Wednesday, March 24, 2004

Wednesday Close

S&P 500 1,091.33 -.24%
NASDAQ 1,909.48 +.40%

Leading Sectors
Gaming +3.28%
Semis +2.33%
Software +.53%

Lagging Sectors
Energy -2.11%
Iron/Steel -2.46%
Oil Service -3.05%

Crude Oil 36.82 .51%
Natural Gas 5.42 -.22%
Gold 415.50 -.46%
Base Metals 111.80 +.84%
U.S. Dollar 88.97 +.04%
10-Yr. Long-Bond Yield 3.71% +.50%
VIX 19.81 -4.16%
Put/Call .89 +32.84%
NYSE Arms 1.24 +1.64%

After-hours Movers
THC +5.54% after it said it agreed to pay the government $30.75M to settle 2 investigations into its billing practices.
LSCC +3.33 after better-than-expected 4Q and restating previous 3 quarters downward.
MERX -8.34% after beating 3Q estimates and lowering 4Q guidance.
MU -4.55% after missing sales estimates for 2Q.

Goldman Sachs reiterates Outperform on MDT, PFE, TRW and MSFT.

After-hours News
U.S. stocks finished mixed on Wednesday as strength in gaming and semiconductors was offset by weakness in commodity-related sectors. Continued fears of terrorism hurt economically sensitive groups after French officials discovered a bomb underneath the tracks of a train headed from Paris to Basel. Investors fear that already weak European economies could weaken further, damaging the U.S. economy. After the close, the Financial Times said Microsoft faces further suits over Windows XP. Bush administration officials said they are working to get Saudi Arabia to disrupt funding for terror groups and they are cooperating much more than a year ago. Israeli forces stopped a 14-year old Palestinian boy that was paid $22 to carry an 18 pound bomb and detonate it at a roadblock. The boy said he was tempted by the promise of his dispatchers that he would meet 70 virgins once he entered heaven and that he wanted to be a hero, reported Ha'aretz.

BOTTOM LINE: The Portfolio ended down slightly on the day as the market deteriorated substantially in the afternoon. I sold a few of my commodity-related longs, bringing market exposure for the Portfolio back down to 25%. I will closely monitor the tech sector's reaction to a relatively disappointing quarter from Micron. A break below 456 on the Morgan Stanley High-tech index will lead me to exit some of my longs and a break above 467 will lead me to increase my exposure in tech. Semis led the market correction and it is good to see them stabilizing and showing outperformance. However, tomorrow will be the real test. I am expecting a significant countertrend rally to begin early next week, but it could begin at any time due to the oversold short-term position of the major U.S. indices.

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