Mid-day Scoreboard

Indices
S&P 500 1,178.27 +.58%
DJIA 10,510.27 +.65%
NASDAQ 2,002.13 +.56%
Russell 2000 615.96 +.11%
DJ Wilshire 5000 11,611.09 +.45%
S&P Barra Growth 569.30 +.60%
S&P Barra Value 604.22 +.51%
Morgan Stanley Consumer 575.73 +.31%
Morgan Stanley Cyclical 747.95 -.25%
Morgan Stanley Technology 455.51 +.47%
Transports 3,761.30 +.44%
Utilities 355.62 +.47%
Put/Call .84 +31.25%
NYSE Arms .76 -31.14%
Volatility(VIX) 13.53 +.89%
ISE Sentiment 180.00 +4.05%
US Dollar 84.59 +.51%
CRB 307.06 +.06%

Futures Spot Prices
Crude Oil 54.30 -.98%
Unleaded Gasoline 157.70 -1.39%
Natural Gas 6.97 -1.30%
Heating Oil 154.50 -.22%
Gold 426.00 +.24%
Base Metals 127.52 -1.0%
Copper 145.50 -.07%
10-year US Treasury Yield 4.62 +.72%

Leading Sectors
Oil Service +1.52%
Internet +1.23%
Retail +1.20%

Lagging Sectors
Biotech -.73%
Papers -1.02%
Iron/Steel -2.29%

Links of Interest
Market Internals
Movers & Shakers
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

BOTTOM LINE: US stocks are higher mid-day on a decline in energy prices and bargain-hunting. The Portfolio is higher on gains in my Homebuilding shorts, Chinese ADR shorts and Retail longs. I added a few new retail longs this morning, thus increasing the Portfolio’s market exposure to 25% net long. One of my new longs is DECK and I am using a $35 stop-loss on this position. The tone of the market is mixed as the advance/decline line is slightly lower, most sectors are higher and volume is very light. Small-caps and Cyclicals are underperforming and measures of investor anxiety are mostly lower. Today’s overall market action is neutral considering recent losses, the decline in energy prices and stronger US dollar. I continue to believe one more push lower is necessary to put in place a more durable bottom. I expect US stocks to trade mixed into the close as a decline in energy prices and bargain hunting offsets concerns over higher interest rates and worries over slowing global growth.

Today's Headlines

Bloomberg:
- Seven of the largest US buyout firms, led by Silver Lake Partners, agreed to acquire software maker SunGard Data Systems for $11.3 billion, collaborating in the biggest leveraged buyout since 1989.
- AmerisourceBergen Corp. cut its fiscal 2005 forecast for earnings per share from continuing operations to $3.10 to $3.50 from $4.00 to $4.10.
- AIG used private, offshore companies for six times more reinsurance than any of its nine biggest US competitors.
- Sprint Corp., Comcast and Time Warner are among companies whose borrowing costs may fall relative to government securities as investors buy their bonds rather than General Motors’ debt.
- An earthquake measured at a preliminary magnitude of 8.2 struck off the northwestern coast of Indonesia, possibly triggering a tsunami in the same area where a temblor caused widespread death and destruction in December.
- The US dollar is climbing to a five-month high against the yen and gained versus the euro on speculation reports this week will show US economic growth is outpacing Germany and Japan.
- Crude oil futures in NY are falling, extending last week’s decline from a record, on speculation of ample supplies when global consumption peaks in the third and fourth quarters.

The Wall Street Journal:
- The SEC is assuring companies they will not be forced into a one-size-fits-all approach to valuing employee stock options when it announces new accounting rules.
- Microsoft is adding features to the next versions of the Windows operating system and Internet Explorer browser to help prevent rogue Web sites from obtaining personal information.
- Professional short-sellers are increasingly betting against real-estate investment trusts, citing a Banc of America report.
- The SEC has sent subpoenas to 12 senior executives at AIG as investigations continue into transactions that may have been used to bolster its financial position.
- Television networks are planning shows with religious themes for next season as the success of “The Passion of the Christ” and “The Da Vinci Code” indicate there is a market for spiritual themes in popular culture.

The New York Times:
- New FCC Chairman Martin will try to broaden broadcasting indecency rules and increase fines for violations.
- A unit of billionaire investor Warren Buffet’s Berkshire Hathaway is being examined by investigators from the SEC, NY Attorney General Spitzer, the US Justice Department and regulators in Ireland, Britain and Australia.

AP
- EBay sales may be considered taxable income under IRS instructions.

Winston-Salem Journal:
- Krispy Kreme Doughnuts Inc. is expected to receive a $225 million loan from CSFB and hedge fund Silver Point Capital.

Daily News:
- Dog-treat dispensers, for owners and their pets who are on the go, are popping up on the streets of New York.

Economic Releases

None of note

Morning Buy/Sell Recommendations

Goldman Sachs:
- Reiterated Outperform on ADP, FSL and MRVL.
- Reiterated Underperform on MU.

Smith Barney:
- Upgraded ISIL to Buy, target $22.
- Reiterated Buy on HAL, target $56.
- Said interest rate worries seem overblown, as do inflation worries, given that labor costs are under control and commodity prices are a tiny share of total costs.
- Reiterated Buy on WMT, target $65.
- Reiterated Buy on Semi Equipment stocks, favorites are AMAT, WFR, MYK and LRCX.
- Said total semi short interest ratio for over 60 US traded semi companies increased .4 days or 17% m/m to 3.1 days in March from 2.6 days in February.

Banc of America:
- Upgraded TOL to Buy.

Bear Stearns:
- Reiterated Outperform on ITW, target $101.

Lehman Brothers:
- Raised IVX to Outperform, target $26.
- Reiterated Overweight on MOVI, target $30.

Merrill Lynch:
- Reiterated Buy on CMVT, target $30.

Morgan Stanley:
- Rated ANR Overweight, target $36.

JP Morgan:
- Rated ICGN Overweight.
- Rated WXS Overweight.

CSFB:
- Raised AMTD to Outperform, target $14.
- Rated WXS Outperform, target $22.
- Raised TAP to Outperform, target $100.

Deutsche Bank:
- Rated BGFV Outperform, target $30.
- Rated TSA Buy, target $31.
- Raised CELL to Buy, target $24.

UBS:
- Downgraded GM to Reduce, target $20.
- Reiterated Buy on LTM, target $38.
- Reiterated Buy on TLWT, target $21.
- Reiterated Buy on SLR, target $5.5.
- Reiterated Buy on GR, target $47.

Jeffries:
- Raised ORB to Buy, target $12.

Piper Jaffray:
- Raised GME to Outperform, target $30.
- Raised ELBO to Outperform, target $50.

Monday Watch

Weekend Headlines
Bloomberg:
- Taiwan President Chen Shui-bian joined as many as 1 million people in a mass rally in Taipei to protest against a Chinese law that authorizes attacking the island if it declares independence.
- NY-based Blackstone Group LP, manager of the world's biggest buyout fund, is leading an investor group in a $14.9 billion bid to acquire Italian mobile telephone company Wind SpA.
- Wal-Mart Stores said March sales at stores open at least a year are rising within its forecast as shoppers bought more food.
- Investors in US Treasury securities are their most bullish in seven weeks, reflecting optimism that the highest 10-year note yields since June offer adequate compensation for inflation.
- As the US dollar heads for the biggest quarterly advance against the euro since 2001, traders are more bullish on the US currency than they have been in 17 months, according to a Bloomberg survey.
- Crude oil futures in NY are falling, extending a 3.3% decline last week, after Qatar's energy minister said OPEC's customers weren't asking for more oil, reducing concern about global shortages.
- Boeing said it may raise its forecast for 2006 deliveries because of higher-than-expected demand from Chinese and Indian airlines.
- The US dollar may gain against the yen this year, snapping a three-year drop, as rising interest rates and a strong US economy increase the appeal of US assets, said Makoto Utsumi, a former top currency official at Japan's Ministry of Finance.
- McDonald's, Borders Group and 50 other companies have lopped more than $1.5 billion off their reported pretax earnings since federal regulators urged them in November to review how they account for leases of stores and other rental properties.

Wall Street Journal:
- Boeing plans to sell a new version of it 702 commercial satellite to help return the division to profitability this year.
- A group of 26 former Democrat and Republican national-security officials will send a letter tomorrow to US President Bush asking the federal government to spend as much as $1 billion in the next five years on cutting fossil fuel dependence.

NY Times:
- AIG is close to a decision to remove Maurice "Hank" Greenberg as chairman as his appearance before prosecutors investigating reinsurance transactions nears.
- A growing number of families of critically ill patients are fighting to keep their loved ones alive through advances in medical technology, even when doctors believe it is time to let the patients die.
- Digital set-top boxes that allow viewers to pause and replay live tv and skip commercials also give advertisers new ways to customize ads according to viewing habits.
- Dayton, Ohio, which has established 40 charter schools and is planning nine more, has become a subject of interest to educators as the system competes with public schools for students and money.
- Investigators on three continents are examining units of billionaire investor Warren Buffett's Berkshire Hathaway for possible financial manipulation.

Washington Post:
- The Bush administration is contacting Syrian opposition groups and assessing political trends there amid concern their nation's military withdrawal from Lebanon may destabilize the Damascus regime.

Chicago Tribune:
- Ten drugmakers, including GlaxoSmithKline, Pfizer and Novartis AG, plan to begin an advertising campaign to promote a drug card for US residents without health insurance.

Crain's Chicago Business:
- Chicago's Pritzker family is in talks to acquire the remaining 50% of the top-grossing casino in Illinois from its partner, Mandalay Resort Group.

Seattle Times:
- Microsoft is bolstering alliances in Washington as part of a long-term strategy to repair damage from its federal antitrust case and gain a voice in new media regulations.

Time Magazine:
- US Customs and Border Protection officials said they are planning to increase resources this week to target illegal immigration from Mexico to Arizona.

Daily Telegraph:
- General Motors may scrap some brands, such as Pontiac and Buick, as it tries to reverse a decline in sales.

Sunday Times:
- Elan Corp.'s directors are considering splitting off the company's San-Francisco-based biotechnology unit from its drugs delivery business.
- Ford Motor is preparing to put $934 million of new investment into its Jaguar brand.

Independent on Sunday:
- A group within the UK Labour government is preparing a plan for constructing up to 10 new nuclear reactors in Britain.

Bild am Sonntag:
- The European Union's foreign-policy chief said China's policies toward Taiwan are raising "concern" among EU member states, even if the bloc is still seeking to scrap a weapons ban against China.

Weekend Recommendations
Bulls and Bears:
- Had guests that were positive on XOM, USU, COHR, DCX, UPS, SFD, mixed on C, MSFT, BUD, FHN, KOMG, KO, MVL and negative on AAPL, TOL, GE, FDX.

Cavuto on Business:
- Had guests that were positive on GM and mixed on EMC, TSO, ASO, WM.

Forbes on Fox:
- Had guests that were positive on VLO, SPI, WYE, mixed on PKZ, LUV and negative on SHOP.

Cashin' In:
- Had guests that were positive on SNE and mixed on WMT, PG.

Business Week:
- Had a positive columns on ADSK and YHOO.

Barron's:
- Had positive comments on GM's mini-bonds, COP, CNX, KWK, COG, TIF, ALSK and negative comments on X.

Goldman Sachs:
- Reiterated Outperform on NSM, CAN, YHOO, BSX, GOOG, EBAY, CL and MCHP.
- Reiterated Cautious view of Slot Manufacturers.
- Sees multiple catalysts for Gaming stocks in April, favorites are STN, WYNN and LVS.

Night Trading
Asian indices are mixed, -1.0% to +.75% on average.
S&P 500 indicated +.22%.
NASDAQ 100 indicated +.24%.

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
BKST/1.60
WAG/.48
IPXL/.14

Splits
QSII 2-for-1

Economic Data
None of note

BOTTOM LINE: Asian Indices are mixed tonight as gains in exporting stocks are offsetting losses in commodity-related shares in the region. China's Shanghai A-Share Index is falling again and is at cycle lows, down 28.9% in the last 12 months and 42.9% from its all-time high set in June 2001. I expect US stocks to open modestly higher in the morning on a bounce from last week's declines, a gain in the US dollar and lower energy prices. The Portfolio is Market Neutral heading into the week.

Weekly Outlook

There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week.

Economic reports for the week include:

Mon. - None of note
Tues. - Consumer Confidence
Wed. - Final 4Q GDP, Final 4Q Personal Consumption, Final 4Q GDP Price Deflator
Thur. - Personal Income, Personal Spending, PCE Deflator, Initial Jobless Claims, Help Wanted Index, Chicago Purchasing Manager, Factory Orders
Fri. - Unemployment Rate, Average Hourly Earnings, Change in Non-farm Payrolls, Average Weekly Hours, Univ. of Mich. Consumer Confidence, Construction Spending, ISM Manufacturing, Total Vehicle Sales

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

Mon. - Micron Technology(MU), Walgreen Co.(WAG)
Tues. - Apollo Group(APOL)
Wed. - Accenture Ltd(ACN), Best Buy(BBY), Carmax Inc.(KMX), Circuit City Stores(CC), Ruby Tuesday(RI)
Thur. - American Tower(AMT), Bed Bath & Beyond(BBBY), Freddie Mac(FRE), Red Hat Inc.(RHAT), Toys R Us(TOY)
Fri. - Pier 1 Imports(PIR)

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

Mon. - None of note
Tue. - Smith Barney Healthcare Conference, Banc of America Media/Telecom/Entertainment Conference, Prudential Metals & Mining Conference
Wed. - Lehman Brothers' Global Healthcare Conference, Banc of America Media/Telecom/Entertainment Conference, MSFT Analyst Meeting
Thur. - Lehman Brothers' Global Healthcare Conference
Fri. - Lehman Brothers' Global Healthcare Conference

BOTTOM LINE: I expect US stocks to begin the week modestly lower and then rally on an oversold technical bounce, bargain hunting, short covering, stabilizing long-term interest rates and quarter-end window-dressing. Consumer Confidence readings will likely come in below expectations due to the recent extreme negativity perpetuated in the media, high-profile acts of violence around the country, Terri Schiavo's Case, the Social Security debate, higher gas prices and lower stock prices. As well, other economic data may fail to meet elevated expectations. This, combined with a stronger US dollar, should lead to a stabilizing of long-term interest rates this week. I continue to expect the second half of the year to be much better for US stocks than the first half as inflation decelerates, commodities prices fall, long-term interest rates decline, low valuations tempt investors, growth remains healthy, the US dollar stabilizes, employment continues to improve, merger activity continues and corporate spending accelerates. My trading indicators are still bearish and the Portfolio is market neutral heading into the week.