Wednesday Watch

Earnings of Note
Company/Estimate
CMVT/.07
DG/.25
SNPS/.03
NMG/A/1.45

Splits
SYMC 2-for-1
RYL 2-for1

Economic Data
Personal Income for October estimated to rise .5% versus a .2% gain in September.
Personal Spending for October estimated to rose .4% versus a .6% gain in September.
PCE Deflator (YoY) for October estimated up 2.4% versus a 2.0% rise in September.
Construction Spending for October estimated up .7% versus a 0.0% change in September.
ISM Manufacturing for November estimated at 57.0 versus 56.8 in October.
ISM Prices Paid for November estimated at 75.3 versus 78.5 in October.
Total Vehicle Sales for November estimated at 16.5M versus 17.0M in October.
Domestic Vehicle Sales for November estimated at 13.1M versus 13.2M in October.
Fed's Beige Book.

Recommendations
Goldman Sachs reiterated Outperform on PFE, AGN and JTX. Goldman reiterated Underperform on CI. Banc of America upgraded RKY to Buy.

Late-Night News
Asian indices are lower on concerns China's attempts to slow growth will lead to a hard landing in the region. China will probably set the nation's economic growth target for next year at 8%, Wen Wei Po reported. United Nations Secretary General Annan should resign because the UN failed to detect and stop abuses of the oil-for-food program by former Iraqi leader Saddam Hussein, Minnesota Senator Norm Coleman said in a column to be published in tomorrow's Wall Street Journal. Disney may say it will increase its dividend following high earnings and annual cash-flow growth to $2.9 billion, the Financial Times said. British tourists are choosing to holiday in the U.S. rather than Europe due to the weakness of the dollar against the euro, the Financial Times said. Investors, including California Public Employees' Retirement System and Morgan Stanley, helped India's benchmark stock index rise to a record close yesterday, betting the expansion of Asia's fourth-biggest economy will help companies such as Infosys and Wipro, Bloomberg reported. Rudolph Giuliani, New York's former mayor, is starting an investment bank, and as part of that his consulting firm, Giuliani Partners LLC, will buy Ernst & Young's investment-banking business, the Wall Street Journal reported.

Late-Night Trading
Asian Indices are -.75%. to -.25% on average.
S&P 500 indicated +.22%.
NASDAQ 100 indicated +.45%

BOTTOM LINE: I expect U.S. equities to open modestly higher, led by tech shares, on better economic reports and declining energy prices. However, stocks may weaken slightly later in the day on apprehension ahead of Intel's mid-quarter update after Thur.'s close and Friday's unemployment report. The Portfolio is 100% net long heading into tomorrow.

Tuesday Close

S&P 500 1,173.82 -.40%
NASDAQ 2,096.81 -.48%

Leading Sectors
Iron/Steel +.93%
HMOs +.93%
Hospitals +.78%

Lagging Sectors
Semis -1.40%
Utilities -1.43%
Retail -2.45%

Other
Crude Oil 48.98 -.31%
Natural Gas 7.60 -.26%
Gold 453.20 unch.
Base Metals 120.75 -.02%
U.S. Dollar 81.82 -.13%
10-Yr. T-note Yield 4.35% +.73%
VIX 13.24 -.45%
Put/Call .87 +16.0%
NYSE Arms .99 -3.88%

After-hours Movers
CPRT +5.05% after better-than-expected 1Q estimates.
CHS +6.03% after beating 3Q estimates.
OVTI +10.9% after beating 3Q estimates and raising 4Q outlook.
SYNA -4.7% after saying it intends to offer $100 million of Convertible Senior Subordinated Notes.
ADEX -4.6% after meeting 2Q estimates and lowering 3Q guidance.

Recommendations
Goldman Sachs reiterated Outperform on SBC.

After-hours News
U.S. stocks finished modestly lower today as fears over consumer spending more than offset other strong economic reports. After the close, NTT DoCoMo, Japan's largest mobile-phone operator, plans to start selling mobile phones from Nokia Oyj and Motorola next year, to reduce its reliance on local manufacturers, the Financial Times reported. Indiana Pacers players will face criminal charges for fighting with fans during a Nov. 19 game against the Detroit Pistons, the Detroit News reported. Ken Jennings, who won more money on a game show than anyone in history, lost on "Jeopardy" in the episode that airs today, ending a streak that lasted 74 days and earned him $2,520,700, King World said. Radioactive iodine released from a plutonium-producing plant run by General Electric and DuPont in Washington state in the 1940s and 1950s didn't lead to health problems decades later, a newly published study found. Cigna Corp. said 2004 earnings excluding some items probably would be $950 million to $975 million, higher than a forecast earlier this month as medical management improves, Bloomberg reported. Analog Devices said the U.S. SEC is conduction an inquiry into the company's granting of stock options to directors and officers in the past five years, Bloomberg said. Man Group Plc, the world's largest publicly traded hedge fund manager, may have its credit rating lowered because of the company's high level of borrowing and its funds' slumping performance, Moody's Investors Service said. NY State Comptroller Hevesi sued Merck over pension fund losses related to Vioxx, Bloomberg reported. LG.Philips LCD, the world's second-largest market of liquid crystal displays, said it plans to spend $5.1 billion building the world's largest liquid crystal display plant, Bloomberg said.

BOTTOM LINE: The Portfolio finished unchanged today as strength in my security, internet and telecom equipment longs offset weakness in my medical equipment, retail and wireless longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. I continue to view recent market action as healthy and necessary for another move higher before year-end. The major U.S. indices will likely continue their recent consolidation over the next couple of days and begin advancing on Friday's jobs report.

Mid-day Report

S&P 500 1,177.35 -.11%
NASDAQ 2,104.29 -.12%

Leading Sectors
Iron/Steel +1.36%
HMOs +.73%
Defense +.39%

Lagging Sectors
I-Banks -.90%
Broadcasting -.93%
Retail -2.18%

Other
Crude Oil 49.18 -1.17%
Natural Gas 7.49 -4.43%
Gold 452.50 -.72%
Base Metals 120.75 -.02%
U.S. Dollar 81.91 -.02%
10-Yr. T-note Yield 4.35% +.73%
VIX 13.09 -1.58%
Put/Call .87 +16.0%
NYSE Arms 1.0 -2.91%

Market Movers
TASR +7.6% on short-covering after 2-for-1 split.
PACT +23.0% after announcing it signed a partnership agreement to become a designated distributor of China Netcom(CN), and to distribute Netcom's XiaoLingTone/PHS mobile phone products, prepaid calling cards, wireless broadband and internet services.
RHAT +9.7% after Prudential upgrade to Overweight.
UNFI +8.2% after beating 1Q estimates and reiterated 05 guidance.
ELOS -19.0% after the FDA refused to review its VelaSmooth device for treating cellulite.
HOTT -11.8% after lowering 4Q guidance and multiple downgrades.
XING -12.9% after disappointing 9-months earnings report.

Economic Data
Preliminary 3Q GDP rose 3.9% versus estimates of 3.7% and a prior forecast of 3.7%.
Preliminary 3Q Personal Consumption rose 5.1% versus estimates of 4.7% and a prior forecast of 4.6%.
Preliminary 3Q Price Deflator rose 1.3% versus estimates of 1.3% and a prior estimate of 1.3%.
Consumer Confidence for November fell to 90.5 versus estimates of 96.0 and a reading of 92.9 in October.
Chicago Purchasing Manager for November was 65.2 versus estimates of 62.0 and a reading of 68.5 in October.

Recommendations
-Goldman Sachs reiterated Outperform on WAG. Goldman reiterated Underperform on ABY.
-Citi SmithBarney reiterated Buy on SHO, target $22. Citi reiterated Buy on INTC, target $25.50. Citi reiterated Sell on HOTT, target $14. Citi reiterated Buy on K, target $48.
-JP Morgan rated KEA Underweight. JP Morgan rated DTPI Overweight. AMT rated Overweight at JP Moran.
-Banc of America rated AMTD Sell, target $12.
-Legg Mason rated TSA Buy, target $37. AV rated Buy at Legg Mason, target $21.
-Prudential raised OSI to Overweight, target $41. Pru raised RHAT to Overweight, target $17.
-CSFB rated MMM Outperform, target $92.
-Merrill Lynch rated SHO Buy, target $21.
-Raymond James rated ANT Outperform, target $43.

Mid-day News
U.S. stocks are slightly lower mid-day on a continuing consolidation of recent gains. IBM and Sybase plan to collaborate to market an edition of Sybase's database software for IBM Servers that use the Linux operating system, the Wall Street Journal reported. Oragenics will likely say today it has received U.S. FDA approval to test bacteria that's intended to prevent tooth decay, the NY Times reported. Helicopter companies are benefiting from increased demand for medical airlifts and other commercial services, the NY Times reported. A U.S. appeals court ruled the government can't withhold federal funds from universities that bar military recruiters from campus, the Washington Post reported. Materials for making chemical blood agents and literature on how to produce a deadly form of anthrax were found at two houses in Fallujah, Iraq, last week, the Washington Times reported. Dallas Mavericks owner Mark Cuban says he plans to create a hedge fund managed by professional gamblers in which investors could wager on sporting events, the Dallas Morning News reported. Allergan's shares fell as much as 4.5% after the company said it was investigating whether injections of its Botox wrinkle treatment may have caused two people in Florida to become ill with botulism, Bloomberg reported. OAO Yukos Oil has lost financial stability and spent all its capital, Interfax said. German Chancellor Schroeder and Russian President Putin agreed during a telephone call that the result of any rerun of the disputed Ukrainian presidential election must be "strictly respected," Bloomberg reported. The U.S. economy grew at a 3.9% annual pace from July through September, faster than the government estimated last month, as consumer spending strengthened, Bloomberg said. Priceline.com and Lowestfare.com stopped selling retail airline tickets for Northwest Airlines as the companies disagree on distribution terms, Bloomberg said. Pfizer may be the first to produce a single medication designed to reduce "bad" cholesterol and elevate "good" cholesterol, Bloomberg reported. OAO Gazprom, Russia's state-run natural gas company, will bid for OAO Yukos' biggest unit and may buy other domestic producers to created an oil business rivaling that of Exxon Mobil within six years, Bloomberg reported. NAACP President Mfume said he is resigning from the civil rights group, Bloomberg said. Crude oil in NY is falling as warm temperatures and rising inventories eased concern that demand may outpace supplies of heating oil and natural gas, Bloomberg said. The employment index component of the Chicago Purchasing Manager report rose to a 16-year high, suggesting the manufacturing recovery is secure and will help drive economic growth, Bloomberg reported.

Bottom Line: The Portfolio is unchanged mid-day as strength in my security, telecom equipment and internet longs is being offset by weakness in my wireless, retail and medical equipment longs. I have not traded today and the Portfolio is still 100% net long. The major indices continue to consolidate recent gains in an orderly and healthy manner. I still expect one more substantial run higher over the next few weeks into year-end and plan to buy favorite longs aggressively on any near-term weakness. Friday's employment report should exceed expectations, thus boosting consumer confidence, and provide the catalyst for higher stock prices. I expect U.S. stocks to trade modestly higher into the close on declining energy prices.

Tuesday Watch

Earnings of Note
Company/Estimate
CHS/.38
CPRT/.21
OVTI/.24
JTX/.19
SFD/.52

Splits
TASR 2-for-1

Economic Data
Preliminary 3Q GDP estimated to rise 3.7% versus a 3.3% increase in 2Q.
Preliminary 3Q Personal Consumption estimated to rise 4.7% versus a 1.6% increase in 2Q.
Preliminary 3Q GDP Price Deflator estimated to increase 1.3% versus a 3.2% rise in 2Q.
Consumer Confidence for November estimated to rise to 96.0 versus a reading of 92.8 in October.
Chicago Purchasing Manager for November estimated at 62.0 versus 68.5 in October.

Recommendations
Goldman Sachs reiterated Outperform on GOOG and EBAY. Goldman reiterated Underperform on BSC.

Late-Night News
Asian indices are higher, led by Korean shares. Global profit forecasts have been upgraded more in 2004 than at any time in the past 15 years, the London-based Times said, citing research by Citigroup. The world is facing a "cascade of proliferation" of nuclear weapons unless the existing system to prevent their spread is improved, the Financial Times said, citing a UN report. Bank of New York is negotiating with federal prosecutors to ward off a possible criminal indictment on charges it failed to report suspicious activity at one of its branches, the Wall Street Journal reported. Ukraine's standoff over who won the Nov. 21 presidential election mustn't provoke a breakup of the country, U.S. Secretary of State Powell told Leonid Kuchma, the outgoing Ukrainian president. The Ukrainian Supreme Court may give its ruling today on charges of fraud in the Nov. 21 presidential election, as the outgoing president said he is prepared to hold fresh elections, Bloomberg said.

Late-Night Trading
Asian Indices are unch. to +1.0% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated +.13%

BOTTOM LINE: I expect U.S. equities to open higher on better-than-expected economic reports, lower energy prices, a stronger dollar, short-covering and more optimism. The Portfolio is 100% net long heading into tomorrow.

Monday Close

S&P 500 1,178.57 -.34%
NASDAQ 2,106.87 +.23%

Leading Sectors
Boxmakers +1.57%
HMOs +.84%
Wireless +.62%

Lagging Sectors
Oil Service -.98%
Retail -1.36%
Homebuilders -2.76%

Other
Crude Oil 49.65 -.22%
Natural Gas 7.84 unch.
Gold 455.40 -.09%
Base Metals 120.77 +.21%
U.S. Dollar 81.96 +.04%
10-Yr. T-note Yield 4.32% unch.
VIX 13.30 +3.99%
Put/Call .75 +8.70%
NYSE Arms 1.03 +15.73%

After-hours Movers
STGS +5.1% after saying it will be added to the S&P Small-cap 600 Index.
HOTT -8.3% after lowering 4Q estimates on disappointing November sales.

Recommendations
Goldman Sachs reiterated Outperform on DNA and ACN.

After-hours News
U.S. stocks finished mixed today as rising interest rates offset optimism over economic growth. After the close, Europe's population is expected to decline by 96 million between 2000 and 2050 despite projected immigration of 600,000 a year during the same period, the Financial Times said. The Arctic Ocean may have significant deposits of oil and gas in a ridge buried near the North Pole, the NY Times reported. Beijing city officials canceled a $3.5 million software order to Microsoft, bowing to complaints from domestic rivals, the Financial Times said. Perry Corp., an investment advisory firm, said it owns 26.6 million Mylan Labs shares and supports the company's acquisition of King Pharmaceuticals that billionaire financier Carl Icahn has tried to block, Bloomberg reported. Halliburton said a bankruptcy judge approved a $1.5 billion settlement of asbestos claims between two of its subsidiaries and insurers, Bloomberg said.

BOTTOM LINE: The Portfolio finished slightly lower today as losses in my Chinese ADR, retail and telecom equipment longs more than offset gains in my security, internet and Indian ADR longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The market improved modestly into the afternoon as most stocks rose and technology outperformed. I continue to expect another rally in the near-term on better-than-expected economic reports, a rally in the dollar and lower energy prices.

Mid-day Report

S&P 500 1,178.23 -.37%
NASDAQ 2,103.23 +.07%

Leading Sectors
Boxmakers +1.50%
HMOs +.69%
Wireless +.51%

Lagging Sectors
Retail -1.13%
Oil Service -1.42%
Homebuilders -2.71%

Other
Crude Oil 49.80 +.73%
Natural Gas 7.92 -8.32%
Gold 455.90 +.97%
Base Metals 120.77 +.21%
U.S. Dollar 81.84 +.07%
10-Yr. T-note Yield 4.33% +1.93%
VIX 13.35 +4.38%
Put/Call .73 +5.80%
NYSE Arms .99 +11.24%

Market Movers
AAPL +4.88% after UBS/Merrill raised estimates and target on strong weekend sales.
WMT -3.5% after lowering November sales estimates.
CAAS +102.5% after being selected to supply pumps to two companies, including General Motor's joint venture in China.
KCI +5.6% after Merrill added it to Focus List saying profit may rise 25% next year and 28% in 2006 as the maker of therapeutic beds benefits from its devices to treat wounds.
NGPS +12.5% on no news.
INFY +4.5% on no news.
OSTK +4.2% after saying traffic to its web site increased 31% y-o-y over the holiday weekend and Legg Mason reiterated Buy, target $78.
IPAR +12.5% after increasing 05 outlook.
PARL +12.3% on IPAR news.
GLNG -13.5% on disappointing 3Q report.
KMRT -4.4% on WMT news.
PHM -3.8% on higher interest rates.

Economic Data
None of note.

Recommendations
-Goldman Sachs reiterated Outperform on TPX, UNH and AVP. Goldman reiterated Underperform on TWMC.
-Citi SmithBarney said RSH will show the biggest upside surprise when comp store sales are reported early next month. Citi also raised comp estimates at AEOS, PLCE and lowered them at HOTT. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on FON, target $27. Citi reiterated Buy on AMT, target $22.00. Citi reiterated Buy on SSI, target $70. Citi reiterated Buy on ALK, target $36. Citi cut MET to Sell, target $38. Citi cut TMK to Sell, target $55.
-JP Morgan cut EP to Underweight.
-Merrill reiterated Buy on AAPL, raised target to $78.
-UBS reiterated Buy on AAPL, raised target to $77. UBS downgraded BNN to Reduce, target $34.
-Prudential cut ROH to Underweight, target $42. Pru cut DD to Underweight, target $47. Pru raised BEN to Overweight, target $75. Pru raised AMG to Overweight, target $72.
-Bear Stearns rated THO Outperform, target $25.

Mid-day News
U.S. stocks are mixed mid-day as rising interest rates and profit-taking is offsetting optimism over economic growth. Many U.S. hospitals are shying away from letting doctors deliver babies vaginally if the woman has previously had a Caesarean section, partly because of fears of lawsuits if there are complications, the NY Times reported. U.S. teenagers, indulging more than ever in luxury goods, are now paying adult prices for their clothes as designer labels becoming increasingly important to them, the Washington Post reported. Liquid crystal display flat-panel tv sets will drop in price by as much as 30% starting next year, the NY Times reported. An English-language tv network specifically geared toward Muslims will begin broadcasting in North America tomorrow, the NY Times said. McDonald's, Dunkin' Donuts and other fast-food restaurant chains plan to offer so-called stored-value gift cards this holiday season to capitalize on their success with other retailers, USA Today reported. Amazon.com is focusing on routing customers to third-party Web sites to buy products rather than selling items itself, the LA Times reported. Moscow's arbitration court will hear an appeal from OAO Yukos Oil on Dec. 3 against the government's decision to sell Yuko's main oil-producing unit, Interfax reported. General-merchandise and apparel sales will increase 4% to 6% this holiday season, Diane Swonk, chief economist at Mesirow Financial, told CNBC. Saudi Arabia plans to expand output capacity by 14% to ease concern of potential shortages, said the nation's oil minister. The UN nuclear watchdog said that Iran has agreed to suspend all uranium enrichment activities, according to a draft resolution before the IAEA in Vienna, Bloomberg reported. BT Group Plc, the U.K.'s largest phone operator, created an entertainment division to offer movies and tv programs over the Internet, Bloomberg said. President Bush has picked Carlos Gutierrez, CEO of Kellogg, to replace Donald Evans as secretary of Commerce, Bloomberg reported. U.S. retail sales over the Web increased 40% y-o-y on Friday, according to ComScore Networks. UN Secretary-General Annan said he was upset to learn his son was still getting paid this year by a company under investigation for its role in the scandal-ridden UN oil-for-food program through which former Iraqi dictator Saddam Hussein illegally pocketed $21.3 billion, Bloomberg reported. The benchmark 10-year U.S. Treasury is falling, pushing its yield to a three-month high on better-than-expected holiday retail sales and recent declines in the dollar, Bloomberg said.

Bottom Line: The Portfolio is lower mid-day on losses in my Chinese ADR, retail and telecom equipment longs. I exited a few long positions as they hit stop-losses this morning, thus leaving the Portfolio 100% net long. Today's mixed performance by the major indices appears to be mostly a result of profit-taking rather than real concerns over fundamentals. The Morgan Stanley Retail Index(MVRX) has gained 21.7% since August lows. Most retailers did very well over the weekend, notwithstanding WMT's November results. Other low-end retailers such as TGT, JCP and KSS exceeded expectations. Technology and small-caps are outperforming today and breadth is healthy for the overall market. The 10-year T-note yield is still 60 basis points below the highs set in June. As well, it is good to see measures of investor anxiety rising. I expect U.S. stocks to rise modestly into the close on short-covering and bargain-hunting ahead of tomorrow's GDP, Consumer Confidence and Chicago Purchasing Manager reports.