Thursday, March 04, 2004

Mid-day Update

S&P 500 1,154.59 +.31%
NASDAQ 2,050.54 +.84%

Leading Sectors
Homebuilders +2.09%
Internet +1.77%
Broadcasting +1.58%

Lagging Sectors
Banks -.02%
Energy -.28%
Defense -.74%

Crude Oil 36.63 +2.32%
Natural Gas 5.43 +1.02%
Gold 393.60 +.23%
Base Metals 109.35 -1.09%
U.S. Dollar 89.16 +.25%
10-Yr. Long-Bond Yield 4.02% -.57%
VIX 14.25 -2.06%
Put/Call .67 -6.94%
NYSE Arms .71 -27.55%

Market Movers
ASKJ +33.9% after raising 1Q earnings/revenue guidance and announcing acquisition of the Excite Network.
MATK +12.1% after announcing that the FDA has completed a favorable review of the company's generally recognized as safe notification for use of the former OmegaTech DHA in food applications.
IMCL +7.6% after Carl Icahn raised stake to 6.9% and said Wall Street had underestimated the "great potential" of Erbitux.
PFCB +5.1% after Citi raised it to Buy and gave $60 price target.
CPTS +20% after saying the AMA panel will categorize the Essure birth control system as a Category I procedure, speeding up coverage of Essure by private insurance companies and Medicaid.
DB +7.2% on rumors that Citigroup Smith Barney may acquire it.
PDII -11.6% on disappointing 4Q.

Economic Data
Non-farm Productivity(final) up 2.6% in 4Q vs. 2.7% estimate.
Unit Labor Costs(final) -.4% in 4Q vs. expectations of -1.2%.
Initial Jobless Claims came in at 345K last week, meeting expectations.
Continuing Claims came in at 3,091K last week vs. a 3,075 estimate.
Factory Orders were down .5%, meeting expectations.

Goldman Sachs reiterating Outperform rating on AA. GS is upgrading CEN, PAYX to Outperform and reiterating Outperform rating on ADP as they have concluded that recent weak payroll trends were due to economic, not secular problems. GS re-initiating coverage on FDC with Outperform rating and $60 target. Citi Smith Barney reiterating Buy on GTK and $67 price target. Citi says Feb. gaming revenue in Atlantic City increased 20-25%, benefiting HET, CZR, AZR, BYD, MGG and DJT. Citi says DOW seeing increased levels of business activity globally, bodes well for PPG, MCH, EMN and NCX. Citi also raising price target on GMST to $9.50. Finally, Citi raising price target on NMG/A to $68, saying it is the best-positioned luxury retailer.'s Cramer is recommending selling brokerage stocks ahead of earnings as they have run too far in short-term. Cramer also saying that shorts are covering in the homebuilding sector as they anticipate a weaker-than-expected jobs report and a fall in interest rates tomorrow. Merrill Lynch raised VRTS to Buy with a target of $38.

Mid-day News
U.S. stocks are mostly higher mid-day, led by homebuilders, technology and biotechnology. U.S. factory orders, excluding transportation components are surging and new orders are likely to pick up dramatically, Brian Wesbury, a chief economist told CNBC. The ECB kept rates unchanged at 2%, ignoring calls from Schroeder to lower rates. U.S. worker productivity grew last quarter at less than a third of the pace of the previous three months, suggesting companies may increase hiring as the economy strengthens. First-time claims for unemployment insurance fell to 345K, near a 3-year low.

BOTTOM LINE: The Portfolio is having a very good day today and I have increased its market exposure to 75% net long. I added LRCX and NVLS this morning, a couple of beaten-up semi-equipment names, ahead of INTC's update after the close. I am using stops of $25.50 and $31.00, respectively. I also added a couple of biotech names on the technical break-out of the Nasdaq Biotech Index. I expect to see some weakness later this afternoon as traders hedge their gains today ahead of the important news scheduled for release before trading tomorrow.

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