Mid-day Scoreboard

Indices
S&P 500 1,156.82 -.27%
DJIA 10,189.93 -.27%
NASDAQ 1,944.58 -.91%
Russell 2000 593.36 -.93%
DJ Wilshire 5000 11,400.74 -.27%
S&P Barra Growth 560.19 -.40%
S&P Barra Value 592.49 -.11%
Morgan Stanley Consumer 576.64 -.41%
Morgan Stanley Cyclical 711.72 -.53%
Morgan Stanley Technology 440.74 -.53%
Transports 3,461.54 -1.46%
Utilities 366.86 +.52%
Put/Call .79 -5.95%
NYSE Arms 1.07 +102.21%
Volatility(VIX) 14.66 +1.73%
ISE Sentiment 136.00 +7.94%
US Dollar 83.62 -.10%
CRB 307.58 +.28%

Futures Spot Prices
Crude Oil 55.55 +2.49%
Unleaded Gasoline 164.50 +1.54%
Natural Gas 7.21 +2.53%
Heating Oil 154.70 +.85%
Gold 435.40 +.23%
Base Metals 126.42 +.57%
Copper 148.80 +.30%
10-year US Treasury Yield 4.26% -.60%

Leading Sectors
Oil Service +1.12%
Energy +.92%
Restaurants +.62%

Lagging Sectors
Broadcasting -1.94%
Computer Hardware -2.09%
Airlines -4.20%

BOTTOM LINE: US stocks are lower mid-day on earnings worries and higher energy prices. The Portfolio is unchanged on mixed performance by my Tech longs. I have not traded today, thus leaving the Portfolio 75% net long. The tone of the market is negative as the advance/decline line is weak, most sectors are lower and volume is light. Measures of investor anxiety are mixed. Today’s overall market action is modestly negative, considering yesterday’s sharp gains, higher energy prices and earnings worries. So far, today’s action appears to be a healthy consolidation of yesterday’s gains. GOOG is currently my largest position and I expect this stock to reach $300 by year-end. I expect US stocks to trade modestly higher into the close on short-covering and bargain-hunting.

Today's Headlines

Bloomberg:
- Medtronic agreed to pay $1.35 billion to end a lawsuit by a surgeon over the use of his inventions.
- China welcomed comments made in Jakarta today by Japan’s Prime Minister Koizumi on the pain his country inflicted on neighboring nations before and during WW II.
- Crude oil is rising, heading for the biggest weekly rally in four months, on concern US gas demand will outpace domestic production and imports during the next five months, when consumption peaks.
- US 10-yr T-notes are rising as benchmark stock indices failed to extend their biggest one-day gain in more than a year, raising the attractiveness of fixed-income investments.

Wall Street Journal:
- Merck plans to use $675 million in funds to fight accusations the company’s Vioxx painkiller led to cardiac arrests.
- GM is marketing the H3 scaled-down version of the Hummer to women in a bid to reverse a 17% decline in sales of the gas-guzzling model.
- The NYSE’s purchase of Archipelago Holdings and its decision to transform itself into a publicly traded company, will put the Nasdaq Stock Market under pressure.
- A group of companies led by Nasdaq Stock Market is likely to announce today that it will buy Instinet Group, an electronic trader and brokerage firm valued at about $1.8 billion.
- The Fed’s Open Market Committee’s actions during the past year have affected the supply of money and countered the threat of inflation, former Fed board member Wayne Angell wrote.

NY Daily News:
- Spending on construction of housing, offices and public works in NYC may reach a record $19.9 billion this year.

Tradewinds:
- Transpacific container line operators got lower rate increases than planned from the biggest cargo owners such as Wal-Mart in this year’s rate negotiations.

NY Post:
- New York City will become the first city to make the so-called morning after pill available to women on prescription.

USA Today:
- Smuggling of the drug Ecstasy has declined in the wake of tighter airport security and better scrutiny of passengers after the Sept. 11, 2001, terrorist attacks.

AP:
- Americans are driving less, rearranging vacations and cutting other expenses as the price of gas advances, citing a poll by Ipsos-Public Affairs.

Sueddeutsche Zeitung:
- German Chancellor Gerhard Schroeder’s government will cut its 2005 growth forecast for Europe’s largest economy to between 1% and 1.2%.

Economic Releases

None of note

Links of Interest

Market Snapshot
Detailed Market Summary
Market Internals
Movers & Shakers
IBD New America
NYSE OrderTrac
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
Hot Spots
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Option Dragon
Real-time Intraday Chart/Quote

Friday Watch

Late-Night Headlines
Bloomberg:
- Japanese Prime Minister Junichiro Koizumi will apologize for the suffering his country inflicted on neighboring Asian nations during the World War II period.

Wall Street Journal:
- Saudi Arabia will invest about $50 billion in energy development in the next five years, more than double what it spent in the past five.
- NYSE CEO Thain plans to use the proposed merger with electronic rive Archipelago Holdings to dislodge some 480 stock-trading specialists.

Yomiuri:
- Japan will accept a Chinese proposal to discuss joint development of a gas field in an area of the East China Sea claimed by both countries.

South China Morning Post:
- Lenovo Group Ltd., China's biggest personal-computer maker, has been overtaken by Hewlett-Packard as the top seller in Aisa Pacific, citing an industry survey.

Late Buy/Sell Recommendations
Goldman Sachs:
- Reiterated Outperform on TMK, BLS, ROH, XRX, DHR, ACS, GOOG, TPX, ZION and ADP.
- Reiterated Underperform on TCO, DCLK, PRXL, ATI and AEIS.

Business Week:
- Shares of Tibco Software(TIBX) may be worth as much as $15 a share in an acquisition, citing Willilam Harnisch, founder of Peconic Partners.
- Shares of Bioenvision(BIVN) are expected to rise amid anticipation that its drug to treat childhood leukemia will be approved by European regulators soon.

Night Trading
Asian Indices are +.50% to +.75% on average.
S&P 500 indicated -.20%.
NASDAQ 100 indicated -.10%.

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
Daily Stock Events
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/EPS Estimate
EK/.33
FISV/.52
FO/1.02
IP/.30
LEA/.03
LSCC/-.07
MYG/.20
OSTK/-.11
RDC/.22

Splits
None of note

Economic Releases
None of note

BOTTOM LINE: Asian indices are higher, led by exporters, after US stocks had their biggest gains in 18 months, spurring optimism growth in the world's largest economy will be sustained. I expect US equities to open modestly higher in the morning on strength in the technology sector. The Portfolio is 75% net long heading into tomorrow.

Thursday Close

Indices
S&P 500 1,159.95 +1.97%
DJIA 10,218.60 +2.06%
NASDAQ 1,962.41 +2.54%
Russell 2000 598.98 +2.40%
DJ Wilshire 5000 11,431.55 +1.92%
S&P Barra Growth 562.38 +2.29%
S&P Barra Value 593.15 +1.66%
Morgan Stanley Consumer 579.02 +1.92%
Morgan Stanley Cyclical 715.55 +2.82%
Morgan Stanley Technology 443.07 +3.25%
Transports 3,513.02 +3.47%
Utilities 364.94 +1.27%
Put/Call .84 +3.70%
NYSE Arms .53 -71.80%
Volatility(VIX) 14.41 -14.83%
ISE Sentiment 126.00 -5.97%
US Dollar 83.70 +.22%
CRB 306.71 -.09%

Futures Spot Prices
Crude Oil 54.30 +.18%
Unleaded Gasoline 162.45 +.28%
Natural Gas 7.06 +.53%
Heating Oil 153.20 -.13%
Gold 434.40 unch.
Base Metals 125.70 -2.16%
Copper 148.00 -.24%
10-year US Treasury Yield 4.29% +2.61%

Leading Sectors
Airlines +3.68%
Oil Tankers +3.55%
Wireless +3.24%

Lagging Sectors
Papers +.05%
Restaurants -.18%
Gold & Silver -1.09%

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

Afternoon Recommendations
Goldman Sachs:
- Reiterated Outperform on AMGN, ALK, YUM, ODP and GOOG.
- Reiterated Underperform on JBLU and NFB.

Business Week:
- Asta Funding(ASFI), which purchases debt, may boost 2005 earnings by 20% as it profits from a new bankruptcy law.

Afternoon/Evening Headlines
Bloomberg:
- Hynix Semiconductor has agreed to pay $185 million to settle US charges that the company engaged in a conspiracy to fix prices of dynamic random access memory computer chips.
- Qwest Communications International will raise its bid for MCI Inc. to $30 a share, or $9.75 billion, to derail MCI’s agreement to be bought by Verizon Communications.
- Google said first-quarter profit rose six-fold as sales of online advertising outside the US surged and new features lured more Web surfers.
- News Corp.’s Fox Sports offered the NFL an equity stake in its proposed sports channel.

BOTTOM LINE: US stocks finished sharply higher today on optimism over earnings and fewer worries that the US economy is slowing too rapidly. The Portfolio finished unchanged today as gains in my Networking and Homebuilding longs offset losses in my Oil Tanker and Computer Hardware shorts. I exited a few shorts as they hit stop-losses and added a few new longs from various sectors in the afternoon, thus leaving the Portfolio 75% net long. One of my new longs is FFIV and I am using a $43.50 stop-loss on this position. The tone of the market strengthened into the afternoon as the advance/decline finished at its daily highs, almost every sector rose and volume was above average. Measures of investor anxiety were mixed. However, the AAII % Bulls rose 123.54% this week to 36.84%. Overall, today’s market action was very positive, considering the rise in long-term rates, a bounce in energy prices from daily lows and yesterday’s decline. While I feel strongly that US stocks have seen their lows for the year, the major indices will likely trade only modestly higher until the Fed starts making less hawkish comments and oil falls back below the psychologically important $50/bbl level. I expect these events to occur within the next couple of months and further spur US equities. As I stated a few days ago, longer-term investors should use any further weakness to begin acquiring shares of favorite longs.