Mid-day Update

S&P 500 1,131.11 +.15%
NASDAQ 2,035.00 +.24%

Leading Sectors
Disk Drives +2.08%
Airlines +1.67%
Broadcasting +1.29%

Lagging Sectors
Fashion -.79%
Hospitals -1.64%
Restaurants -2.59%

Other
Crude Oil 36.56 -1.64%
Natural Gas 5.74 -.92%
Gold 401.80 -1.45%
Base Metals 110.88 +.33%
U.S. Dollar 90.40 +.66%
10-Yr. Long-Bond Yield 4.39% +.92%
VIX 16.99 -1.39%
Put/Call .96 +5.49%
NYSE Arms .60 -48.72%

Market Movers
TTWO -13.09% after CEO resigned, delayed game releases and forecast an unexpected loss.
MCD -4.6% after reporting better-than-expected 1Q, CIBC downgrade.
HCA -5.0% after cutting 1Q and 04 forecast.
HDI +4.89% after beating 1Q estimates.
AUO +10.26% as investors anticipate strong flat-panel sales to Japanese companies.
SAFM -14.3% on rumors of an FDA warning letter.

Economic Data
Consumer Price Index for March +.5% vs. estimates of +.3%.
CPI Ex Food & Energy +.4% in March vs. estimates of +.2%.

Recommendations
NTIQ and KRI raised to Overweight at JP Morgan. CBH rated Underperform at Keefe, Bruyette. JEF raised to Buy at Merrill, target $40. PRSF raised to Sector Outperform at CIBC. X rated Outperform at CSFB, target $45. AIG raised to Overweight at Lehman, target $92. NXTP rated Strong Buy at Raymond James, target $17. ELX rated Underperform at RJ. Tom Kurlak, writing for TheStreet.com, is saying INTC is a very good buy right here on expected strength later in the year. Cramer, of TheStreet.com, says to buy tech and cyclicals through first 3 Fed hikes. He says homebuilders, retailers, banks, s&l, drugs, reits and insurers will underperform in this environment. TSC also recommending MIK and JBSS. Goldman Sachs reiterated Underperform on AMCC. GS reiterated Outperform on MO, TRMS, CAH and INTC. GS upgraded SRE to Outperform. Citi Smith Barney says to Buy CBH right now. Citi upgraded KPA to 1H. Citi thinks aluminum prices will continue to rise throughout year, favorite stocks AA and AL. Citi reiterated Buy on MCD, MER, COX and CMCSK.

Mid-day News
U.S. stocks are rising modestly mid-day as strong earnings reports offset a higher-than-expected CPI reading. A recent survey by Merrill Lynch says that 66% of investors are underweight bonds and inflation concerns are at a record high. The U.S. Centers for Disease Control and Prevention plans for the first time ever to begin stockpiling influenza vaccine for children, the AP reported. The FDA approved the clinical testing of small sensors that can be placed beneath the skull of a paralyzed patient to help control computers just by thinking, the AP reported. al-Sadr has dropped all his conditions for talks with the U.S. on defusing the standoff and is ready to accept what the top Shiite clerics ask for, Agence France-Presse reported. Prices paid by U.S. consumers rose .5% in March, a fourth straight increase, boosted by rising energy, transportation and clothing costs. Excluding energy and food, core prices climbed the most in 2 years. Manhattan apartment prices rose to a record $998,905 in the first quarter as the city emerged from a recession and Wall Street bonuses fueled real estate purchases, Bloomberg reported.

BOTTOM LINE: The Portfolio is unchanged on the day and I have not traded as of yet, leaving market exposure at 75% net long. I am surprised by today's strength considering the high CPI reading. Homebuilders, banks and I-banks all appear ready for a short-term bounce. If market strength persists throughout the day I will likely add exposure in the cyclical area. However, if the U.S. equity markets weaken this afternoon it will probably trigger sell signals in my short-term indicators, thus I will look to add a few shorts in the retail and restaurant sectors.