Tuesday, March 23, 2004

Tuesday Close

S&P 500 1,093.95 -.13%
NASDAQ 1,901.80 -.42%

Leading Sectors
Iron/Steel +.80%
HMO's +.78%
Airlines +.72%

Lagging Sectors
Telecom -1.02%
Disk Drives -1.03%
Oil Service -1.40%

Crude Oil 37.51 +.16%
Natural Gas 5.53 unch.
Gold 419.90 -.02%
Base Metals 110.87 -1.28%
U.S. Dollar 87.85 +.07%
10-Yr. Long-Bond Yield 3.69% -.61%
VIX 20.67 -4.22%
Put/Call .67 -30.21%
NYSE Arms 1.22 -63.58%

After-hours Movers
RHAT +9.12% after largest developer of Linux software met 4Q estimates and raised 1Q guidance.
NOVL +5.71% as number 2 developer of Linux software benefited from strong RHAT report.

Goldman Sachs reiterated Outperform on AMGN. GS reiterates its view that steel stocks will continue to see earnings driven outperformance. TheStreet.com has a negative column on AWE, saying it is losing subscribers. TheStreet.com has a positive column on gaming stocks, saying estimates are rising as the stocks correct.

After-hours News
U.S. stocks ended slightly lower Tuesday on another disappointing session for the bulls. Equities were higher until the final 30 minutes, dropping on reports that Israeli gunboats opened fired off the shoreline of Gaza City. After the close, Tyson Foods said it won't have to pay $1.28B in damages to thousands of ranchers, according to a ruling by a U.S. judge. Morgan Stanley led companies that sold $7.5B of new notes and bonds today, more than double the daily average this year, as frequent borrowers such as finance companies took advantage of low borrowing costs. Israeli planes hit a squad preparing to fire rockets from Lebanon into Israel, military officials reported.

BOTTOM LINE: The Portfolio was up slightly on the day, as I took profits in a few winning longs and added a new overbought short, bringing market exposure back down to 25% net long. I shorted ANF in the afternoon and will use a tight stop-loss of $33 as the market is very oversold short-term. The action in the final 30 minutes was disheartening for the bulls, as the days gains completely evaporated on some inconsequential news items. I expect a bit more weakness before a real countertrend rally begins on quarter-end mark-ups. Furthermore, I expect weakness to resurface in early April. However, the beginning of earnings season later in the month should provide the catalyst for a resumption of the bull market that began last year.

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