Friday, March 19, 2004

Mid-day Update

S&P 500 1,118.93 -.31%
NASDAQ 1,962.52 unch.

Leading Sectors
Iron/Steel +4.39%
Software +.83%
Papers +.60%

Lagging Sectors
Networking -.89%
Airlines -1.12%
Semis -1.35%

Crude Oil 38.00 +.18%
Natural Gas 5.61 -.37%
Gold 410.10 -.29%
Base Metals 113.07 +.31%
U.S. Dollar 88.28 +.73%
10-Yr. Long-Bond Yield 3.78% +.70%
VIX 18.50 -.16%
Put/Call .95 +15.85%
NYSE Arms 1.30 +23.81%

Market Movers
ADBE +9.6% after significantly beating 1Q estimates and raising 2Q guidance.
STTX +18.9% after boosting 2Q forecast substantially.
CACS +11.6% after Cingular selected it for wireless backhaul solutions.
QCBC +17% after takeover by BPOP.
NUE +6.89% after boosting 1Q guidance substantially.
PSRC -16.4% after meeting 3Q estimates and lowering 4Q guidance.
ACVI -17% after lowering 1Q guidance.

Economic Data
None of note.

ADBE raised to Buy at Citi Smith Barney, target $47. Citi saying to buy MOT on weakness ahead of next week's CTIA Conference. VRTS raised to Buy 2 at UBS, target $35. SFD raised to Outperform at CSFB, target $32. SAP raised to Sector Outperform at CIBC, target $45. BAC, FBF raised to Outperform at Bear Stearns. HBAN, ASO cut to Sell at Merrill. PGR raised to Overweight at Lehman, target $105. ROK raised to Overweight at Lehman, target $38. MGA raised to Overweight at J.P. Morgan. SOHU raised to Overweight at Pacific Growth. Cramer of thinks BDK could pre-announce to the upside. Morgan Stanley says semi demand will stay strong in 04 and recommends overweighting the sector following the recent 20-25% pullback. Goldman Sachs reiterates Outperform on AMGN. GS sees improved newspaper stock performance in 04 led by surging help-wanted ad sales, favorites are TRB and GCI. GS says PFE is favorite pharma stock and does not believe drug re-importation will occur this year.

Mid-day News
Stocks are mixed mid-day on stength in commodity-related stocks and weakness in semis. Merrill Lynch increased its forecast for mobile-phone shipment this year to 20 percent from a previous 16 percent due to growing markets in China, India and Russia. Demand for semis was the highest in 3 years in February, reported Saddam Hussein took $10.1 billion, $3.5 billion more than previously estimated, in smuggled oil revenue from the UN Oil for Food Program, the Washington Post reported. San Francisco home prices surged 14% in February to record highs, the San Francisco Chronicle reported. Oracle expects to soon agree to sell its financial-management software to 100 customers in Asia, Dow Jones reported. Cramer says on CNBC that high oil prices affect 10% of S&P positively and 20% negatively. Pakistani forces continue to battle as many as 400 fighters along the Afghan border who appear to be protecting a "high-value" target. Adobe’s CFO said that he is excited about economic growth and that they are hiring worldwide.

BOTTOM LINE: The Portfolio is having a good day as a few of my longs are up substantially. I expect the recent weakness in the last hour will not persist throughout the day. I haven't executed any trades today, however I may add a few longs on any significant weakness. Goldman Sachs is estimating S&P 500 operating EPS to grow 10% in 04 and 8% in 05, down from 29% in 03. I view this as a positive for the market as companies should exceed these low expectations by a wide margin. The Portfolio is 100% net long.

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