Thursday, March 11, 2004

Mid-day Update

S&P 500 1,122.39 -.15%
NASDAQ 1972.64 +.43%

Leading Sectors
Iron/Steel +1.79%
Semis +1.31%
Internet +1.13%

Lagging Sectors
Drugs -.89%
Wireless -1.36%
Fashion -2.98%

Crude Oil 36.38 +.78%
Natural Gas 5.47 +1.35%
Gold 400.30 -.05%
Base Metals 109.62 +2.07%
U.S. Dollar 88.77 -.20%
10-Yr. Long-Bond Yield 3.77% +1.31%
VIX 17.92 -3.91%
Put/Call 1.13 +32.94%
NYSE Arms 1.28 -47.11%

Market Movers
NT -3.3% after it said it may restate results for 03 after an accounting review.
DCTH +76.0% after it said clinicians at the Sydney Melanoma Unit in Australia successfully completed the first treatment in the company's Phase III clinical trial for inoperable cancer in the liver.
TGT +8.3% on plans to sell its Mervyn's and Marshall Field's department stores and multiple upgrades.
LF -26.3% after lowering 1Q and 04 guidance and multiple downgrades.
HAL -4.7% after the U.S. Justice Dept. said it would take over a criminal investigation looking into whether or not HAL inflated fees for its work in Iraq.
YELL +11.2% after raising 1Q estimates significantly.
TASR +6.6% on short-covering.
NSM +5.6% after significantly beating 3Q estimates and raising 4Q guidance.

Economic Data
Advance Retail Sales for Feb. were up.6%, meeting estimates.
Retail Sales Less Autos for Feb. unch. vs. expectations of a .5% increase.
Initial Jobless Claims 341K last week vs. expectations of 343K.
Continuing Claims were 3032K vs. expectations of 3075K.

Goldman Sachs reiterates Underperform on DDS. GS reiterating Outperform on BBY. Goldman would buy steel stocks on current weakness, favorites are STLD and X. Citi Smith Barney is recommending AMTD before they release Daily Avg. Revenue Trade data on Fri. Citi initiated coverage of LXK with a 1M rating and $95 target. Citi is upgrading TGT to 1M and raising target to $50. Citi reiterating Buy rating on MATK. Citi says tone of presentations at their industrial conference was almost universally upbeat. They reiterate Buys on GE, TYC, ASD and ITT. LAMR is mentioned positively on Barron's Online saying the company should benefit from a rebound in local ad revenues. RHAT raised to Outperform at Thomas Weisel. LF lowered to Underperform at CSFB with $18 target. TGT raised to Outperform at CSFB. DG rated Buy at Bank of America, $35 target. CENX raised to Buy at Merrill, $28 target. CKFR raised to Outperform at Lehman, $34 target. ERES cut to Underperform at Raymond James.

Mid-day News
U.S. stocks are mixed mid-day on strength in Cyclicals and weakness in wireless and pharmaceuticals. Spains's government said the ETA terror group was behind rush-hour train bombings that killed more than 190 people and injured 1,247 in Spain's worst-ever terrorist attack. Codelco, the world's largest copper producer, sold 3/4 of its stockpile of the metal, raising the risk of a shortage this year, Reuters reported. Crude oil rose for the first time in 4 days after the IEA said that demand this year will rise to the highest since 1997 because of surging global economies. Alan Greenspan reiterated his belief that U.S. job growth will soon accelerate. He also said the U.S. should not pursue protectionist policies as it will cost more jobs than it will save. He said we need to focus on retraining our un-skilled labor force. The surge in Lucent bonds, which have almost doubled since the beginning of last year, is a sign that communications companies' debt-reductions efforts are paying off, Bloomberg reported. The U.S. House passed a bill that stiffens federal penalties against t.v. and radio broadcasters for indecency.

BOTTOM LINE: The market's ability to rally in the face of the Spanish terror attacks is a good sign. National Semis exceptional numbers are also being rewarded as it leads the SOX higher. I added a few technology and base metal longs on the morning weakness, bringing the Portfolio's market exposure to 25% net long. While I am not ready to be aggressive on the long-side, the market's tone is much better today. I may add another 25% long exposure if the market can hold today's gains and strengthen into the close.

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