Thursday Close

Indices
S&P 500 1,189.89 -.28%
Dow 10,593.10 -.03%
NASDAQ 2,057.64 -.84%
Russell 2000 629.32 -.42%
DJ Wilshire 5000 11,718.93 -.28%
S&P Barra Growth 572.34 -.30%
S&P Barra Value 613.24 -.25%
Morgan Stanley Consumer 587.89 -.07%
Morgan Stanley Cyclical 761.80 -.32%
Morgan Stanley Technology 466.32 -1.66%
Transports 3,579.48 -.69%
Utilities 348.64 +.22%
Put/Call .86 +17.81%
NYSE Arms 1.25 +47.06%
Volatility(VIX) 11.79 +1.11%
ISE Sentiment 170.00 +39.34%
US Dollar 83.92 -.01%
CRB 281.61 -.48%

Futures Spot Prices
Crude Oil 46.67 +.47%
Unleaded Gasoline 127.30 +.36%
Natural Gas 6.13 -.23%
Heating Oil 128.05 +.31%
Gold 418.70 +.05%
Base Metals 121.09 +.14%
Copper 139.00 +.11%
10-year US Treasury Yield 4.16% unch.

Leading Sectors
Retail +.65%
Iron/Steel +.56%
Energy +.56%

Lagging Sectors
Semis -1.26%
Internet -2.07%
Networking -2.88%

After-hours Movers
SNDA +13.95% after beating 4Q estimates.
ASCL +11.78% after beating 4Q estimates and raising 1Q guidance.
CELL +7.65% after beating 4Q estimates.
TSCO +6.59% after beating 4Q estimates and raising 05 guidance.
APCC +4.76% after beating 4Q estimates.
BCSI +4.99% after boosting 3Q estimates.
SEAC -15.4% after cutting 4Q forecast.
SHOP -10.13% after meeting 4Q estimates and lowering 1Q/05 guidance.
ASKJ -4.83% after missing 4Q revenue estimates slightly and reiterating 1Q/05 guidance.

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

Afternoon Recommendations
-Goldman Sachs: Reiterated Outperform on IR, K, STR and CAT. Reiterated Underperform on KFT. Initiated Packaged Food Sector with Cautious rating.
-Banc of America: Upgraded NE to Buy, target $61. Upgraded ESV to Buy, target $45. Upgraded RDC to Buy, target $34. Upgraded THE to Buy, target $25.
-UBS: Rated OMX Buy.
-Business Week: Brooktrout(BRKT) may benefit from the growing use of Voice-Over-Internet protocol. Imax Corp.(IMAX), the world’s biggest maker of giant-screen film projection systems, is benefiting as more theaters sign up for its screens.

After-hours News
US stocks finished modestly lower today on worries over slowing economic growth and weakness in technology shares. After the close, Intel may have to buy Texas Instruments or Qualcomm to boost its cell-phone business, Business Week said. Needham fund manager Vincent Gallagher, who helps manage $1 billion, told CNBC that he likes Ceradyne, MEMC Electronic Materials and Digitas as growth stocks. Mercury Interactive CEO Landan told CNBC he hopes the company will make acquisitions rather than be bought, as the computer-software industry continues to consolidate, Bloomberg said. The value of products using nanotechnology, in which particles a few billionths of a meter wide are applied to improve quality, will increase more than 20-fold by the end of the decade, Business Week reported. Citigroup may face a 30-day trading suspension on Eurex AG if German regulators conclude the bank manipulated the market for European government bonds and futures last August, the London-based Times said. US President Bush will present the most frugal spending proposal of his presidency, one designed to help cut the deficit in half by 2009, White House budget director Bolten said. Sun Microsystems and Archipelago Holdings plan to build the world’s first online exchange to buy and sell computing power like electricity to reduce technology costs for customers, Bloomberg said. Alberto Gonzales won Senate confirmation to be US attorney general over the objection of Democrats, Bloomberg reported.

BOTTOM LINE: The Portfolio finished higher today on gains in my internet, retail, software and gaming longs. I added a few new longs from various sectors in the afternoon, thus leaving the Portfolio 100% net long. I added to my SINA long after-hours and I am using a $26 stop-loss on this position. The tone of the market was weaker today, however it improved into the close. The advance/decline line finished near its daily highs, volume improved and several sectors rose. As well, measures of investor anxiety mostly increased, the US dollar maintained gains and interest rates fell modestly. The CRB declined and is approaching its uptrend line which has been in place since October of 2001. I expect this index to finally break this uptrend in the near future.

Mid-day Report

Indices
S&P 500 1,187.68 -.46%
Dow 10,569.01 -.26%
NASDAQ 2,054.20 -1.0%
Russell 2000 627.58 -.70%
DJ Wilshire 5000 11,697.15 -.47%
S&P Barra Growth 571.56 -.44%
S&P Barra Value 611.89 -.47%
Morgan Stanley Consumer 586.45 -.31%
Morgan Stanley Cyclical 760.16 -.54%
Morgan Stanley Technology 465.05 -1.91%
Transports 3,577.43 -.74%
Utilities 347.28 -.17%
Put/Call .74 +1.37%
NYSE Arms 1.33 +56.47%
Volatility(VIX) 11.89 +1.97%
ISE Sentiment 182.00 +49.18%
US Dollar 84.02 +.57%
CRB 281.19 -.63%

Futures Spot Prices
Crude Oil 46.15 -1.20%
Unleaded Gasoline 125.90 -2.67%
Natural Gas 6.14 -3.70%
Heating Oil 126.75 -2.27%
Gold 418.50 -1.06%
Base Metals 121.09 +.14%
Copper 139.00 -.25%
10-year US Treasury Yield 4.16% +.57%

Leading Sectors
Iron/Steel +.92%
Telecom +.51%
Retail +.45%

Lagging Sectors
Semis -1.64%
Internet -2.18%
Networking -3.02%

Market Movers
AMZN -18.9% after beating 4Q revenue estimates, missing 4Q earnings estimates, raising 1Q/05 revenue guidance and multiple downgrades.
CYBX +33.5% after saying the FDA is close to approving an implanted device that treats depression by electrically stimulating patients’ nerves and multiple upgrades.
SBUX -7.9% after saying same-store-sales rose 7% during January and Citi SmithBarney downgrade to Hold.
JNPR -5.1% on ALA report.
KONG +23.3% after beating 4Q estimates and raising 1Q guidance.
DHC +20.68% on continuing optimism over recent purchase of American Ref-Fuel Holdings to expand its waste-to-energy business.
AMSC +11.36% after substantially beating 3Q estimates and raising 05 guidance.
SPF +6.81% after beating 4Q estimates, raising 1Q estimates and increasing 05 guidance.
GETI +9.89% after saying it plans to pay $320 million to shareholders in the form of a special dividend.
MERQ +8.93% after beating 4Q estimates, raising 1Q guidance, boosting 05 outlook and multiple upgrades..
KMX +13.3% after boosting 4Q estimates and Fulcrum Global upgrade to Buy.
ANF +8.35% after reporting substantially better-than-expected same-store-sales for January.
FLR +4.2% after beating 4Q estimates and raising 05 guidance.
MNT +8.43% after beating 3Q estimates and raising 05 outlook.
FEIC +12.71% after beating 4Q estimates, widening 1Q guidance and Needham upgrade to Buy.
BMC -13.76% after missing 3Q estimates, lowering 4Q guidance and Legg Mason downgrade to Hold.
AZR -12.74% after missing 4Q estimates and multiple downgrades.
ALA -12.5% after missing 4Q estimates, lowering 05 guidance and multiple downgrades.
NEW -8.49% after meeting 4Q estimates and lowering 05 outlook.
AMSG -12.28% after meeting 4Q estimates and lowering 05 guidance.
DIGE -8.84% after missing 2Q estimates, widening 3Q outlook and lowering 05 guidance.
TMO -9.97% after meeting 4Q estimates, lowering 1Q guidance and JP Morgan downgrade to Neutral.

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

Economic Data
-Preliminary 4Q Non-farm Productivity rose .8% versus estimates of a 1.5% increase and a 1.8% gain in 3Q.
-Preliminary 4Q Unit Labor Costs rose 2.3% versus estimates of a 2.0% gain and a 1.6% increase in 3Q.
-Initial Jobless Claims for last week fell to 316K versus estimates of 330K and 325K the prior week.
-Continuing Claims fell to 2696K versus estimates of 2765K and 2812K prior.
-Factory Orders for December rose .3% versus estimates of a .6% increase and a 1.4% gain in November.
-ISM Non-Manufacturing for January fell to 59.2 versus estimates of 61.5 and a reading of 63.9 in December.

Recommendations
-Goldman Sachs: Reiterated Outperform on ALL, HEP, GILD, IP, MERQ, ROH, DD, MDT and HOT. Reiterated Underperform on AZR, BMC and KZL.
-Banc of America: Upgraded BA to Buy, target $60. Upgraded SALM to Buy, target $28.
-Citi SmithBarney: Said to Buy TOY now, target $27. Reiterated Buy on ATVI, target $29. Reiterated Buy on ERTS, target $76. Reiterated Buy on UNM, target $20. Reiterated Sell on BA, target $40. Reiterated Buy on SPF, target $98. Reiterated Buy on PNR, target $52. Reiterated Buy on PHM, target $86. Reiterated Buy on QSFT, target $18. Reiterated Buy on MERQ, target $58.
-Bear Stearns: Downgraded AZR to Underperform.
-JP Morgan: Raised SBC to Overweight. Raised CAH, MCK to Overweight. Rated IBI Overweight.
-Lehman Brothers: Raised HPQ to Overweight, target $25.
-Prudential: Cut AXL to Underweight, target $24.
-UBS: Raised COO to Buy, target $95. Raised XJT to Buy, target $15.75. Raised STZ to Buy, target $65.

Mid-day News
US stocks are lower mid-day on losses in the technology sector and worries over slowing economic growth. Qwest Communications is holding talks to buy MCI Inc. for about $6.3 billion, the Wall Street Journal reported. General Motors, Ford and other automakers are allowing hundreds of thousands of potential buyers to test drive cars on racing tracks to boost sales, the Wall Street Journal reported. German Interior Minister Otto Schily pledged to expand German aid to reconstruct Iraq at a meeting with President Bush yesterday, Der Spiegel reported. Dinakar Singh’s hedge fund, TPG-Axon Capital, is the latest hedge fund being started by former employees of Goldman Sachs Group, many of whom worked for Robert Rubin, the NY Times reported. A group of 30 companies, including Mattel and Eastman Chemical, are forming a group to monitor the pharmacy benefit managers that most businesses use to obtain discounted drugs, the NY Times reported. Galena, Alaska, is considering using a Toshiba Corp. nuclear reactor to power the town’s electricity, the NY Times reported. Boston workers said they are more optimistic about job opportunities than they were in the summer and fall, the Boston Globe reported. Partial election results from six of Iraq’s 18 provinces indicate that the list endorsed by top Shiite Muslim cleric Ali al-Sistani has the most votes so far, the AP reported. Demand for homes priced at $1 million and above in the San Francisco Bay area rose 73% in 2004, the San Francisco Chronicle reported. The Palestinians will announce a cease-fire in hostilities with Israel when the two sides meet next week in Eqypt, Bloomberg reported. Sales gains at US retailers including Wal-Mart and May Department Stores slowed for a third consecutive month in January, hurt by blizzards and a climb in fuel costs, Bloomberg said. Michael Price, who had one of the best records in the mutual fund industry during the 80s and 90s, is bullish on shares of Sears and Unocal, Bloomberg reported. A bill to move most class-action lawsuits against companies from state to federal courts was approved by a US Senate committee, Bloomberg said. The US dollar is advancing against the euro after European Central Bank President Trichet said inflation is contained, suggesting the bank will keep its benchmark interest rate at a 60-year low, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my internet, retail and steel longs. I have not traded today and the Portfolio remains 75% net long. The tone of the market is weaker today as decliners outpace advancers, most sectors are lower and volume is decent. However, significant losses are mainly confined to the technology sector and energy prices are falling. As well, the US dollar appears to be breaking out to the upside of its recent trading range. Measures of investor anxiety are mostly higher. The labor market looks to have gained some momentum recently. An above-expectations employment report tomorrow would likely send stocks higher along with long-term interest rates. I expect US stocks to rise into the close on more optimism over US reforms, declining energy prices, low long-term interest rates, bargain-hunting and short-covering ahead of tomorrow’s economic data.

Thursday Watch

Late-Night News
Asian indices are mostly higher on strength in commodity-related stocks in the region. Taiwan President Chen Shui-bian invited China's top cross-strait negotiator to visit Taiwan to reopen political talks, the state-run China Daily reported. Citigroup's Citibank, Bank of America and other financial institutions are streamlining the application process to open accounts online, the Wall Street Journal reported. Time Warner and Comcast plan to merge Time Warner's cable unit into Adelphia Communications if their joint bid for the company's cable-television assets succeeds, the Wall Street Journal reported. Blockbuster today raised its offer to buy competitor Hollywood Entertainment to $14.50 a share, or about $883 million, topping a bid from Movie Gallery, Bloomberg reported. President Bush, pressing Congress to solve the coming Social Security crisis, offered some details of his plan to create private accounts and said he's open to "any good idea" for shoring up the system, Bloomberg reported. China won't be swayed into changing its currency policy by proposed US legislation that would impose tariffs on the nation's exports unless the yuan is allowed to appreciate, a Chinese government economist said.

Late Recommendations
Goldman Sachs: Reiterated Outperform on DVN, CBG and MUR. Reiterated Underperform on EQR and UNM.

Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated -.12%.
NASDAQ 100 indicated -.16%.

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
APCC/.25
ASKJ/.32
AVID/.62
BMC/.21
CDN/.25
CERN/.54
CMCSA/.11
G/.42
IP/.43
MEDI/.17
PEP/.58
RTN/.46
SNDA/.28
FON/.32
HOT/.45

Splits
FLIR 2-for-1

Economic Data
-Preliminary 4Q Non-farm Productivity is estimated to rise 1.5% versus a 1.8% gain in 3Q.
-Preliminary 4Q Unit Labor Costs are estimated to rise 2.0% versus a 1.8% increase in 3Q.
-Initial Jobless Claims for last week are estimated to rise to 330K versus 325K the prior week.
-Continuing Claims are estimated to fall to 2765K versus 280K prior.
-Factory Orders for December are estimated to rise .6% versus a 1.2% gain in November.
-ISM Non-Manufacturing for January is estimated to fall to 61.5 versus 63.9 in December.

BOTTOM LINE: I expect US equities to open modestly lower in the morning on weakness in technology and retail stocks. However, shares may move modestly higher later in the day on more optimism over US reforms, low long-term interest rates, short-covering and bargain hunting. The Portfolio is 75% net long heading into tomorrow.

Wednesday Close

Indices
S&P 500 1,193.19 +.32%
Dow 10,596.79 +.43%
NASDAQ 2,075.06 +.31%
Russell 2000 631.98 +.61%
DJ Wilshire 5000 11,752.25 +.37%
S&P Barra Growth 574.08 +.45%
S&P Barra Value 614.77 +.19%
Morgan Stanley Consumer 588.31 +.51%
Morgan Stanley Cyclical 764.28 +.52%
Morgan Stanley Technology 474.17 -.23%
Transports 3,604.17 -.04%
Utilities 347.87 +.72%
Put/Call .73 -18.89%
NYSE Arms .85 -11.46%
Volatility(VIX) 11.66 -3.08%
ISE Sentiment 122.10 -32.60%
US Dollar 83.54 +.11%
CRB 282.96 -.33%

Futures Spot Prices
Crude Oil 46.69 unch.
Unleaded Gasoline 129.10 -.19%
Natural Gas 6.42 +.77%
Heating Oil 129.95 +.19%
Gold 423.60 +.14%
Base Metals 120.92 -.49%
Copper 139.40 +.04%
10-year US Treasury Yield 4.14% +.05%

Leading Sectors
Airlines +1.86%
Iron/Steel +1.85%
Oil Service +1.83%

Lagging Sectors
I-Banks -.68%
Computer Hardware -.76%
HMOs -1.02%

After-hours Movers
AMZN -14.64% after beating 4Q revenue estimates, missing 4Q earnings estimates and raising 1Q/05 revenue guidance.
CNET -11.35% after missing 4Q estimates, lowering 1Q estimates and widening 05 guidance.
GETI +16.42% after saying it plans to pay $320 million to shareholders in the form of a special dividend.
MNT +6.87% after beating 3Q estimates and raising 05 outlook.
DIGE -17.66% after missing 2Q estimates, widening 3Q outlook and lowering 05 guidance.
TSRA -10.28% after meeting 4Q estimates and lowering 05 guidance.
SBUX -5.02% after saying same-store-sales rose 7% during January.
OSTK -4.47% on AMZN report.
STLD -4.86% after missing 4Q estimates.
MERQ +3.96% after beating 4Q estimates, raising 1Q guidance and boosting 05 outlook.

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

Afternoon Recommendations
-Goldman Sachs: Reiterated Outperform on NSM, MERQ and ALL. Reiterated Underperform on BA. Upgraded MCHP to Outperform. Downgraded MCRL to Underperform.

After-hours News
US stocks finished modestly higher today on good earnings reports, lower energy prices and Fed comments that met expectations. After the close, Walt Disney plans to build a new computer animation unit to develop sequels to films it made during its partnership with Pixar, including Toy Story, Bloomberg reported. Lenovo Group CEO Yuanqing said the company’s plan to buy International Business Machines’ personal computer unit wouldn’t post a security threat to the US, the Financial Times reported. The Irish Republican Army says it is withdrawing from the decommissioning of weapons process established under the terms of the Northern Ireland Good Friday peace agreement, Bloomberg said. Iran say the European Union has not delivers promised “incentives” in return for its pledge to suspend its uranium enrichment activities, the Financial Times said. PIMCO is “bearish” on corporate bonds, said Paul McCulley, a managing director at the firm. Martha Stewart will star in a new version of Donald Trump’s “The Apprentice,” after she completes her jail sentence for obstructing justice, Bloomberg said. China would have to ease controls on its currency within six months or face a 27.5% tariff on exports to the US under legislation to be introduced in the Senate tomorrow, Bloomberg reported. A Missouri jury ordered Brown & Williamson Tobacco to pay $20 million in punitive damages to the husband of a woman who died of heart disease after decades of smoking Kool cigarettes, Bloomberg said. US Senators McCain and Feingold won over Senator Lott, who is joining them in a proposal to restrict donations to political groups like MoveOn.org and Swift Boat Veterans for Truth, Bloomberg reported. Federal Reserve policy makers raised the benchmark US interest rate a quarter-point to 2.5% and restated a plan to make future increases at a “measured” pace to keep inflation in check, Bloomberg said.

BOTTOM LINE: The Portfolio finished higher today on gains in my telecom, internet and steel longs. I exited a few technology longs in the afternoon as they hit stop-losses, thus leaving the Portfolio 75% net long. The tone of the market improved modestly into the close as the advance decline line finished at its daily highs and volume increased. Small-caps outperformed and measures of investor anxiety mostly fell. I expect US stocks to trade mixed-to-higher through week’s end on more optimism, good earnings/economic reports and lower energy prices.

Mid-day Report

Indices
S&P 500 1,191.66 +.19%
Dow 10,580..68 +.27%
NASDAQ 2,071.03 +.11%
Russell 2000 628.91 +.12%
DJ Wilshire 5000 11,731.26 +.19%
S&P Barra Growth 573.27 +.31%
S&P Barra Value 614.08 +.08%
Morgan Stanley Consumer 587.36 +.35%
Morgan Stanley Cyclical 761.43 +.15%
Morgan Stanley Technology 474.16 -.23%
Transports 3,600.96 -.13%
Utilities 348.27 +.83%
Put/Call .87 -3.33%
NYSE Arms .81 -15.62%
Volatility(VIX) 11.66 -3.08%
ISE Sentiment 124.00 -31.49%
US Dollar 83.68 +.28%
CRB 282.89 -.37%

Futures Spot Prices
Crude Oil 46.92 -.36%
Unleaded Gasoline 129.50 -1.48%
Natural Gas 6.39 +1.33%
Heating Oil 130.00 -1.06%
Gold 422.00 -.21%
Base Metals 120.92 -.49%
Copper 139.00 -1.84%
10-year US Treasury Yield 4.15% +.42%

Leading Sectors
Airlines +1.59%
Oil Service +1.30%
Gaming +1.20%

Lagging Sectors
I-Banks -.64%
Restaurants -.71%
HMOs -1.02%

Market Movers
GOOG +11.4% after substantially beating 4Q estimates and multiple upgrades.
THQI +21.1% after substantially beating 3Q estimates, reiterating 4Q outlook and raising 05 guidance.
CFC -4.44% after missing 4Q estimates, reiterating 05 outlook and boosting dividend.
MFLX +16.98% after beating 1Q estimates, raising 2Q outlook and Needham Buy rating.
PACR +13.61% after beating 4Q estimates and Morgan Keegan upgrade to Outperform.
GHCI +10.68% after beating 1Q estimates and FBR upgrade to Outperform.
VLO +5.26% on continuing optimism over 4Q report.
HYDL +5.1% after beating 4Q estimates.
ROH +6.81% after beating 4Q estimates raising 05 guidance and Fulcrum upgrade to Buy.
ATMI +11.2% after beating 4Q estimates and raising 1Q guidance.
BBOX -12.1% after missing 3Q estimates.
TEX -8.9% after making cautious comments at Lehman dinner.

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 WAG, ROH, HOT, BBG, EMC, GOOG, DKS, TYC and BSX.
-Citi SmithBarney: Reiterated Buy on CMCSK, target $34. Reiterated Buy on MXIM, target $52. Downgraded TIVO to Sell, target $3.50. Reiterated Buy on NT, target $5. Reiterated Buy on EXTR, target $11. Reiterated Buy on BJS, target $62. Reiterated Buy on TYC, target $40. Reiterated Buy on ASD, target $50.
-UBS: Raised TICC to Buy, target $17.
-Deutsche Bank: Raised KRC to Buy, target $45. Rated SINA Buy, target $40. Rated NTES Buy, target $66.
-Banc of America: Raised ALNY to Buy, target $9.50. Raised LAD to Buy, target $32.
-Prudential: Raised UPCS to Buy, target $9. Rated APCS Overweight, target $16. Rated UNWR Overweight, target $6.
-Merrill Lynch: Raised FDO to Buy, target $39.

Mid-day News
US stocks are slightly higher mid-day on gains in commodity-related stocks and strong earnings reports. The SEC has adopted a more aggressive approach to potential stock fraud, stopping trading of shares where it suspects manipulation, the Wall Street Journal reported. The worlds needs new tools to fight a growing nuclear black market and stop countries developing nuclear weapons technology, said Mohamed ElBaradei, director-general of the IAEA. Cuba signed an agreement with China Petrochemical, also known as Sinopec Group, to develop potential oil deposits surrounding the island nation, AP reported. US companies may have been defrauded by thousands of people who sued over claims that they were sickened by exposure to asbestos or silica or both, the NY Times reported. The NFL and Shanghai Media Group may announce today a five-year agreement to air live broadcasts of the Super Bowl on China’s Dragon TV and 12 local networks, the Wall Street Journal reported. The Reverend Al Sharpton today will begin working with PETA to promote a boycott against Yum! Brands’ KFC so the restaurant chain will make its chicken suppliers adopt tougher treatment standards, the NY Times said. Tower Automotive, the world’s largest maker of vehicle frames, will seek Chapter 11 bankruptcy protection as soon as today, the Wall Street Journal reported. The US Social Security system’s problems are a small part of the larger challenge of coping with an aging population, as programs for the elderly such as health care, housing and heating assistance have proliferated, the Washington Post reported. The US Coast Guard is developing a new soar device and underwater weapons in order to protect American ports from an underwater attack, the NY Times said. US Customs and Border Protection Commissioner Bonner proposed using wireless sensors inside cargo containers, which would monitor for tampering and speed processing, the LA Times reported. Global travel may increase as much as 32% in five years, with Asian nations as the most popular destinations, Bloomberg reported. Egyptian President Mubarak has invited Israeli Prime Minister Sharon and Palestinian leader Abbas to hold talks in Egypt next week, Bloomberg reported. Russia’s economy grew 7.1% last year because of rising oil, gas and metals prices, Bloomberg said. Crude oil is falling modestly for a second day after an Energy Dept. report showed an unexpected rise in US gasoline stockpiles, Bloomberg said. The German adjusted unemployment rate jumped to 11.4%, a seven-year high, and the unadjusted rated surged to the highest level since World War II, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my internet, steel and computer longs. I have not traded today and the Portfolio remains 100% net long. The tone of the market is weaker, notwithstanding gains in the major indices. The advance/decline line is slightly negative, sector performance in mixed and volume is light. Measures of investor anxiety are mostly lower, however the ISE Sentiment Index is falling significantly today. I would like to see this index fall below 100. I expect US stocks to rise modestly into the close on more optimism for US reforms, low long-term interest rates, more dovish Fed comments, strong earnings reports, short-covering and bargain-hunting.