Monday, March 22, 2004

Mid-day Update

S&P 500 1,095.61 -1.28%
NASDAQ 1,907.07 -1.72%

Leading Sectors
Restaurants +.25%
Drugs -.42%
Energy -.64%

Lagging Sectors
I-Banks -2.81%
Networking -3.05%
Airlines -3.17%

Crude Oil 37.15 -2.44%
Natural Gas 5.51 -1.20%
Gold 418.30 +1.36%
Base Metals 112.31 -.67%
U.S. Dollar 87.62 -.58%
10-Yr. Long-Bond Yield 3.74% +.90%
VIX 21.61 +12.85%
Put/Call .82 -19.61%
NYSE Arms 3.18 +56.65%

Market Movers
USON +18.9% on $1.7B buyout by Welsh Carson.
MAGS +26% as investors anticipate increased demand for security systems.
NSSC +21.7% on positive Barron's recommendation.
EWT -11.7% on Taiwan political unrest.
IFF -6.6% after negative "Heard on the Street" column in the WSJ.
SSCC -7.0% after lowering 1Q earnings forecast.

Economic Data
None of note.

Tom Kurlak says in a editorial that he couldn't disagree more with Wall Street's concern that semiconductors have seen their best earnings growth rates for this cycle. His favorites are INTC, AMAT, TER, MU, BRCM and AVX. Goldman Sachs reiterates Underperform on TE and RKY. GS reiterates Outperform on EBAY, MO, BSX, PAYX, CAKE, WEN, YUM, KO, CCE and PEP. GS raising CBL to Outperform. Goldman becoming more confident in a significant employment pick-up, benefiting SIR, RMK, MLHR and SCS, favorite is KROL. Citi Smith Barney says MU will deliver strong 2Q results and make positive comments on 3Q. HTLD raised to Overweight at Morgan Stanley, $26 target. FON and CCI raised to Overweight at JP Morgan.

Mid-day News
U.S. stocks are falling mid-day on numerous geopolitical concerns, led by weakness in airline and technology shares. WalMart said same-store sales for March are tracking at the high end of the company's plan. Citi Smith Barney Chief North American Economist says that the recent Manpower employment survey is indicative of 700,000 new jobs being created in the second quarter, but that must be seen for investors to be convinced. Makers of antidepressants should better warn doctors and patients about suicide risk for people taking the medicines, the U.S. FDA said. Crude oil futures fell after officials from 2 members of OPEC said the group may postpone a cut in production quotas that was due to start April 1. Concerns that inflation will soon begin increasing are "premature" and it is unlikely inflation will increase significantly said Michael Moskow, president of the Federal Reserve Bank of Chicago. Moskow also said employment will pick-up as the economy continues to expand and that the Fed can be "patient" on policy accommodation.

BOTTOM LINE: The Portfolio is 100% net long and is down today on weakness in almost every sector. The NYSE Arms Index reached 4.52 this morning. The last time it reached such an extreme level was at the lows last March right before the bull market began. I have not traded as of yet. I am waiting to see if the morning lows on the S&P 500 will hold. I will likely cut market exposure significantly in the afternoon on a convincing break of the morning lows.

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