Mid-day Update

S&P 500 1,096.21 +.05%
NASDAQ 1,836.85 -.16%

Leading Sectors
Airlines +2.31%
Restaurants +1.17%
Transports +.61%

Lagging Sectors
Commodity -.71%
Oil Service -1.03%
Semis -2.11%

Other
Crude Oil 45.20 -1.89%
Natural Gas 5.27 -.66%
Gold 405.70 -1.72%
Base Metals 109.19 +.26%
U.S. Dollar 89.47 +.47%
10-Yr. T-note Yield 4.29% +.32%
VIX 15.54 -2.14%
Put/Call .76 -3.80%
NYSE Arms 1.29 +27.72%

Market Movers
POSS -37.4% after reiterating 4Q outlook, lowering 05 guidance and saying a study showed its AngioJet medical device shouldn't be routinely used to reduce blood vessel clots in heart attack patients.
BRCM -6.4% after CSFB lowered its 3Q/4Q estimates and price target.
PCP +6.7% after Bank of America upgrade to Buy.
DLP +9.8% after saying it will enter a long-term agreement with Syngenta AG to develop and sell new biotechnology products for cotton.
PERY +5.5% after exceeding 2Q estimates.
SAFM -23.2% after missing 3Q estimates and lowering 04 outlook.
AD -13.9% after lowering 04 guidance and multiple downgrades.
TTC -5.6% after exceeding 3Q estimates and lowering 04 guidance.
GOOG -4.4% on profit-taking after IPO run-up.

Economic Data
Existing Home Sales for July were 6.72M versus estimates of 6.81M and 6.92M in June.

Recommendations
OTEX rated Buy at Merrill, target $28. POT raised to Buy at Merrill. CLS raised to Outperform at Thomas Weisel. SANM raised to Outperform at Thomas Weisel. BEC raised to Outperform at Thomas Weisel. PCP raised to Buy at Bank of America, target $64. VSAT rated Buy at Oppenheimer, target $25. Goldman Sachs reiterated Outperform on A, IP, DTC, ALK, CAL and SPP. Goldman raised CAT to Outperform. Citi SmithBarney reiterated Buy on MWD, target $72. Citi reiterated Buy on PTP, target $34. Citi reiterated Buy on MXRE, target $24. Citi reiterated Buy on FLEX, target $22. Citi reiterated Buy on TOY, target $23.

Mid-day News
U.S. stocks are mixed mid-day as falling energy prices offset weaker economic data. Bioenvision expects as much as $300 million in sales from its clofarabine drug, which treats acute and chronic leukemia, CEO Wood told CNBC. The European Commission plans to extend its probe into plans by Microsoft and Time Warner to buy control of ContentGuard, a U.S. maker of anti-piracy software, Reuters said. Osama bin Laden's chauffeur was arraigned today on terrorism charges before a military tribunal at the U.S. naval base at Guantanamo Bay, Cuba, the AP said. California's Senate yesterday passed a bill aimed at keeping companies from moving jobs to other countries, the LA Times reported. The measure was passed even though an unreleased report commissioned by the leadership of the California State Assembly found the measure would cost more jobs than it would save, the newspaper said. Iraqi Vice-President Ibrahim al-Jafari made a surprise visit to neighboring Iran to meet President Mohammad Khatami and other members of the leadership, Agence France-Presse reported. U.S. 10-year Treasury notes declined for a third day, the longest drop in a month, after Federal Reserve Governor Bernanke said oil prices near record highs won't derail growth in the world's largest economy, Bloomberg reported. The U.S. Chamber of Commerce, the nation's largest business organization, said it will help pay for ads suggesting the economic "dangers" associated with having trial lawyers aligned with the White House, Bloomberg reported. Crude oil futures fell for a third session, dropping as low as $44.95 a barrel, on speculation that increased Iraqi shipments will help meet global needs, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly lower mid-day as my shorts are mixed and my technology longs are falling. I took profits in a few longs this morning and added a new short, bringing the Portfolio's market exposure to 25% net long. My new short is ERTS and I am using a $51.25 stop-loss on the position. I now believe oil has seen its highs for the intermediate-term. Another move up to test the highs could occur during September, however I believe it will fail and the price of crude will head relentlessly towards the mid-30's by year's end. This is a very positive development and was necessary for the strong rally I envision during the fourth quarter. Stocks will likely remain mixed into the close, however with oil falling I am not ruling out another leg up.