Mid-day Report

Indices
S&P 500 1,207.29 -.21%
Dow 10,811.68 -.23%
NASDAQ 2,084.31 -.23%
Russell 2000 635.96 +.16%
DJ Wilshire 5000 11,895.05 -.13%
S&P Barra Growth 580.42 -.07%
S&P Barra Value 623.08 -.31%
Morgan Stanley Consumer 590.28 -.44%
Morgan Stanley Cyclical 767.22 -.03%
Morgan Stanley Technology 475.99 -.51%
Transports 3,617.07 +.05%
Utilities 355.67 +.51%
Put/Call .76 -2.56%
NYSE Arms 1.01 +31.17%
Volatility(VIX) 11.32 +.44%
ISE Sentiment 158.00 -9.20%
US Dollar 83.71 +.13%
CRB 287.93 -.48%

Futures Spot Prices
Crude Oil 48.20 +2.09%
Unleaded Gasoline 126.80 +1.0%
Natural Gas 6.09 -1.38%
Heating Oil 132.70 +2.76%
Gold 426.90 -.09%
Base Metals 123.32 +.04%
Copper 144.70 -.79%
10-year US Treasury Yield 4.16% +1.56%

Leading Sectors
Iron/Steel +2.77%
Oil Service +1.98%
Energy +1.92%

Lagging Sectors
Computer Hardware -.99%
Restaurants -1.07%
Insurance -1.12%

Market Movers
NTAP -9.43% after beating 3Q estimates, lowering 4Q revenue guidance and UBS upgrade to Buy.
ADBL -29.7% after missing 4Q revenue estimates, saying it expects higher costs, raising 05 revenue guidance and multiple downgrades.
HURC +22.08% on strong 1Q report.
TZOO +16.65% on short-covering.
ITRI +18.61% after beating 4Q estimates and First Albany upgrade to Strong Buy.
INCX +13.42% on no news.
ASF +11.64% after beating 4Q estimates and giving positive outlook.
BRC +14.4% after substantially beating 2Q estimates and raising 05 guidance.
SSYS -15.31% after missing 4Q estimates and lowering 05 guidance.
JUPM -18.34% after beating 4Q estimates and giving disappointing 05 guidance.
LF -10.9% after missing 4Q revenue estimates, saying it expects higher costs and raising 05 revenue guidance.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
-Housing Starts for January rose to 2159K versus estimates of 2000K and 2069K in December.
-Building Permits for January rose to 2105K versus estimates of 2000K and 2069K in December.
-Industrial Production for January was unchanged versus estimates of a .3% gain and a .7% increase in December.
-Capacity Utilization for January was 79.0% versus estimates of 79.3% and 79.1% in December.

Recommendations
-Goldman Sachs: Reiterated Outperform on MSFT, RIG, CMX and KO. Reiterated Underperform on AMAT, HCC and VICL. Reiterated Attractive view of Gold sector, favorite is ABX.
-Citi SmithBarney: Reiterated Buy on MAR, target $75. Reiterated Buy on AMAT, target $22. Reiterated Buy on MAY, target $36. Reiterated Buy on ROP, target $70. Reiterated Buy on CSCO, target $30. Reiterated Buy on GE, target $44. Reiterated Buy on MRO, target $47. Reiterated Buy on TYC, target $40. Reiterated Buy on ACGL, target $48.
-Banc of America: Downgraded PIXR to Sell, target $76.
-JP Morgan: Rated LSI Underweight. Cut MCO to Underweight.
-Deutsche Bank: Raised RIG to Buy, target $60.
-UBS: Rated FILE Buy, target $29. Raised NTAP to Buy.
-Oppenheimer: Rated AIRN Buy, target $8-$9.
-CSFB: Raised MET to Outperform, target $47.

Mid-day News
US stocks are modestly lower mid-day on worries over higher-interest rates and energy prices. Ubisoft Entertainment SA, a French video games maker, is in talks with Electronic Arts, two months after attacking the US company's purchase of a 20% stake as hostile, the Wall Street Journal reported. Mercora Inc., a closely held company based in Santa Clara, is pioneering so-called "peer-to-peer" radio that allows on-line music sharing without breaking the law, the Wall Street Journal reported. Time Warner plans to start a new series of cartoons based on its classic Looney Tunes characters to boost revenue at its animated franchises, the Wall Street Journal reported. Cerus Corp., a US biotech company specializing in blood-disease therapy, may be an investment opportunity, the Wall Street Journal reported, citing Anthony Marchese, of Insiders Trend Fund LP. Airbus SAS has signed an agreement that will give customers of its A380 airplane the option of installing equipment that would let passengers make calls using their own mobile phones, the AP reported. China will impose quotas on iron ore imports from March, Reuters reported. The race to be prime minister of Iraq has narrowed to Ibrahim Jafari of the Dawa Party and onetime US Pentagon favorite Ahmad Chalabi of the Iraqi National Congress, the NY Times reported. The International Association of Chiefs of Police will issue a notice to police departments within 10 days to look into the use of stun guns after numerous deaths that may be related to the weapon, USA Today reported. OPEC said oil demand will rise faster than expected this year, as the Chinese economy shows few signs of slowing, Bloomberg reported. Production at US factories, mines and utilities was unchanged last month, held back by a decline in energy demand, Bloomberg said. US housing start unexpectedly rose to a 21-year high in January, paced by record construction of single-family homes, Bloomberg reported. US lawmakers are beginning a new push to compel enforcement of a 1996 law imposing sanctions on foreign companies that do business in Iran, a move that might trigger a European Union protest to the WTO, Bloomberg said. The US economy has "firmed" and inflation is low, even with interest rates that remain "accommodative," Fed Chairman Greenspan said. The NHL canceled its season today after locking out players for 154 days, Bloomberg said. US Steel, Nucor and AK Steel rose on speculation that US steel producers may be acquisition targets for larger companies in Europe, Bloomberg reported. US 10-year T-Notes are falling the most in three weeks after Fed Chairman Greenspan made positive comments about the US economy, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my semi/software longs and internet shorts. I took profits in a short and a long this morning, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative today as sector performance is mixed and the advance/decline line is slightly lower. However, most measures of investor anxiety are higher, small-caps are outperforming and economically sensitive groups are rising. The very strong housing report is a big positive and once again illustrates the staying power of this industry. The rate of homebuilding may be slowing, but should remain at very high levels compared to past history as long-term interest rates remain low, the labor market continues to improve and supply stays relatively low. I expect US stocks to rise into the close from current levels on optimism over US economic growth, strong earnings reports, short-covering and increasing fund inflows.

Wednesday Watch

Late-Night News
Asian indices are mostly higher, led by gains in China. JP Morgan will hold an investors' meeting next week on its credit- and debit-card business, the Wall Street Journal reported. North Korea doesn't have the technology necessary to attach nuclear warheads to missiles, the Chosun Ilbo newspaper reported, citing South Korea's National Intelligence Service as telling a government committee. Below-average snowfall in the Pacific Northwest may lead to higher electricity prices later in the year, the Wall Street Journal reported. China's imports of steel products fell 41% to 1.92 million metric tons in January compared with a year earlier, the Beijing-based customs office said. Fidelity Management raised its stake in Infosys Technologies to 5.65% of the company's equity, the Hindu Business Line reported. Tractebel SA and Norwegian ship-owner Leif Hoegh ASA plan a $900 million project near Boston to import liquefied natural gas, Lloyd's List reported. South Korea's government won't agree to any significant economic initiatives with North Korea until the issue over its nuclear weapons is resolved, Bloomberg reported. Shares of Chartered Semiconductor Manufacturing Ltd. and STATS ChipPAC Ltd. rose in Singapore after Applied Materials said the outlook for the computer chip industry is improving, Bloomberg said. Doctors and scientists will probably tell the FDA this week that Pfizer's Celebrex painkiller needs to carry a tougher warning of a link to heart attacks and strokes, Bloomberg reported. Pfizer and Merck are among pharmaceutical companies that are likely to consider buying smaller competitors this year because of additional cash from a one-time tax break, the Wall Street Journal reported.

Late Recommendations
-Goldman Sachs: Reiterated Outperform on GE, PFE, SYK and BBBY.
-Banc of America: Upgraded DJ to Buy.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated unch.
NASDAQ 100 indicated unch.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note
Company/Estimate
AAP/.45
CMX/.43
KO/.40
GPRO/.20
HPQ/.34
IACI/.27
JNY/.29
MDT/.45
PNRA/.45
OSI/.57
MCO/.73
PFCB/.40
SNPS/.06
TK/2.94
WEN/.45

Splits
INT 2-for-1

Economic Data
-Housing Starts for January are estimated to fall to 1925K versus 2004K in December.
-Building Permits for January are estimated to fall to 2000K versus 2021K in December.
-Industrial Production for January is estimated to rise .3% versus a .8% increase in December.
-Capacity Utilization for January is estimated to rise to 79.3% versus 79.2% in December.
-Greenspan report on Economy and Fed Policy.

BOTTOM LINE: I expect US equities to open mixed in the morning and move higher later in the day on strong earnings reports, more constructive Fed comments, lower energy prices, rebounding tech shares and increasing fund inflows. The Portfolio is 100% net long heading into tomorrow. Voting for the 2005 Business Blogging Awards ends today at 3pm EST and it is still a very tight race. Please take a few seconds to vote here for Between the Hedges in the Best Financial Industry/Investment Blog category. Thank you very much.

Tuesday Close

Indices
S&P 500 1,210.12 +.33%
Dow 10,837.32 +.43%
NASDAQ 2,089.21 +.30%
Russell 2000 634.94 -.01%
DJ Wilshire 5000 11,911.18 +.27%
S&P Barra Growth 580.82 +.38%
S&P Barra Value 625.00 +.28%
Morgan Stanley Consumer 592.97 +.15%
Morgan Stanley Cyclical 767.39 +.34%
Morgan Stanley Technology 478.42 +.68%
Transports 3,615.16 +.72%
Utilities 353.88 -.54%
Put/Call .78 -10.34%
NYSE Arms .77 -25.96%
Volatility(VIX) 11.27 -2.17%
ISE Sentiment 174.00 -10.77%
US Dollar 83.59 -.44%
CRB 289.33 +.51%

Futures Spot Prices
Crude Oil 47.26 unch.
Unleaded Gasoline 125.41 -.18%
Natural Gas 6.19 +.24%
Heating Oil 129.30 +.13%
Gold 426.80 -.12%
Base Metals 123.27 +.19%
Copper 145.45 -.27%
10-year US Treasury Yield 4.09% +.66%

Leading Sectors
Gaming +2.08%
Computer Hardware +1.89%
Disk Drives +1.74%

Lagging Sectors
Iron/Steel -.37%
I-Banks -.47%
Utilities -.54%

After-hours Movers
ADBL -32.7% after missing 4Q revenue estimates, saying it expects higher costs and raising 05 revenue guidance.
NTAP -11.8% after beating 3Q estimates and lowering 4Q revenue guidance.
GPRO +3.73% after announcing that it has signed a supply and purchase agreement with F. Hoffmann-La Roche Ltd. and its affiliate Roche Molecular Systems.
INTL +4.21% after missing 4Q estimates slightly, announcing a $1.00/share special dividend and stock buyback of $75M.
PLAB +8.19% after beating 1Q estimates.
CSCD +4.26% after beating 4Q estimates, lowering 1Q guidance range and raising 1Q revenue guidance range.
LF -13.22% after substantially missing 4Q estimates and saying COO resigned.
EYET -7.36% after missing 4Q estimates and lowering 05 outlook.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
-Goldman Sachs: Reiterated Outperform on TYC, UNM and SAP. Reiterated Underperform on NAV.
-JP Morgan: Cut VAL to Underweight.

After-hours News
US stocks finished modestly higher today on gains in technology and gaming stocks. After the close, the FCC is leaning toward making AT&T pay certain fees over prepaid calling cards it has sold since 1999, Reuters reported. General Dynamics’ contract with the US Navy for the Multi-Purpose Processor submarine program more than doubled in value to $88.6 million with the addition of engineering and technical services, Bloomberg reported. A 15-year-old boy who said Pfizer’s Zoloft antidepressant drove him to fatally shoot his grandparents was found guilty of murder and sentenced to 30 years in prison, the AP reported. An Indonesian doctor has retracted claims that Newmont Mining harmed the health of villagers near its Minashasa gold mine, Dow Jones reported. Russia told N.Korea it should join the six-nation forum discussing dismantling N.Korea’s nuclear program as soon as possible, Interfax reported. Home Depot plans to create 20,000 new US jobs and recruit Hispanic, bilingual workers to fill them, CNN reported. Apple Computer may increase its purchases from Taiwan suppliers this year by a quarter to $5 billion as it boosts sales, the Commercial Times reported. Applied Materials said first quarter profit more than tripled, Bloomberg said. The seven-year-old Kyoto Protocol comes into force today, binding 35 nations and the European Union to cut their emissions of greenhouse gases, Bloomberg said. The yen fell from a one-week high against the US dollar as a report showed Japan’s economy fell into recession after it shrank in the final quarter of 2004, Bloomberg reported.

BOTTOM LINE: The Portfolio finished higher today on gains in my internet and software longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market improved slightly into the close as the advance/decline line finished nearly unchanged, sector performance was modestly positive and technology stocks outperformed. On the negative side, small-caps and interest-rate sensitive sectors underperformed and measures of investor anxiety were mostly lower. I continue to expect US stocks to move modestly higher this week on more constructive comments from Greenspan, strong earnings reports, better fund inflows and short-covering. I will increase the Portfolio’s market exposure on a clear break above the 2100 level on the Nasdaq.

Mid-day Report

Indices
S&P 500 1,207.31 +.10%
Dow 10,809.61 +.17%
NASDAQ 2,085.06 +.10%
Russell 2000 633.53 -.23%
DJ Wilshire 5000 11,884.74 +.05%
S&P Barra Growth 580.68 +.35%
S&P Barra Value 624.72 +.24%
Morgan Stanley Consumer 592.93 +.14%
Morgan Stanley Cyclical 767.62 +.37%
Morgan Stanley Technology 477.97 +.58%
Transports 3,605.11 +.44%
Utilities 353.90 -.53%
Put/Call .73 -16.09%
NYSE Arms .84 -19.23%
Volatility(VIX) 11.64 +1.04%
ISE Sentiment 173.00 -11.28%
US Dollar 83.61 -.42%
CRB 289.19 +.46%

Futures Spot Prices
Crude Oil 47.57 +.27%
Unleaded Gasoline 127.00 -.63%
Natural Gas 6.14 +.77%
Heating Oil 130.30 +.66%
Gold 426.90 -.09%
Base Metals 123.27 +.19%
Copper 145.60 +1.15%
10-year US Treasury Yield 4.10% +.81%

Leading Sectors
Gaming +2.12%
Disk Drives +1.36%
Retail +1.18%

Lagging Sectors
Oil Service -.44%
Utilities -.60%
Homebuilders -.60%

Market Movers
AAPL +4.64% after Merrill Lynch raised price target to $102.
C +17.92% after receiving a $3.25 billion cash acquisition offer from its fifth largest shareholder, Highfields Capital Management.
ANR +18.05% on strong demand for IPO.
TEVA -5.43% on disappointing 4Q results and 05 guidance.
ANSS +9.71% after beating 4Q estimates and raising 05 outlook.
PFBC +10.78% on strong demand for IPO.
MFLX +12.66% on no news.
CRL +6.94% after beating 4Q estimates, maintaining 1Q outlook and 05 guidance.
FOXH +10.68% after beating 4Q estimates and raising 1Q outlook.
BYD +5.09% on no news.
PFGC -15.15% after saying it would delay filing fourth-quarter and year-end financial results to complete an investigation of its accounting practices and JP Morgan downgrade to Underweight from Overweight.
ROCK -11.1% after missing 4Q estimates and lowering 1Q outlook.
MOLXE -10.52% after missing 2Q estimates and lowering 3Q outlook substantially.
CTCO -4.92% after missing 4Q estimates and lowering 1Q/05 guidance.
BG -5.3% on comments by John Deere regarding slower purchases of farm equipment in Brazil due to low soybean prices.
KWK -4.1% on UBS downgrade to Neutral.
AXCA -9.1% on disappointing 1Q results.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
-Empire Manufacturing for February fell to 19.19 versus estimates of 20.0 and a reading of 20.08 in January.
-Advance Retail Sales for January fell .3% versus estimates of a .4% decline and a 1.1% increase in December.
-Retail Sales Less Autos for January rose .6% versus estimates of a .4% gain and a .3% increase in December.
-Net Foreign Security Purchases for December fell to $61.3B versus estimates of $58.5B and an upwardly revised $89.3B in November.
-Business Inventories for December rose .2% versus estimates of a .2% increase and a 1.1% gain in November.
-NAHB Housing Market Index fell to 68 in February versus estimates of 69 and a reading of 70 in January.

Recommendations
-Goldman Sachs: Reiterated Outperform on K, KRB, EBAY, CCL, HOT, MSFT and A. Reiterated Underperform on INFA, DE, RAI and FSS.
-Banc of America: Said investors in bonds of GM should buy the carmaker’s 30-year securities because their returns will be better than shorter-dated debt.
-Morgan Stanley: Raised MCO to Overweight, target $100.
-Oppenheimer: Raised FMBI to Buy.
-JP Morgan: Downgraded PFGC to Underweight.
-Legg Mason: Rated LEG Buy, target $34.
-UBS: Raised GG to Buy, target $16.

Mid-day News
US stocks are mixed mid-day as gains in technology shares are being offset by losses in interest-rate sensitive sectors. Debt levels among companies are too low and they have scope to increase their borrowing, according to a survey of investors by Merrill Lynch. Copper prices will average $1.20 a pound this year, Merrill Lynch said, revising a previous estimate 9.1% higher because of continuing growth in US and Chinese demand for the metal used in wiring and plumbing. The Baltic Exchange, the 260-year-old shipping organization in London, plans to set up a container ship freight-rate index that could be used for derivative trading, TradeWinds reported. Major League Baseball may today say it has reached agreement to purchase Tickets.com, an online provider of entertainment and sports tickets, for $66 million, the Wall Street Journal reported. Merck’s Vioxx and Pfizer’s Celebrex painkillers will face more scrutiny tomorrow when a FDA advisory panel hears about how the agency and Merck dealt with Vioxx’s recall, the NY Times reported. GM and other US companies are paying more for mail order generic drugs for their employees than individuals get buying the same drugs at retail pharmacies, the Wall Street Journal reported. The number of US households owning at least one individual retirement account in 2004 remained relatively unchanged at 40.4%, the Wall Street Journal reported. Federated Department Stores’ acquisition talks with May Department Stores halted last week after the two retailers couldn’t agree on price, the Wall Street Journal said. Verizon Communications’ planned purchase of MCI for $6.7 billion could mean US corporations will no longer see price wars for telephone and Internet services, the NY Times reported. Advanced Micro Devices cut prices on its existing Opteron server chips by as much as 35% after introducing higher-performing Opteron models, CNet News reported. Brazil plans to ask the WTO to investigate the legality of US government subsidies for soybean farmers, Bloomberg said. Privatizing part of Social Security has advantages and will help divide retirement saving from interest group politics, taxes and government spending, Gary Becker, a Nobel laureate in economics, wrote in the Wall Street Journal. European economic growth unexpectedly slowed in the fourth quarter as Germany and Italy, which account for half the region’s $10 trillion economy, contracted for the first time in more than a year, Bloomberg reported. The United Iraqi Alliance, which came first in the National Assembly elections, is meeting to choose between Ibrahim al-Jaafari, Ahmed Chalabi and Adel Abdel Mahdi, as a candidate for the job of Prime Minister, Bloomberg reported. Billionaire investors Warren Buffett and George Soros increased their holdings of US cable television companies, taking advantage of declines in stock prices to buy shares of the industry’s top two operators, Bloomberg said. The FDA will set up an independent drug safety oversight board to monitor medicines after they win approval, Bloomberg reported. Microsoft will release a new version of its Internet Explorer browser to fix security problems, Bloomberg said. Databases maintained by ChoicePoint, which sells personal information on people in the US to government agencies and businesses, have been accessed by criminals posing as legitimate businesses, MSNBC.com reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my internet and software longs. I have not traded today, thus the Portfolio is still 100% net long. The tone of the market is mixed as the advance/decline line is slightly negative and most sectors are higher. As well, volume is better today and measures of investor anxiety are mixed. The Nasdaq is finding resistance at the key technical level of around 2100. I expect the Nasdaq to break above this level in the next few days on strong earnings reports, more constructive Fed comments, increasing fund inflows, short-covering and a decline in energy prices. I will increase market exposure on a clear break above this level. US stocks should trade modestly higher from current levels into the close.

Tuesday Watch

Late-Night News
Asian indices are mixed as rising technology shares are being offset by declining financial stocks in the region. Time Warner's America Online is in talks with Comcast Corp. and other cable groups over possible joint ventures to increase broadband customer figures, the Financial Times reported. China's central bank will encourage financial institutions to expand credit and spur industrial growth in the country's western provinces, state-run Xinhua news agency said. South Korea's government proposed military talks with North Korea as tensions mount over North Korea's announcement it has nuclear weapons, the AP reported. Warren Buffett's Berkshire Hathaway doubled its holdings of Comcast to 10 million shares in the fourth quarter, Bloomberg reported. Billionaire investor George Soros sold his stakes in Anheuser-Busch and Baxter International, while adding Altria Group, Applied Micro Circuits, Cisco Systems and Dupont to his holdings, Bloomberg said. Consumer satisfaction with Internet commerce sites including Amazon.com and EBay fell in the fourth quarter for the first time since measurements began being taken in 2000, Bloomberg reported. President Bush is beginning to make progress in convincing US textile makers to drop their opposition to a trade agreement with Central American nations, Bloomberg reported. US Senate investigators said today the former head of the UN/Iraqi oil-for-food program may have broken US criminal laws, and accused a UN contractor in Iraq of taking a bribe to circumvent the humanitarian effort, Bloomberg said. Newly obtained documents from the Iraqi government may show Saddam Hussein's regime gave Benon Sevan, the director of the UN program, about $1.2 million in oil vouchers, Bloomberg reported. Saudi Prince Alwaleed bin Talal, whose $13 billion stake in Citigroup suffered as the company lurched from scandal to scandal for three years, said Chairman Sanford Weill and CEO Charles Prince assured him the worst is over, Bloomberg said. Exxon Mobil, Royal Dutch Shell, ChevronTexaco and other oil companies are investing $20 billion to build a plant in Qatar that will turn natural gas into a cleaner-burning automotive fuel, the Wall Street Journal reported.

Late Recommendations
CSFB: Raised Japanese Technology stocks to Neutral from Underweight.

Night Trading
Asian Indices are -.25% to +.25% on average.
S&P 500 indicated -.01%.
NASDAQ 100 indicated unch.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
CNBC Guest Schedule

Earnings of Note
Company/Estimate
ANF/1.13
AMAT/.15
CECO/.66
ADBL/.03
CEPH/.74
DE/.89
N/.88
GET/-.25
FNF/.96
LH/.61
MHS/.56
MHK/1.53
NTAP/.16
JWN/1.02
SDS/.40
RIG/.05

Splits
None of note.

Economic Data
-Empire Manufacturing for February is estimated to fall to 20.0 versus a reading of 20.08 in January.
-Advance Retail Sales for January are estimated to fall .5% versus a rise of 1.2% in December.
-Retail Sales Less Autos for January are estimated to rise .4% versus a .3% increase in December.
-Net Foreign Security Purchases for December are estimated to fall to $60.0B versus $81.0B in November.
-Business Inventories for December are estimated to rise .2% versus a 1.0% gain in November.
-The NAHB Housing Market Index for February is estimated to fall to 69 versus a reading of 70 in January.

BOTTOM LINE: I expect US equities to open modestly higher in the morning on strong earnings reports, good economic reports and rebounding tech shares. The Portfolio is 100% net long heading into tomorrow.

Monday Close

Indices
S&P 500 1,206.14 +.07%
Dow 10,791.13 -.05%
NASDAQ 2,082.91 +.30%
Russell 2000 635.02 +.04%
DJ Wilshire 5000 11,878.65 +.08%
S&P Barra Growth 578.62 +.19%
S&P Barra Value 623.24 -.05%
Morgan Stanley Consumer 592.10 -.02%
Morgan Stanley Cyclical 759.77 +.54%
Morgan Stanley Technology 475.21 +.25%
Transports 3,589.31 -.66%
Utilities 355.79 +.82%
Put/Call .87 +4.82%
NYSE Arms 1.04 +73.33%
Volatility(VIX) 11.52 +.79%
ISE Sentiment 195.00 +51.16%
US Dollar 83.91 -.78%
CRB 287.87 +.59%

Futures Spot Prices
Crude Oil 47.41 -.06%
Unleaded Gasoline 127.80 unch.
Natural Gas 6.07 -.30%
Heating Oil 129.60 +.12%
Gold 426.50 -.19%
Base Metals 123.04 +.90%
Copper 143.95 unch.
10-year US Treasury Yield 4.07% -.28%

Leading Sectors
Computer Hardware +1.08%
Wireless +.97%
Internet +.88%

Lagging Sectors
Homebuilders -.69%
Insurance -.73%
Oil Service -1.33%

After-hours Movers
MOLXE -6.22% after missing 2Q estimates and lowering 3Q outlook substantially.
WCG -3.85% after beating 4Q estimates and lowering 1Q/05 outlooks.
FOXH +5.90% after beating 4Q estimates and raising 1Q outlook.
OMM +4.31% after beating 4Q estimates and raising 1Q outlook.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
-Goldman Sachs: Reiterated Outperform on MDT, HOT, SAP and AET. Reiterated Underperform on BA.

After-hours News
US stocks finished mostly higher today on optimism over merger activity and lower long-term interest rates. After the close, US companies’ internal auditors who assist external auditors in assessing internal controls against fraud could cut audit fees by as much as 50%, the Financial Times said. Wynn Resorts plans to submit a bid to build Singapore’s first casino, the Straits Times reported. Nippon Steel and JFE Holdings plan to reduce the use of coking coal to produce steel because of rising costs, the Nihon Keizai newspaper said. Flu vaccination may be less effective at preventing deaths of people older than 65 than previous research has shown, according to a study published in today’s edition of the Archives of Internal Medicine. The US dollar fell by the most in almost three weeks against the yen after a Japanese government report showed the country’s current-account surplus unexpectedly swelled in December, Bloomberg reported. Google shares rose 3% as the biggest and final restriction on insider stock sales expired today, Bloomberg reported. 3M Co. said it raised its quarterly dividend by almost 17% to 42 cents a share, Bloomberg reported. The California Public Employees’ Retirement System voted to put pressure on auto makers to design cleaner-burning vehicles, Bloomberg reported. Regency Centers and Macquarie CountryWide Trust said they’ve agreed to buy 101 retail centers from the California Public Employees’ Retirement System for about $2.74 billion, Bloomberg said.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my internet, networking and telecom longs. I did not trade in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market improved into the close as the advance/decline line finished nearly unchanged and a number of sectors rose. Volume fell considerably and measures of investor anxiety were mostly higher. Cyclical shares outperformed and long-term interest rates fell again today. I expect US stocks to begin heading higher later this week on more constructive comments from Greenspan, strong earnings reports, better fund inflows and short-covering.