S&P 500 1,133.52 -.08%
NASDAQ 2,019.82 -.28%
Leading Sectors
Broadcasting +1.82%
Fashion +.96%
Airlines +.68%
Lagging Sectors
Oil Service -2.16%
Disk Drives -2.41%
Homebuilders -2.94%
Other
Crude Oil 36.19 -.14%
Natural Gas 6.22 +.39%
Gold 401.60 +.07%
Base Metals 109.41 -.07%
U.S. Dollar 88.70 -.19%
10-Yr. T-note Yield 4.74% +2.10%
VIX 16.07 +5.79%
Put/Call .60 -9.09%
NYSE Arms 1.10 -14.06%
After-hours Movers
NYB +7.07% on speculation over Citigroup takeover.
WM -9.9% after lowering 04 earnings forecast substantially on rising mortgage rates.
Recommendations
Goldman Sachs reiterated Underperform on FRX. Goldman reiterated Outperform on FS and IGT. A recent survey by Bank of America showed spending for business application software will increase over the next 6-12 months.
After-hours News
U.S. stocks finished slightly lower today on profit-taking after an early handover of power to Iraq and rising interest rates. After the close, New York Community Bancorp is close to an agreement to sell itself for around $6 billion, CNBC reported. General Motors said its U.S. sales this month are falling short of its expectations because of lagging customer demand, Bloomberg said. U.S regulators approved leeches for restoring circulation in blocked veins by removing pooled blood, the first FDA sanction for a treatment used for thousands of years, Bloomberg said. T-Mobile has asked mobile operators and handset manufactures to adopt a standard platform for the mobile music market, the Financial Times said. Target says its same-store-sales for June will come in well below its 5-7% forecast, Bloomberg reported.
BOTTOM LINE: The Portfolio finished substantially higher today and I took more profits in the afternoon and added to my oil service shorts, leaving the Portfolio with 100% net long market exposure. I added to my PTEN short and I am maintaining a $33.80 stop-loss on this position. The action in the bond market was disappointing today, however I do not expect a substantial rise in yields for the remainder of the week. I continue to expect a strong finish to the week for U.S. stocks on the Fed rate-hike, declining energy prices, quarter-end repositioning and positive economic reports.
Monday, June 28, 2004
Mid-day Update
S&P 500 1,141.52 +.64%
NASDAQ 2,037.69 +.61%
Leading Sectors
Airlines +3.05%
Broadcasting +1.92%
Internet +1.47%
Lagging Sectors
Homebuilders -1.34%
Disk Drives -1.44%
Oil Service -1.85%
Other
Crude Oil 36.18 -3.65%
Natural Gas 6.20 -2.41%
Gold 400.30 -.74%
Base Metals 109.41 -.07%
U.S. Dollar 88.83 -.05%
10-Yr. T-note Yield 4.71% +1.45%
VIX 15.21 +.13%
Put/Call .53 -19.70%
NYSE Arms .80 -37.50%
Market Movers
TASR +12.2% after saying the Dayton, Ohio Police placed a $436,000 order for the company's stun gun.
WPI -15.3% after cutting second-quarter sales and profit estimates after prices fell and a new birth-control pill was delayed and multiple downgrades.
MO +5.3% after a federal judge cleared the way for major U.S. cigarette makers to file a pre-trial appeal aimed at blocking a $280 billion fraud claim by the U.S. Department of Justice.
CCI -9.7% after saying National Grid Transco, Britain's power grid manager, agreed to buy the U.K. transmission towers of CCI for $2.04 billion.
TZOO +23.2% on short-covering and strength in Internet shares.
ATI +11.9% after saying it will have its first profit in more than two years, helped by a drop in retiree benefit costs and higher demand for flat-rolled stainless steel.
Economic Data
Personal Income rose .6% in May versus estimates of a .5% rise and a .6% increase in April.
Personal Spending rose 1.0% in May versus estimates of a .8% rise and a .2% increase in April.
PCE Deflator (YOY) for May rose 2.5% versus estimates of a 2.2% rise and a 2.0% increase in April.
Recommendations
ELP cut to Underweight at Morgan Stanley. WFMI rated Outperform at Prudential, target $105. TQNT cut to Underweight at Lehman, target $4. GENZ raised to Overweight at Lehman, target $54. FOX raised to Buy at Oppenheimer, target $32. WPI cut to Underweight at JP Morgan. Citi SmithBarney says to Buy JCP today, target $50. Citi also said to Buy IR, target $83. Citi reiterated Buy on CEY, target $44. Citi reiterated Sell on GDT, target $53. Goldman Sachs reiterated Outperform on BIIB, MUR, PXD, AMT and PPL.
Mid-day News
U.S. stocks are higher mid-day as falling oil prices and developments in Iraq boost investor spirits. The U.S.-led coalition formally ended its occupation of Iraq today by handing sovereignty to an interim Iraqi government ahead of schedule, Bloomberg reported. U.S. personal spending rose 1.0% in May, the biggest increase since 2001, as purchases of automobiles and other durable goods accelerated. A measure of prices tied to spending increased the most since 1990, reflecting higher fuel costs, Bloomberg reported. U.S. college students at public universities are spending almost a third less on tuition than they did in 1998, as new federal tax breaks and an increase in state and federal grants help ease education costs, USA Today reported. OAO Lukoil, Russia's biggest oil producer, plans to start crude-oil production in Iraq in 2005, Interfax news service reported. U.S. cable companies are developing new systems that ultimately may enable national television broadcasts to include different commercials aimed at varying audience groups, the NY Times reported. Sun Microsystems will unveil partnerships today meant to bolster the company's position in the mobile Internet business, the NY Times said. AOL won a patent for software that allows people to send instant messages or enter chat rooms while watching TV, the NY Times reported. Governor Schwarzenegger struck a deal with the California State Employees Association that would let the sate borrow almost $1 billion to balance the state's budget, the LA Times reported. Crude oil futures plunged to a two-month low after the U.S.-led coalition handed sovereignty to Iraq ahead of schedule, tempering concern that terrorists would disrupt the country's petroleum operations, Bloomberg reported. Wal-Mart said June sales will increase 2-4%, less than its original forecast, Bloomberg said. United Airlines was turned down for a federal loan guarantee and told it can't reapply, Bloomberg said. Cattle futures plunged the maximum allowed by the CME after the U.S. said a mad-cow screening test was positive, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a very good day today as my security, internet and biotech longs are rising substantially and my oil service shorts are falling. I took profits in a few stocks from various sectors this morning, leaving the Portfolio with 125% net long market exposure. I expect U.S. equities to trade neutral to higher before a more substantial upwards move begins later in the week. Oil should continue to fall throughout the week and interest rates will likely rise modestly on more strong economic reports.
NASDAQ 2,037.69 +.61%
Leading Sectors
Airlines +3.05%
Broadcasting +1.92%
Internet +1.47%
Lagging Sectors
Homebuilders -1.34%
Disk Drives -1.44%
Oil Service -1.85%
Other
Crude Oil 36.18 -3.65%
Natural Gas 6.20 -2.41%
Gold 400.30 -.74%
Base Metals 109.41 -.07%
U.S. Dollar 88.83 -.05%
10-Yr. T-note Yield 4.71% +1.45%
VIX 15.21 +.13%
Put/Call .53 -19.70%
NYSE Arms .80 -37.50%
Market Movers
TASR +12.2% after saying the Dayton, Ohio Police placed a $436,000 order for the company's stun gun.
WPI -15.3% after cutting second-quarter sales and profit estimates after prices fell and a new birth-control pill was delayed and multiple downgrades.
MO +5.3% after a federal judge cleared the way for major U.S. cigarette makers to file a pre-trial appeal aimed at blocking a $280 billion fraud claim by the U.S. Department of Justice.
CCI -9.7% after saying National Grid Transco, Britain's power grid manager, agreed to buy the U.K. transmission towers of CCI for $2.04 billion.
TZOO +23.2% on short-covering and strength in Internet shares.
ATI +11.9% after saying it will have its first profit in more than two years, helped by a drop in retiree benefit costs and higher demand for flat-rolled stainless steel.
Economic Data
Personal Income rose .6% in May versus estimates of a .5% rise and a .6% increase in April.
Personal Spending rose 1.0% in May versus estimates of a .8% rise and a .2% increase in April.
PCE Deflator (YOY) for May rose 2.5% versus estimates of a 2.2% rise and a 2.0% increase in April.
Recommendations
ELP cut to Underweight at Morgan Stanley. WFMI rated Outperform at Prudential, target $105. TQNT cut to Underweight at Lehman, target $4. GENZ raised to Overweight at Lehman, target $54. FOX raised to Buy at Oppenheimer, target $32. WPI cut to Underweight at JP Morgan. Citi SmithBarney says to Buy JCP today, target $50. Citi also said to Buy IR, target $83. Citi reiterated Buy on CEY, target $44. Citi reiterated Sell on GDT, target $53. Goldman Sachs reiterated Outperform on BIIB, MUR, PXD, AMT and PPL.
Mid-day News
U.S. stocks are higher mid-day as falling oil prices and developments in Iraq boost investor spirits. The U.S.-led coalition formally ended its occupation of Iraq today by handing sovereignty to an interim Iraqi government ahead of schedule, Bloomberg reported. U.S. personal spending rose 1.0% in May, the biggest increase since 2001, as purchases of automobiles and other durable goods accelerated. A measure of prices tied to spending increased the most since 1990, reflecting higher fuel costs, Bloomberg reported. U.S. college students at public universities are spending almost a third less on tuition than they did in 1998, as new federal tax breaks and an increase in state and federal grants help ease education costs, USA Today reported. OAO Lukoil, Russia's biggest oil producer, plans to start crude-oil production in Iraq in 2005, Interfax news service reported. U.S. cable companies are developing new systems that ultimately may enable national television broadcasts to include different commercials aimed at varying audience groups, the NY Times reported. Sun Microsystems will unveil partnerships today meant to bolster the company's position in the mobile Internet business, the NY Times said. AOL won a patent for software that allows people to send instant messages or enter chat rooms while watching TV, the NY Times reported. Governor Schwarzenegger struck a deal with the California State Employees Association that would let the sate borrow almost $1 billion to balance the state's budget, the LA Times reported. Crude oil futures plunged to a two-month low after the U.S.-led coalition handed sovereignty to Iraq ahead of schedule, tempering concern that terrorists would disrupt the country's petroleum operations, Bloomberg reported. Wal-Mart said June sales will increase 2-4%, less than its original forecast, Bloomberg said. United Airlines was turned down for a federal loan guarantee and told it can't reapply, Bloomberg said. Cattle futures plunged the maximum allowed by the CME after the U.S. said a mad-cow screening test was positive, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a very good day today as my security, internet and biotech longs are rising substantially and my oil service shorts are falling. I took profits in a few stocks from various sectors this morning, leaving the Portfolio with 125% net long market exposure. I expect U.S. equities to trade neutral to higher before a more substantial upwards move begins later in the week. Oil should continue to fall throughout the week and interest rates will likely rise modestly on more strong economic reports.
Monday Watch
Earnings of Note
Company/Estimate
SONC/.31
PKE/.23
Splits
MOV 2-for-1
Economic Data
Personal Income for May estimated to rise .5% versus a .6% rise in April.
Personal Spending for May estimated to rise .8% versus a .3% rise in April.
PCE Deflator (YOY) for May estimated to increase 2.2% versus a 1.9% rise in April.
Weekend Recommendations
Forbes on Fox had guests that were positive on MSFT, AMTD, HYSL, ADP, COP and mixed on HB. Bulls and Bears had guests that were positive on DE, MMC and mixed on RYVNX, BA, WMT and CX. Cashin' In had guests that were positive on MMM and mixed on AIB, STRA, MSFT, IHG, HDI and WMT. Louis Rukeyser's Wall Street had guests that were positive on TXN, EOG, SSL, TWP, WPI, PGN and SPLS. Wall St. Week w/Fortune did not have any stock recommendations. Barron's had positive comments on HNZ, TEU, ACTU, BYD, HD, BBBY, STN, CHS, COH, YHOO and WSM. Goldman Sachs reiterated Outperform on HD, ADP, MMP and PAYX. InformationWeek has a positive article on CSCO.
Weekend News
Iraqi militia fighters and clerics who oppose the U.S. presence in their country expressed disgust at the recent wave of violence by foreign insurgents that has killed Iraqis, the Washington Post reported. President Bush said the European Union statement endorsing Iraq's interim government and a pledge to help the country realize democracy represent an important step forward as Iraq prepares for free elections in January, Bloomberg reported. State Farm Mutual Automobile Insurance, United Services Automobile Association and Farmers Group are lowering car insurance premiums in many U.S. states, and may be joined by dozens of other insurers, the NY Times reported. Violence in Iraq may ease in the run up to elections in January as local security forces begin to take over from U.S. and British troops and people feel they can express their feelings democratically rather than through violence, the U.K.'s top representative said. The Green Party chose a California lawyer to be its presidential candidate instead of Ralph Nader, the LA Times reported. Teresa Heinz Kerry, wife of Senator John Kerry, controls a family fortune worth an estimated $1 billion, the LA Times reported. New Jersey next week will become the second state after New York to ban drivers from using hand-held cellular phones, the Newark Star-Ledger reported. Former President Clinton and Senator Ted Kennedy will get prime-time speaking spots next month at the Democratic National Convention, the LA Times reported. Senator John McCain, California Governor Schwarzenegger and former New York City Mayor Rudolph Giuliani will deliver key prime-time speeches at this summer's Republican convention, the NY Times said. Microsoft has teamed up with Sichuan Changhong Electric in southwestern China to develop digital home appliances, said Shanghai Securities News. Crude oil futures fell in New York on expectations the end of a strike in Norway and the restoration of exports from Iraq will add to U.S. supplies that are already higher than year-ago levels, Bloomberg said. The San Francisco Chronicle has an interesting editorial on the U.N. Oil-for-food scandal.
Late-Night Trading
Asian indices are mixed, -1.25% to +.50% on average.
S&P 500 indicated +.29%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher tomorrow on falling oil prices and Middle East violence commensurate with market expectations, before the handover of power to Iraq on Wednesday. The Portfolio is 150% net long heading into tomorrow.
Company/Estimate
SONC/.31
PKE/.23
Splits
MOV 2-for-1
Economic Data
Personal Income for May estimated to rise .5% versus a .6% rise in April.
Personal Spending for May estimated to rise .8% versus a .3% rise in April.
PCE Deflator (YOY) for May estimated to increase 2.2% versus a 1.9% rise in April.
Weekend Recommendations
Forbes on Fox had guests that were positive on MSFT, AMTD, HYSL, ADP, COP and mixed on HB. Bulls and Bears had guests that were positive on DE, MMC and mixed on RYVNX, BA, WMT and CX. Cashin' In had guests that were positive on MMM and mixed on AIB, STRA, MSFT, IHG, HDI and WMT. Louis Rukeyser's Wall Street had guests that were positive on TXN, EOG, SSL, TWP, WPI, PGN and SPLS. Wall St. Week w/Fortune did not have any stock recommendations. Barron's had positive comments on HNZ, TEU, ACTU, BYD, HD, BBBY, STN, CHS, COH, YHOO and WSM. Goldman Sachs reiterated Outperform on HD, ADP, MMP and PAYX. InformationWeek has a positive article on CSCO.
Weekend News
Iraqi militia fighters and clerics who oppose the U.S. presence in their country expressed disgust at the recent wave of violence by foreign insurgents that has killed Iraqis, the Washington Post reported. President Bush said the European Union statement endorsing Iraq's interim government and a pledge to help the country realize democracy represent an important step forward as Iraq prepares for free elections in January, Bloomberg reported. State Farm Mutual Automobile Insurance, United Services Automobile Association and Farmers Group are lowering car insurance premiums in many U.S. states, and may be joined by dozens of other insurers, the NY Times reported. Violence in Iraq may ease in the run up to elections in January as local security forces begin to take over from U.S. and British troops and people feel they can express their feelings democratically rather than through violence, the U.K.'s top representative said. The Green Party chose a California lawyer to be its presidential candidate instead of Ralph Nader, the LA Times reported. Teresa Heinz Kerry, wife of Senator John Kerry, controls a family fortune worth an estimated $1 billion, the LA Times reported. New Jersey next week will become the second state after New York to ban drivers from using hand-held cellular phones, the Newark Star-Ledger reported. Former President Clinton and Senator Ted Kennedy will get prime-time speaking spots next month at the Democratic National Convention, the LA Times reported. Senator John McCain, California Governor Schwarzenegger and former New York City Mayor Rudolph Giuliani will deliver key prime-time speeches at this summer's Republican convention, the NY Times said. Microsoft has teamed up with Sichuan Changhong Electric in southwestern China to develop digital home appliances, said Shanghai Securities News. Crude oil futures fell in New York on expectations the end of a strike in Norway and the restoration of exports from Iraq will add to U.S. supplies that are already higher than year-ago levels, Bloomberg said. The San Francisco Chronicle has an interesting editorial on the U.N. Oil-for-food scandal.
Late-Night Trading
Asian indices are mixed, -1.25% to +.50% on average.
S&P 500 indicated +.29%.
NASDAQ 100 indicated +.07%.
BOTTOM LINE: I expect U.S. stocks to open modestly higher tomorrow on falling oil prices and Middle East violence commensurate with market expectations, before the handover of power to Iraq on Wednesday. The Portfolio is 150% net long heading into tomorrow.
Sunday, June 27, 2004
Chart of the Week
Bottom Line: Look for the Morgan Stanley Technology Index to convincingly break out of its recent downtrend and lead the major U.S. indices higher. Technology spending will accelerate is the second-half of this year, earnings estimates are too low and valuations have mostly come down to reasonable levels.
Weekly Outlook
There are a number of important economic reports and a few significant corporate earnings reports scheduled for release this week. Economic reports this week include Personal Income, Personal Spending, Consumer Confidence, Chicago Purchasing Manager, Initial Jobless Claims, Construction Spending, ISM Manufacturing, Vehicle Sales, Unemployment Rate, Average Hourly Earnings, Change in Non-farm/Manufacturing Payrolls, Average Weekly Hours and Factory Orders. Consumer Confidence, Chicago Purchasing Manager, ISM Manufacturing, Change in Non-farm Payrolls all have market-moving potential.
McKormick(MKC), Research in Motion(RIMM), Sonic(SONC), Emmis Communications(EMMS), Monsanto(MON), Constellation Brands(STZ), Biomet(BMET), ConAgra(CAG) and General Mills(GIS) are some of the more important companies that release quarterly earnings this week. There are also a couple of other events that have market-moving potential. The FMOC Policy Announcement, end of the quarter repositioning, handover of power to the Iraqi government and the NYSSA Homeland Security Industry Conference will also impact trading this week.
Bottom Line: I expect U.S. stocks to rise this week, possibly by a substantial margin, led by technology shares. The handover of power to the Iraqis, the Fed keeping the word "measured" in its policy statement with respect to the pace of rate-hikes, falling energy prices, the recent decline in interest rates and positive economic reports should provide the catalysts for a good week for U.S. stocks. The AAII % Bulls increased by a substantial amount last week which would normally be a negative. However, I believe that while investors may feel more bullish, they are waiting for the uncertainty surrounding events of the coming week to lift before they actually buy in a significant way.
Here are some of the reasons for my current bullish stance on U.S. stocks:
1)Recently, NASDAQ short interest hit an all-time high and NYSE short interest approached an all-time high, which should result in a significant amount of short-covering in the very near future as fundamentals continue to improve.
2)Interest rates have declined by almost 30 basis points in the last few weeks. The 10-yr T-note is yielding 4.64%, over 40% lower than in 1994.
3)Gas prices have fallen 13% from their recent highs.
4)Inflation for 2004 is set to rise less than the 40-year average of 3.0%.
5)Valuations for most U.S. stocks(S&P 500 04 P/E=17.3, down 66% from peak) are very reasonable given the strong economic backdrop and relatively low interest rate picture.
6)Corporate profits and growth are near all-time highs.
7)Corporate balance sheets are much cleaner and healthier.
8)Executive corruption is down.
9)U.S. and world economic growth are on pace to reach 20-year highs this year.
10)Japan(the world's second largest economy) is contributing meaningfully to world growth for the first time in almost 15 years.
11)China's growth is slowing, but still exceptional.
12)The big picture in Iraq is improving. The cost of the
War in Iraq is set to come in at only 1% of U.S. GDP versus 12% for the Vietnam War, 15% for the Korean War and 130% for WWII.
13)There have been no major terror acts on U.S. soil since 9/11.
14)U.S. home ownership is at all-time highs.
15)American's are the wealthiest in U.S. history. Moreover, 1 out of every 125 are now millionaires, even excluding home equity.
16)Job opportunities and wages are improving substantially. 1.2 million jobs have been created in the last 6 months.
17)The Unemployment rate is lower than the average rate over any 10-year period during the last 40 years.
18)The Budget Deficit will come in significantly below estimates for 2004 as substantial economic growth increases incomes and profits, resulting in increased government tax receipts.
19)Consumer sentiment is improving with job gains and income growth.
20)U.S. manufacturing, which has been in a depression for many years, is rebounding at one of the fastest paces on record.
21)Corporate spending on services and equipment is on the rise for the first time in several years.
22)Consumers are continuing to spend at a very healthy rate.
23)The massive overcapacity, in many sectors, generated during the Internet bubble is almost burned off.
24)Current U.S economic growth is the result of real companies with real business models generating real profits. During the Internet bubble, companies with poor management teams, flawed business models, corrupt accounting and no profits were artificially inflating economic growth.
25)Stock market internals are rapidly improving.
Finally, my short-term trading indicators are giving buy signals and the Portfolio is 150% net long heading into the week.
McKormick(MKC), Research in Motion(RIMM), Sonic(SONC), Emmis Communications(EMMS), Monsanto(MON), Constellation Brands(STZ), Biomet(BMET), ConAgra(CAG) and General Mills(GIS) are some of the more important companies that release quarterly earnings this week. There are also a couple of other events that have market-moving potential. The FMOC Policy Announcement, end of the quarter repositioning, handover of power to the Iraqi government and the NYSSA Homeland Security Industry Conference will also impact trading this week.
Bottom Line: I expect U.S. stocks to rise this week, possibly by a substantial margin, led by technology shares. The handover of power to the Iraqis, the Fed keeping the word "measured" in its policy statement with respect to the pace of rate-hikes, falling energy prices, the recent decline in interest rates and positive economic reports should provide the catalysts for a good week for U.S. stocks. The AAII % Bulls increased by a substantial amount last week which would normally be a negative. However, I believe that while investors may feel more bullish, they are waiting for the uncertainty surrounding events of the coming week to lift before they actually buy in a significant way.
Here are some of the reasons for my current bullish stance on U.S. stocks:
1)Recently, NASDAQ short interest hit an all-time high and NYSE short interest approached an all-time high, which should result in a significant amount of short-covering in the very near future as fundamentals continue to improve.
2)Interest rates have declined by almost 30 basis points in the last few weeks. The 10-yr T-note is yielding 4.64%, over 40% lower than in 1994.
3)Gas prices have fallen 13% from their recent highs.
4)Inflation for 2004 is set to rise less than the 40-year average of 3.0%.
5)Valuations for most U.S. stocks(S&P 500 04 P/E=17.3, down 66% from peak) are very reasonable given the strong economic backdrop and relatively low interest rate picture.
6)Corporate profits and growth are near all-time highs.
7)Corporate balance sheets are much cleaner and healthier.
8)Executive corruption is down.
9)U.S. and world economic growth are on pace to reach 20-year highs this year.
10)Japan(the world's second largest economy) is contributing meaningfully to world growth for the first time in almost 15 years.
11)China's growth is slowing, but still exceptional.
12)The big picture in Iraq is improving. The cost of the
War in Iraq is set to come in at only 1% of U.S. GDP versus 12% for the Vietnam War, 15% for the Korean War and 130% for WWII.
13)There have been no major terror acts on U.S. soil since 9/11.
14)U.S. home ownership is at all-time highs.
15)American's are the wealthiest in U.S. history. Moreover, 1 out of every 125 are now millionaires, even excluding home equity.
16)Job opportunities and wages are improving substantially. 1.2 million jobs have been created in the last 6 months.
17)The Unemployment rate is lower than the average rate over any 10-year period during the last 40 years.
18)The Budget Deficit will come in significantly below estimates for 2004 as substantial economic growth increases incomes and profits, resulting in increased government tax receipts.
19)Consumer sentiment is improving with job gains and income growth.
20)U.S. manufacturing, which has been in a depression for many years, is rebounding at one of the fastest paces on record.
21)Corporate spending on services and equipment is on the rise for the first time in several years.
22)Consumers are continuing to spend at a very healthy rate.
23)The massive overcapacity, in many sectors, generated during the Internet bubble is almost burned off.
24)Current U.S economic growth is the result of real companies with real business models generating real profits. During the Internet bubble, companies with poor management teams, flawed business models, corrupt accounting and no profits were artificially inflating economic growth.
25)Stock market internals are rapidly improving.
Finally, my short-term trading indicators are giving buy signals and the Portfolio is 150% net long heading into the week.
Market Week in Review
S&P 500 1,134.43 -.05%
U.S. indices finished mixed last week on a good pick-up in volume as technology shares outperformed substantially, offsetting declines in healthcare-related stocks. Stocks fell slightly on Monday, led lower by healthcare and energy-related shares. A mid-week rally began Tuesday, led by technology stocks, after SBC Communications announced a $6 billion capital spending spree to build a new fiber optic network. As well, the very successful IPO of Salesforce.com(CRM) boosted sentiment towards technology stocks. Finally, falling interest rates, increasing merger activity, strong corporate earnings reports and declining energy prices also spurred investor enthusiasm mid-week. The week ended on a mixed note as violence in the Middle East prevented investors from bidding shares higher in advance of the coming week's Iraqi handover of power. Moreover, the Russell rebalancing, end of the quarter repositioning and imminent Fed rate-hike continued to weigh on investors' psyche at week's end.
There were several notable movers last week. Shares of Taser International(TASR) rose 63.3% after boosting 04 annual revenue growth from 100% to 150% and speculation over a deal with Sharper Image to sell a personal version of its stun gun. NVE Corp.(NVEC) rose 46.7% after receiving a new patent on an innovative type of MRAM. PalmOne(PLMO) gained 62.5% after beating 4Q estimates and raising its 1Q forecast substantially. Dick's Sporting Goods(DKS) increased 14.5% after saying it would purchase Galyan's Trading for $305 million in cash. Career Education(CECO) fell 20.0% after the company said a SEC inquiry was raised to a formal investigation. Orasure Technologies(OSUR) gained 24.7% after it received FDA approval of it OraQuick Rapid HIV-1/2 Antibody Test. Shares of Performance Food Group(PFGC) fell 19.3% after lowering its second-quarter earnings estimate, saying the distribution of fruit products and retooling plants is costing more than anticipated. Finally, AT&T(T) fell 9.0% after it reduced its 2004 profit and revenue forecasts because it lowered prices to business customers.
Bottom Line: The tone of the market last week was very good, notwithstanding minimal movements in the major averages. The advance/decline line continued to improve and volume increased. Many sectors registered substantial gains with small-cap and technology shares outperforming significantly. According to Thomson First Call, positive-to-negative earnings pre-announcements are running at a record high. This is turning out to be one of the best years in recent history for stock-pickers as the major averages flounder while certain sectors and stocks register significant gains. Last weeks' market action, combined with declining interest rates and energy prices, bodes well for the future.
U.S. indices finished mixed last week on a good pick-up in volume as technology shares outperformed substantially, offsetting declines in healthcare-related stocks. Stocks fell slightly on Monday, led lower by healthcare and energy-related shares. A mid-week rally began Tuesday, led by technology stocks, after SBC Communications announced a $6 billion capital spending spree to build a new fiber optic network. As well, the very successful IPO of Salesforce.com(CRM) boosted sentiment towards technology stocks. Finally, falling interest rates, increasing merger activity, strong corporate earnings reports and declining energy prices also spurred investor enthusiasm mid-week. The week ended on a mixed note as violence in the Middle East prevented investors from bidding shares higher in advance of the coming week's Iraqi handover of power. Moreover, the Russell rebalancing, end of the quarter repositioning and imminent Fed rate-hike continued to weigh on investors' psyche at week's end.
There were several notable movers last week. Shares of Taser International(TASR) rose 63.3% after boosting 04 annual revenue growth from 100% to 150% and speculation over a deal with Sharper Image to sell a personal version of its stun gun. NVE Corp.(NVEC) rose 46.7% after receiving a new patent on an innovative type of MRAM. PalmOne(PLMO) gained 62.5% after beating 4Q estimates and raising its 1Q forecast substantially. Dick's Sporting Goods(DKS) increased 14.5% after saying it would purchase Galyan's Trading for $305 million in cash. Career Education(CECO) fell 20.0% after the company said a SEC inquiry was raised to a formal investigation. Orasure Technologies(OSUR) gained 24.7% after it received FDA approval of it OraQuick Rapid HIV-1/2 Antibody Test. Shares of Performance Food Group(PFGC) fell 19.3% after lowering its second-quarter earnings estimate, saying the distribution of fruit products and retooling plants is costing more than anticipated. Finally, AT&T(T) fell 9.0% after it reduced its 2004 profit and revenue forecasts because it lowered prices to business customers.
Bottom Line: The tone of the market last week was very good, notwithstanding minimal movements in the major averages. The advance/decline line continued to improve and volume increased. Many sectors registered substantial gains with small-cap and technology shares outperforming significantly. According to Thomson First Call, positive-to-negative earnings pre-announcements are running at a record high. This is turning out to be one of the best years in recent history for stock-pickers as the major averages flounder while certain sectors and stocks register significant gains. Last weeks' market action, combined with declining interest rates and energy prices, bodes well for the future.
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