Monday Watch

Earnings of Note
Company/Estimate
AH/.38
CVC/-.37
CHTR/-.32
FOSL/.20
PSUN/.16
SBL/.08

Splits
None of Note.

Economic Data
None of Note.

Weekend Recommendations
Goldman Sachs reiterated Outperform on EBAY, PXD, BAC, GDT, BSX and DTV. Barron's has positive columns on MCIA and WMB.

Weekend News
Oil & Gas Journal has an interesting article, saying that technology will increase oil reserves 3x-4x current estimates. Americans have conflicting emotions about the photographs of abuse at the Abu Ghraib prison in Iraq, with many disgusted at the images yet protective of U.S. troops, the NY Times reported. President Bush plans to intensify a worldwide effort to gain support for Israeli Prime Minister Sharon's plan to withdraw from the Gaza Strip and retain some West Bank settlements, the NY Times reported. U.S. companies that sell products overseas say opposition to the war in Iraq and any anti-Americanism hasn't led to a loss in sales, the NY Times reported. BMW, the world's second-largest maker of luxury cars, may expand its Spartanburg, South Carolina, plant to build a third model there, the head of production said. A blast in the Russian republic of Chechnya killed President Kadyrov, Russian President Putin said. U.S. state governments are reporting the strongest tax revenue and the most positive outlook for budgets since the stock market began to crash in early 2000, the Washington Post reported. Iran won't oppose any move by OPEC to raise production when the group meets in Beirut next month, Reuters said. IBM said it has developed client middleware that will help companies avoid using Microsoft's operating system, the Financial Times said. SunTrust Banks agreed to buy National Commerce Financial for $6.98 billion in cash and stock, Bloomberg reported. Asian stocks are falling tonight by the most in 2 ½ years on concerns over rising interest rates in the U.S. and slowing Chinese economic growth.

Late-Night Trading
Asian indices are sharply lower, -6.00% to -1.00% on average.
S&P 500 indicated -.48%.
NASDAQ indicated -1.0%.

BOTTOM LINE: The Portfolio is 25% net short heading into the week. I expect U.S. stocks to put in a short-term bottom on Monday or Tuesday as strong economic reports, stabilizing interest rates and good corporate earnings lead investors to bargain hunt. It is possible, looking at the carnage in Asian indices tonight, that U.S. stocks may be in the process of forming an intermediate-term bottom rather than short-term. If this is the case, I would expect to see less investor complacency and an extreme surge in volume on a broadly negative day. I will likely begin to add selective long positions into any extreme weakness tomorrow in anticipation of a short-term rally.