Mid-day Report

Indices
S&P 500 1,222.83 -.20%
Dow 10,942.41 +.05%
NASDAQ 2,083.42 -.32%
Russell 2000 640.81 -.47%
DJ Wilshire 5000 12,043.08 -.24%
S&P Barra Growth 588.30 -.14%
S&P Barra Value 630.06 -.26%
Morgan Stanley Consumer 591.23 -.22%
Morgan Stanley Cyclical 782.60 -.05%
Morgan Stanley Technology 478.71 -.50%
Transports 3,879.87 +.10%
Utilities 361.44 -.50%
Put/Call .84 +10.53%
NYSE Arms 1.09 +41.56%
Volatility(VIX) 12.33 +.57%
ISE Sentiment 196.00 +15.98%
US Dollar 82.01 -.94%
CRB 312.10 +.88%

Futures Spot Prices
Crude Oil 54.75 +1.60%
Unleaded Gasoline 153.50 +1.97%
Natural Gas 6.84 +1.88%
Heating Oil 152.20 +2.42%
Gold 439.80 +.92%
Base Metals 131.25 +.98%
Copper 149.90 +.17%
10-year US Treasury Yield 4.37% +1.57%

Leading Sectors
Defense +.46%
Energy +.35%
Insurance +.20%

Lagging Sectors
Gaming -1.41%
Restaurants -1.47%
Iron/Steel -2.24%

Market Movers
AAPL -4.33% on competitive worries.
X -3.5% on worries over slowing Chinese demand.
ADLR +21.21% after it and partner GalxoSmithKline said a study showed their drug Entereg helped patients with pain from bowel dysfunction.
NVDA -4.38% on profit-taking.
GRU +27.82% after announcing that it has signed an agreement with Google to include Google’s contextual AdSense advertising on its information pages, as well as the integration of Google search into its Answers.com product.
CKP +16.16% after meeting 4Q estimates and raising 05 outlook.
SNE +4.0% on optimism over new CEO.
EXM -15.52% after announcing 5.9M share secondary.
PRFT -11.86% after announcing 5.03M share secondary.
WRES -12.87% after 4Q estimates, giving disappointing outlook and KeyBanc downgrade to Hold.

Mid-day Overview
Market Internals
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Data
None of note.

Recommendations
- Goldman Sachs: Reiterated Outperform on PFE, FSH, KR, AIG, DKS, LVS and CZN. Reiterated Underperform on THC and DJ. Reaffirmed Attractive View of Hospital sector.
- Smith Barney: Reiterated Buy on COO, target $93. Reiterated Sell on PP, target $33. Reiterated Buy on TXN, target $32. Expects to see lower dayrates for oil tanker companies in the second quarter and believes earnings for most of these companies will trail last year’s levels.
- Banc of America: Upgraded SMTC to Buy, target $23.
- JP Morgan: Raised PNCL to Overweight.
- UBS: Raised KAR to Buy, target $30. Raised YHOO to Buy, target $41.
- CIBC: Raised GSIC to Sector Outperform, target $18.
- Morgan Stanley: Raised COF to Overweight, target $79. Raised CDN to Overweight, target $18.
- Thomas Weisel: Raised APSG to Outperform.

Mid-day News
US stocks are mostly lower mid-day on worries over rising energy prices and long-term interest rates. Devon Energy may halt its operations in Syria amid mounting US political pressure on Syrian leaders, Asharq al-Awsat reported. OPEC is unlikely to change output when it meets in Iran next week, Dow Jones reported. Limited Brands, which owns Victoria’s Secret and Bath & Body Works chains, is focusing on skin-care products and cosmetics to avoid fluctuations in apparel prices and slow growth, the Wall Street Journal reported. Boeing expects its satellite division to make a profit in 2005 after years of losses, the Wall Street Journal reported. The US Financial Accounting Standards Board is proposing to force mergers-and-acquisitions fees to be booked as expenses, which would affect the reporting of profit for companies making acquisitions, the Wall Street Journal reported. US gains in energy efficiency and manufacturing rationalization have mitigated the negative impact of rising oil prices on economic growth, the Wall Street Journal reported. Interpublic Group won the $300 million global advertising account for Intel Corp., beating WPP Group Plc in a competitive pitch, Adweek said. Tata Steel, India’s second-biggest steelmaker, may raise prices of its products in April, the Press Trust of India reported. The US economy is showing good prospects for growth, with increased business investment and signs of relatively tame inflation, although some analysts are concerned about the global economy, the NY Times reported. Warner Music Group, the world’s fourth-largest record company, plans an IPO in the next 30-60 days that may raise $750 million to $1 billion, the NY Post reported. Boeing learned that former CEO Stonecipher was having an affair with an employee from an anonymous tip accompanying an excerpt of a graphic e-mail he wrote, the Wall Street Journal reported. Gtech Holdings filed a libel lawsuit over a campaign by Scientific Games to derail its bid for a contract in Mexico, the Wall Street Journal reported. Blockbuster Inc. is discussing a settlement to end investigation in at least 37 states over its “End of Late Fees” tv ad campaign, Reuters reported. Democratic lawmakers have been told by advisers that their united opposition to some of President Bush’s Social Security proposals haven’t paid off politically because voters don’t think Democrats have an alternative, the Washington Post reported. Imad Moustapha, Syria’s ambassador to the US, told MSNBC today “the sooner, the better” for the country’s withdrawal of its forces from neighboring Lebanon. Robert Friedman, the former CIO of Michael Price’s mutual fund company, is starting his first global stock hedge fund, Bloomberg reported. Italian Foreign Minister Fini said the fatal shooting by US soldier of an Italian intelligence officer in Baghdad was an accident, disputing charges by an anti-war journalist injured in the attack, Bloomberg said. The cleric-backed coalition that won the most seats in Iraq’s Jan. 30 election may join forces with the second-placed Kurdish Alliance, Ahmad Chalabi said. ValueAct Capital Partners LP, one of Martha Stewart Living Omnimedia’s largest shareholders, cut its stake to less than 1% from 6.1% in December, Bloomberg reported. Qualcomm named Paul Jacobs to succeed his father Irwin as CEO, Bloomberg said. President Bush said Syria must withdraw its troops and intelligence forces from Lebanon before that nation’s elections in May, Bloomberg reported. France’s main unions will stage a one-day national strike on March 10, even as unemployment in the country recently rose to 10%, to protest government plans to loosen the mandatory 35-hour workweek and to demand higher pay, Bloomberg said. Former President Clinton will have surgery on March 10 in NY to remove fluid and scar tissue in his chest cavity from open-heart surgery last September that is causing discomfort, Bloomberg reported. Crude oil is rising to within $1 of an all-time high in NY on speculation that OPEC will do little to rein in prices at a meeting next week, Bloomberg reported. The US dollar is falling to a two-month low against the euro after European Central Bank policy maker Wellink suggested to the Financial Times Deutschland the bank may raise its benchmark interest rate, Bloomberg said.

BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my Chinese ADR, Alternative Energy and Biotech longs are offsetting losses in my Gaming, Homebuilding and Semi longs. I took profits in a few longs from various sectors this morning and added a few new tech longs, thus leaving the Portfolio’s market exposure at 125% net long. One of my new longs is AAPL and I am using a $38 stop-loss on this position. The tone of the market is modestly negative as the advance/decline line is lower, sector performance is mostly negative and volume is light. Measures of investor anxiety are mostly higher. Today’s overall market action appears to be a further healthy consolidation on light volume after recent gains. The mildly negative reaction by the semis to TXN’s mid-quarter update is a positive. NSM and INTC should give a more positive assessment of business conditions later in the week. While I believe steel stocks will see a substantial correction later in the year, the latest pullback is likely a buying opportunity near-term. I expect US stocks to trade mixed from current levels into the close as optimism over US economic growth, short covering and bargain hunting offset worries over higher energy prices and interest rates.

Tuesday Watch

Late-Night News
Asian indices are mostly higher, led by Chinese stocks after Merrill Lynch recommended the country's shares. Lehman Brothers Holdings may be in exclusive talks with InterContinental Hotels Group Plc over $1.9 billion of the world's largest hotel company's assets, the London-based Times said. A Washington-based civil liberties group plans to file a FTC complaint early tomorrow against Web sites it says are incorrectly claiming to offer legal music downloads, the AP reported. UK e-commerce companies received 50% more private equity funding in 2003 than during the dot-com bubble of 2000, the Financial Times said, citing the British Venture Capital Association. Microsoft and SAP AG will be among companies targeting orders from smaller businesses at this year's Cebit technology fair in Germany as more exhibitors attend the show and resume spending on software and services. China unveiled a proposed anti-secession bill that would sanction the use of force to prevent independence by Taiwan in the event that efforts to secure peaceful reunification are unsuccessful, Bloomberg reported. China will allow investors to trade foreign currencies in the country for the first time in May, Dow Jones Newswires reported. The US Environmental Protection Agency proposed changes yesterday to the country's Lead and Copper Rule that would require utilities to conduct stricter lead testing for drinking water, the Washington Post said. Arizona Senator Kyl said Senate Republicans are drafting a budget plan that provides $70 billion in tax cuts during the next five years, $30 billion less than the White House requested.

Late Recommendations
- Goldman Sachs: Reiterated Outperform on RE, DKS, ENH, STR and MSFT.
- Merrill Lynch: Recommended investors buy shares of Chinese stocks as faster-than-expected economic growth will boost profits.

Night Trading
Asian Indices are -.50% to +.75% on average.
S&P 500 indicated -.16%.
NASDAQ 100 indicated -.29%.

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
CKP/.30
CZN/.12
CMS/.18
FCEL/-.41
KR/.34
LVS/.16
THC/-.09
HLTH/.13

Splits
AEOS 2-for-1
CBH 2-for-1
PENN 2-for-1

Economic Data
None of note.

BOTTOM LINE: I expect US equities to open modestly lower. However, stocks may rally later in the day on short-covering, bargain hunting, optimism over the US economy and weaker energy prices. The Portfolio is 125% net long heading into tomorrow.

Monday Close

Indices
S&P 500 1,225.31 +.26%
Dow 10,936.86 -.03%
NASDAQ 2,090.21 +.95%
Russell 2000 643.86 -.17%
DJ Wilshire 5000 12,071.69 +.27%
S&P Barra Growth 589.19 +.20%
S&P Barra Value 631.69 +.32%
Morgan Stanley Consumer 592.53 +.16%
Morgan Stanley Cyclical 783.01 -.16%
Morgan Stanley Technology 481.09 +1.43%
Transports 3,876.13 +1.18%
Utilities 363.27 +.42%
Put/Call .76 -7.32%
NYSE Arms .77 -30.0%
Volatility(VIX) 12.26 +2.68%
ISE Sentiment 169.00 +11.18%
US Dollar 82.79 +.33%
CRB 309.37 +.07%

Futures Spot Prices
Crude Oil 53.86 -.06%
Unleaded Gasoline 150.50 -.02%
Natural Gas 6.75 +.54%
Heating Oil 148.30 -.13%
Gold 435.50 -.07%
Base Metals 129.97 -.24%
Copper 149.30 -.23%
10-year US Treasury Yield 4.30% unch.

Leading Sectors
Gaming +2.30%
Networking +1.97%
Semis +1.88%

Lagging Sectors
HMOs -.88%
Commodity -1.13%
Iron/Steel -1.25%

After-hours Movers
ABRX +4.04% on strong 4Q report.
FFIV +3.4% after saying it will replace National Oilwell in the S&P 400 Mid-cap.
CCRN -7.8% after meeting 4Q estimates and lowering 1Q outlook substantially.
LSRI -4.0% on disappointing 4Q report.
TXN -3.14% after lowering 1Q revenue forecast.
DKS -2.86% after beating 4Q eps estimates, missing 4Q revenue estimates and lowering 1Q outlook.

Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
- Goldman Sachs: Reiterated Outperform on DTV.
- Wells Fargo: Raised CWTR to Buy, target $35. Raised TLB to Buy, target $38.
- Banc of America: Advised betting the British pound will decline against the US dollar, saying expectations will recede that the Bank of England is going to raise interest rates.
- Merrill Lynch: Recommended investors cut their holdings of Brazilian bonds after a recent rally.

After-hours News
US stocks finished mostly higher today as gains in technology shares mostly offset weakness in commodity-related stocks. After the close, Japan’s Fair Trade Commission ruled Intel Corp. violated anti-monopoly laws by pressuring computer makers to use its chips exclusively, the Daily Yomiuri reported. Growth in US consumer installment credit accelerated more than expected during January on greater demand for credit card, auto and other personal loans, the Federal Reserve reported. Texas Instruments said first-quarter sales and profit will be at the low end of forecasts as demand for chips used in televisions falls and clients work off inventory, Bloomberg said. Seagate Technology, the world’s largest maker of computer disk drives, forecast third-quarter profit of .36/share, exceeding analyst estimates, on demand from consumer electronics and storage systems companies, Bloomberg reported. Laughter may help prevent heart disease, the No. 1 cause of death in the US, according to a new study that test participants’ blood pressure as they watched films that made them laugh, Bloomberg said. Circuit City Stores said it has rejected a $3.25 billion takeover from Highfields Capital Management LP, Bloomberg reported.

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my alternative energy, networking and semi longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The tone of the market deteriorated modestly from morning highs as the advance/decline line finished slightly higher at daily lows, sector performance was mixed and volume was decent. Measures of investor anxiety were mostly lower into the close. Technology stocks outperformed throughout the day and commodity-related stocks underperfomed. Overall, today’s market action was pretty good as most major US indices consolidated recent gains. The significant outperformance by the Nasdaq was a positive. I would like to see this index break out of its recent trading range before shifting the Portfolio further into higher-beta shares. My trading indicators are now giving all-out Buy signals for the first time since they began giving Sell signals in early January. While US stocks may continue to consolidate recent gains in the near-term, I still believe the rally that has occurred over the past few weeks has further to run.

Mid-day Report

Indices
S&P 500 1,226.65 +.37%
Dow 10,968.45 +.26%
NASDAQ 2,093.68 +1.11%
Russell 2000 646.09 +.18
DJ Wilshire 5000 12,085.01 +.38
S&P Barra Growth 589.80 +.30%
S&P Barra Value 632.33 +.43%
Morgan Stanley Consumer 593.05 +.25%
Morgan Stanley Cyclical 785.30 +.13%
Morgan Stanley Technology 482.60 +1.78%
Transports 3,874.66 +1.14%
Utilities 363.30 +.43%
Put/Call .79 -3.66%
NYSE Arms .75 -30.91%
Volatility(VIX) 12.15 +1.84%
ISE Sentiment 174.00 +14.47%
US Dollar 82.73 +.25%
CRB 309.45 +.09%

Futures Spot Prices
Crude Oil 53.60 -.33%
Unleaded Gasoline 150.80 -.06%
Natural Gas 6.68 -.87%
Heating Oil 147.70 -.43%
Gold 435.80 +.14%
Base Metals 129.97 -.24%
Copper 149.60 +.13%
10-year US Treasury Yield 4.30% -.04%

Leading Sectors
Gaming +2.41%
Semis +2.28%
Networking +2.16%

Lagging Sectors
HMOs -.87%
Energy -.92%
Commodity -.93%

Market Movers
RIMM -5.11% after Piper Jaffray downgrade to Market Perform on competition worries.
CELG +16.7% after saying its experimental drug Revlimid worked so well in studies of people with a form of blood cancer that the trials are being stopped and all patients offered the treatment.
ICCI +20.1% after saying its management offered to buy out other investors in a transaction valuing Insight’s shares at $650 million.
HIB +21.11% after Capital One(COF) agreed to purchase it for $5.35B. COF -2.68%.
QCOM +4.8% after cutting 2Q sales estimate and raising 2Q eps forecast.
CTIC -47.9% after saying its experimental drug Xyotax failed to boost survival more than an older chemotherapy in a study of patients with non-small sell lung cancer.
UDI +25.95% after BAE Systems Plc, Europe’s biggest defense company, agreed to buy it for $3.97 billion.
GEOI +19.39% after on continuing optimism after strong 4Q report.
STR +7.18% after Morgan Stanley rated it Overweight.
TSRA +7.54% on no news.
BYD +6.26% on no news.
APCC +10.08% after UBS initiated it with a Buy rating.
HAE +5.98% on no news.
MSO -9.76% on continued profit-taking after Stewart’s release from jail.

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

Economic Data
None of note.

Recommendations
- Goldman Sachs: Reiterated Outperform on YUM, MDT, BSX., KO, RIG, DO and GE.
- Smith Barney: Said to Buy WFR, raised estimates, target $18. Reiterated Buy on TEX, target $58. Reiterated Buy on DNA, target $87.50. Reiterated Buy on WMT, target $65. Reiterated Sell on PGN, target $38.50. Reiterated Sell on SKS, target $12.50. Reiterated Sell on HIW, target $21. Said to Buy NSM, FCS and IRF on pullbacks. Reiterated Buy on ERTS, target $76.
- JP Morgan: Raised PLT to Overweight.
- Banc of America: Upgraded ANN to Buy, target $34. Expects employment reports to continue to surprise on the upside and to accelerate this spring.
- UBS: Rated APCC Buy, target $40. Raised NE to Buy. Raised WMB to Buy, target $23.
- Oppenheimer: Raised ABX to Sector Outperform, target $33.
- Merrill Lynch: Raised PX to Buy, target $55.
- Prudential: Raised TLB to Overweight, target $36. Downgraded BSX to Underweight., target $29. Raised MDT to Overweight, target $62. Raised MCD to Overweight.
- Morgan Stanley: Raised STR to Overweight, target $67.
- CSFB: Rated CPS Outperform, target $48.

Mid-day News
US stocks are higher mid-day as investors boost technology shares ahead of key mid-quarter updates, conference presentations and earnings reports. T-Mobile International AG plans to lower rates for wireless data transfers to spur the use of the technology, Frankfurter Allgemeine Zeitung reported. Royal Philips Electronic NV plans to reduce its number of suppliers by a third to help cut costs and keep up with Asian competitors, Financial Times Deutschland reported. General Motors will provide discounts on a regional rather than a national basis to restrain expectations among consumers of large price cuts, the Wall Street Journal reported. Time Warner and GE’s NBC Universal plan to lower prices for DVDs in China, Russia and Mexico to fight counterfeiting and gain market share, the Wall Street Journal reported. Bank of Japan Governor Fukui said Japan has no intention of diversifying its currency reserves, Reuters reported. D’Andrea Brothers LLC, a closely held LA-based company, has obtained exclusive rights to manufacture and distribute the US Army’s Hooah! Energy bar for the retail market, the Wall Street Journal reported. EBay is one of the top five companies targeted by computer hackers who use fake e-mails and Internet sites to collect clients’ personal information, the NY Times reported. China’s local governments have been exaggerating their economic growth rates reported to the central government, Xinhua News Agency reported. Apple Computer’s lawsuit to force Internet sites to disclose the identity of who provided leaked data about new Apple products may make courts decide who should be considered a journalist, the NY Times reported. If a court in San Jose, California, decides that bloggers are journalists, more people could be able to keep news sources confidential, the newspaper reported. Wells Fargo and Bank of America are upgrading automated teller machines with Internet technology to improve the efficiency of customer transactions, the NY Times said. Joe Liberman, a Connecticut Senator who was the Democratic Party’s vice presidential nominee in 2000, is angering some members of his party with his willingness to word with President Bush on trying to save the Social Security system, the NY Times reported. Nigeria’s President Obasanjo urged OPEC to “moderate the high price of oil,” AFP reported. Comcast is beginning to offer televised sports programs around the US amid speculation it might start a national sports network to compete with ESPN, the Philadelphia Inquirer reported. Foreign investment in the USA will bolster demand for the dollar, according to Joseph Quinlan, chief market strategist at Banc of America Capital, Barron’s reported. University of Colorado President Elizabeth Hoffman said today she is stepping down, effective June 30 or when the Board of Regents finds a replacement, the AP reported. Hoffman’s five-year tenure included a football recruiting scandal and allowing a professor who compared victims of the Sept. 11, 2001, terrorist attacks to Nazi war criminals to keep his job, the AP said. Syrian soldiers in Lebanon will today start retreating to the eastern Bekaa Valley near the border after the Syrian and the Lebanese presidents meet in Damascus, Bloomberg reported. GE plans to sell as much as $2.36 billion of shares in its life and mortgage insurance unit, Genworth Financial, Bloomberg said. Google hired a top Microsoft engineer who was one of the six original members of the team that created the Windows NT operating system, Bloomberg said. Boeing ousted CEO Harry Stonecipher because of an affair with a female executive that violated the company’s code of conduct, Bloomberg reported. Honda Motor, stung by a 21% drop in Accord and Civic car sales this year, said it may have to offer cheaper loans and leases and lift incentives to dealers to bolster sales of its two best-selling US models, Bloomberg reported. Crude oil fell from a four-month high in NY after OPEC’s president said that the group can pump at least another 2 million barrels a day, Bloomberg said.

BOTTOM LINE: The Portfolio is substantially higher mid-day on gains in my networking, semiconductor and alternative energy longs. I exited a few commodity-related longs this morning and added a few new tech longs, thus leaving the Portfolio’s market exposure at 125% net long. One of my new longs is NTE and I am using a $23 stop-loss on this position. The tone of the market is modestly positive as the advance/decline line is slightly higher, sector performance is mostly positive and volume is ok. Measures of investor anxiety are mostly lower, however. Today’s overall market action is very positive as the DJIA, S&P 500 and Russell 2000 consolidate recent gains and the tech-heavy Nasdaq outperforms substantially. I expect the Nasdaq to take out resistance at around 2,110 in the next few days, led by Semis and Networkers. The current rally in the overall market likely has further to run as there is still an unusual amount of skepticism by many investors considering recent gains. I expect US stocks to trade modestly higher from current levels into the close on optimism over US economic growth, short covering, low long-term interest rates, stabilizing energy prices and bargain hunting.

Monday Watch

Weekend News
China will not alter its currency reserves away from the dollar and won't adjust its policy on the yuan, said Guo Shuqing, head of China's foreign-exchange regulator. The smuggling of a more potent variety of marijuana from Canada to the US has boosted the level of drug trafficking and violent crime, the NY Times reported. The British Broadcasting Corp. is facing criticism for paying a convicted criminal to appear in a documentary related to his crime, the Daily Telegraph reported. Kmart Holding Corp., the No. 3 US discount retailer which is buying Sears, will move its headquarters to Chicago from Michigan within a year, the Detroit Free Press reported. Walt Disney's Space Mountain roller-coaster ride will reopen July 15, in time for the company's 50th anniversary of its Disneyland park in Anaheim, California, the Orange County Register reported. The median asking-price for homes in King County, where Seattle is located, rose 15% in February to $415,000, the Seattle Times reported. Canadian and US officials are seeking to broaden their joint air-defense arrangement to include shared land and maritime threats, the Toronto Start reported. BP Plc hired Goldman Sachs and Morgan Stanley to advise it on the IPO of its chemicals unit, Bloomberg reported. UnitedHealth and Medco Health Solutions are among a growing list of insurers and pharmacy-benefit managers who have agreed to participate in the new Medicare drug benefit, the NY Times reported. The US Senate will vote as soon as this week on legislation aimed at making consumer bankruptcy more difficult, the Washington Post reported. EBay may be unable to sustain growth as it faces complaints from users over fee increases, service and lower selling prices, the NY Times reported. Black churches in the US are starting to align with Republicans over social issues, including same-sex marriage, the NY Times said. Iran reiterated its permanent commitment to enriching uranium Saturday and warned that any sanctions from the UN could affect security and stability in the region, the NY Times reported. Shipments of cargo on the US West Coast will increase 14% this year from 2004 according to the Pacific Maritime Association in San Francisco. Alternative treatments such as acupuncture and the use of drugs like ibuprofen are on the rise as patients try to replace Merck's Vioxx Painkiller, the NY Times said. Finance ministers from the Group of Seven industrial countries agree the next World Bank president should hail from the US, Bloomberg reported. Tobacco stocks, which have outperformed the broader stock market over the past five years, may be nearing the end of their rally as growth in cigarette smoking slows, the NY Times reported. Nasdaq Stock Market Inc. submitted a bid last month for Reuters Group's Instinet, a purchase that would give Nasdaq a 50% share of electronic trading in the US, Crain's NY Business said. STMicroelectronics NV will move its global production of RFID chips to Singapore by the third-quarter in response to an expected surge in demand for the product by Wal-Mart Stores, the Business Times said. Xiamen Airlines will buy 15 737-800 planes from Boeing for $615 million, the Asian Wall Street Journal reported. Merrill Lynch and Goldman Sachs may seek a license to open a bank in India, the Economic Times reported. Advanced Micro Devices Chairman Ruiz will visit computer makers in Taiwan tomorrow, aiming to help boost sales, the Economic Daily News reported. Reuters Group Plc may plan to offer its news and information services to consumers on their cell phones and other electronic platforms, the Financial Times said. World steel prices may begin falling from the middle of 2005 due to slowing demand in China, the Financial Times said, citing an interview with Duferco SA Chairman Bolfo. China will allow the market to play a bigger role in setting the value of its currency, the China Daily said. ESPN last week started a free online poker game which attracted 30,000 people within a few days, the Financial Times said. China's Premier Wen Jiabao announced plans to slow growth in the world's fastest-growing major economy to 8% this year by clamping down on urban infrastructure projects and spending more on lagging rural areas, Bloomberg reported. Wal-Mart said March sales at US stores open at least a year are rising within forecast as shoppers used tax refunds, Bloomberg said. Medtronic may capture at least 10% of the $5 billion market for drug-coated heart stents, cutting into profit growth at Boston Scientific and Johnson & Johnson, Bloomberg reported. Iraq's new parliament will hold its first session on March 16, AFP reported. Berkshire Hathaway, run by billionaire Warren Buffett, said its reinsurance unit may be accused of contributing to the 2001 collapse of HIH Insurance Ltd, Bloomberg reported. Capital One Financial, the fifth-biggest US credit-card issuer, said it agreed to buy Hibernia Corp. for $5.35 billion in stock and cash to add a network of bank branches, Bloomberg said. News Corp. Chairman Rupert Murdoch is still considering whether to launch a new business channel to compete with CNBC, the NY Times reported.

Weekend Recommendations
- Bulls and Bears: Had guests that were positive on TAP, DBD, DLM, WAG, PFE, CLX, INTC, BIID, mixed on RSH, AAPL and negative on SYMC, MSO.
- Cashin' In: Had guests that were mixed on MXIM, FDX, GTRX, mixed on ODFL, LGF, XMSR and negative on MSO.
- Forbes on Fox: Had guests that were positive on SNDA, NTES, PRU, ENR, BTU and negative on MSO.
- Cavuto on Business: Had guests that were positive on GE, YUM, VWSYF and negative on MSO.
- Barron's: Had positive comments on Ford Motor bonds, airport-related municipal securities from AMR's American Airlines unit, CSCO, home electronics and cable stocks.
- Business Week: Had a positive column on Business Intelligence Software stocks.
- Goldman Sachs: Reiterated Outperform on DNA, INTC, NSM, FSL and EBAY.
- Smith Barney: Reiterated Overweight on Financial stocks and said Future Inflation Gauges are falling.

Night Trading
Asian Indices are higher, +.25% to +.50% on average.
S&P 500 indicated +.04%.
NASDAQ 100 indicated +.23%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell 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
DKS/.77
MVL/.15
SBTV/.93
KCS/.58

Splits
None of note.

Economic Data
- Consumer Credit for January is estimated to rise $5.1B versus an increase of $3.1B in December.

BOTTOM LINE: I expect US stocks to open modestly higher in the morning on optimism over merger activity, strong economic reports and last week's technical breakouts. The Portfolio is 125% net long heading into the week.

Weekly Outlook

There are a few important economic reports and some significant corporate earnings reports scheduled for release this week. Economic reports for the week include:

Mon. - Consumer Credit
Wed. - Fed's Beige Book
Thur. - Initial Jobless Claims, Continuing Claims, Wholesale Inventories, Monthly Budget Statement
Fri. - Trade Balance

Some of the more noteworthy companies that release quarterly earnings this week are:

Mon. - Dick's Sporting Goods(DKS), Marvel Enterprises(MVL)
Tues. - Kroger Co.(KR), Las Vegas Sands(LVS), Tenet Healthcare(THC)
Wed. - Blockbuster Inc.(BBI), Cooper Cos.(COO), Talbots Inc.(TLB), American Tower(AMT)
Thur. - Aeropostale Inc.(ARO), AnnTaylor Stores(ANN), Borders Group(BGP), Dillard's Inc.(DDS), National Semiconductor(NSM), Quiksilver(ZQK), Tech Data(TECD)
Fri. - Berkshire Hathaway(BRK/A), Electronics Boutique(ELBO), Urban Outfitters(URBN)

Other events that have market-moving potential this week include:

Mon. - Smith Barney REIT Conference, Raymond James Institutional Investor Conference, Morgan Stanley Semiconductor Conference, Deutsche Bank Global Software Conference, Texas Instruments Mid-quarter Update
Tue. - Raymond James Institutional Conference, Smith Barney Global Industrial Manufacturing Conference, Bear Stearns Retail/Restaurants/Apparel Conference, Smith Barney REIT Conference, Morgan Stanley Semiconductor Conference, Merrill Lynch Communications Forum, Lehman Brothers Global Software/IT Services/Internet Conference, Merrill Lynch Advertising/Marketing Services/Education/Information Services Conference, Deutsche Bank Global Software Conference, Bear Stearns Retail/Restaurants/Apparel Conference, Fed's Bernanke speaks, Fed's Poole speaks, Xilinx Mid-quarter Update
Wed. - Lehman Brothers Global Software/IT Services/Internet Conference, Altera Business Update, Smith Barney REIT Conference, Morgan Stanley Semiconductor Conference, Deutsche Bank Hardware Conference, Bear Stearns Retail/Restaurants/Apparel Conference, Bear Stearns Restaurant Conference, Merrill Lynch Advertising/Marketing Services/Education/Information Services Conference, Smith Barney Global Industrial Manufacturing Conference, Raymond James Institutional Investors Conference, JP Morgan Small-cap Conference, Fed's Moskow speaks
Thur. - JP Morgan Small-cap Conference, Goldman Sachs Small-cap Growth Conference, Bear Stearns Retail/Restaurants/Apparel Conference, Deutsche Bank IT Hardware Conference, Intel Mid-quarter Update, Fed's Bernanke speaks, Fed's Greenspan speaks
Fri. - Goldman Sachs Small-cap Growth Conference, Fed's Greenspan speaks

Bottom Line: I expect US stocks to finish the week modestly higher as technology shares rebound on positive comments from semiconductor companies during mid-quarter updates, earnings reports and conference presentations. I also expect small-caps to continue their outperformance from last week. As well, Biotech shares should see a technical relief rally and retail may continue to outperform on more strong earnings reports. This should result in a breakout to the upside in the Nasdaq from its recent trading range. A drop or stabilization in energy prices or decline in long-term interest rates could help to push shares higher than I currently anticipate. Conference news and Fed comments will carry more weight this week as economic and earnings reports are light. I expect the Fed to make positive comments on recent labor cost readings with respect to their implications for inflation. My short-term trading indicators are mostly bullish and the Portfolio is 125% net long heading into the week.