some new security, internet, semi and networking longs this morning, bringing the Portfolio's market exposure to 125% net long. I added to my long TASR position and I am using a stop-loss of $48.15 on my new shares. The tone of the market has improved substantially from the open and I now feel the recent correction has run its course. I expect U.S. stocks to rise into the close on short-covering, bargain hunting and optimism over future U.S. economic growth.