Mid-day Update

S&P 500 1,127.71 +.21%
NASDAQ 1,972.64 +.13%

Leading Sectors
Airlines +2.75%
Insurance +1.17%
Retail +.77%

Lagging Sectors
Commodity -1.10%
Hospitals -1.38%
Iron/Steel -2.16%

Other
Crude Oil 52.32 -.27%
Natural Gas 8.88 +1.20%
Gold 426.70 +.23%
Base Metals 112.06 -.71%
U.S. Dollar 85.14 -.37%
10-Yr. T-note Yield 4.07% -.33%
VIX 15.62 -.64%
Put/Call .71 +4.41%
NYSE Arms .88 +15.79%

Market Movers
ASKJ -26.9% after meeting 3Q estimates, lowering 4Q revenue estimate slightly and multiple downgrades.
DWA +35.5% on strong demand for IPO.
DNDN +23.1% after the company said a prostate-cancer drug that had failed to prove a benefit for patients in an earlier study helped patients live longer in a follow-up analysis.
IMCL -9.3% after missing optimistic 3Q estimates.
CLMS +5.6% on strong demand for IPO.
FOXH +50.5% on strong demand for IPO.
BBW +28.3% on strong demand for IPO.
ARBA +24.4% after beating 4Q estimates, RBC Capital upgrade to Top Pick and announcing a large sale to PD.
CCMP +15.1% after beating 4Q estimates.
LONG +16.3% on strong demand for IPO.
KOMG +12.0% after beating 3Q estimates and raising 4Q outlook.
KSWS +12.2% after beating 3Q estimates, raising 4Q guidance and announcing 5M share increase in stock buyback.
SRCL +7.3% after beating 3Q estimates.
PLB -18.0% after lowering 4Q/05 outlooks.
PNRA -10.2% after meeting 3Q estimates, lowering 05 guidance and JP Morgan downgrade to Neutral.
INGR -10.7% after missing 3Q estimates.
FBN -13.3% after meeting 3Q estimates, but lowering 4Q forecast.
TEX -8.7% after beating 3Q estimates, raising 4Q forecast and Robert Baird downgrade to Neutral.

Economic Data
Initial Jobless Claims for last week were 350K versus estimates of 335K and 330K the prior week.
Continuing Claims were 2823K versus estimates of 2818K and 2785K prior.
Help Wanted Index for September was 36 versus estimates of 37 and 37 in August.

Recommendations
-Goldman Sachs reiterated Outperform on MDT, AET, PFE, NBP, SYMC, AMT. Goldman reiterated Underperform on LVLT, LSI. Goldman said to Buy steel stocks on weakness from Chinese interest rate hike announcement, favorites are STLD, NUE, X and CMC. Goldman downgraded CI to Underperform.
-Citi SmithBarney said to Buy BEAS ahead of quarter, target $11.50. Citi reiterated Buy on JCP, target $50. Citi reiterated Buy on CMCSK, target $34. Citi reiterated Buy on IRF, target $50. Citi reiterated Buy on QSFT, target $17. Citi reiterated Buy on PRE, target $69. Citi reiterated Sell on BA, target $40. Citi reiterated Buy on PHM, target $86. Citi reiterated Sell on COP, target $76. Citi reiterated Buy on EEFT, target $27. Citi reiterated Buy on TEX, target $52. Citi reiterated Buy on CTX, target $85. Citi reiterated Buy on MSFT, target $33. Citi reiterated Buy on ATH, target $116.
-UBS cut LPNT to Reduce, target $28.
-Legg Mason raised QSFT to Buy, target $18.
-JP Morgan raised PECS to Overweight.

Mid-day News
U.S. stocks are modestly higher mid-day as declining oil prices, soaring IPOs, diminishing domestic terrorism fears and earnings optimism are offsetting concerns over slowing demand from China. Ford Motor may expand production of its gas-electric hybrid Ford Escape sport-utility vehicles, as the company anticipates strong demand, the Wall Street Journal reported. BellSouth is expected to announce an agreement today to help sell ad packages on Google's Web sites, the Wall Street Journal reported. OAO Yukos Oil CFO Misamore said bankruptcy is "perhaps the best solution" for handling its tax debts from the Russian government, according to Le Monde. China raised its benchmark lending rate, for the first time in nine years, to 5.58%, Bloomberg reported. U.S. shares of raw-material producers are falling, led by Alcoa, on concern demand for commodities will slacken after China raised its benchmark lending rate, Bloomberg said. Crude oil futures fell to a three-week low in NY on speculation demand from China will slow, Bloomberg reported. Palestinian leader Yasser Arafat may be moved to a hospital in Ramallah or abroad as his deteriorating health raised the prospect of a power vacuum in the Palestinian Authority, Bloomberg said. United Nations records suggest Iraqi officials overstated the amount of explosives missing from a weapons depot and that 138 tons of the munitions may have disappeared before the U.S.-led coalition liberated Iraq, ABC News reported. The U.S.-led coalition has already found and is in the process of destroying more than 400,000 tons of explosives and weapons in Iraq, ABC said.

Bottom Line: The Portfolio is slightly higher mid-day on gains in my internet and retail longs. I have not traded today and the Portfolio is still 100% net long. Market action today is good considering recent gains. Most measures of investor anxiety are rising, the CRB is falling and interest rates are declining which are all positives. As well, the market's strength in the face of so much new supply, in the form of IPOs, is also impressive. Finally, China's move to hike rates is a positive. Increasing commodity prices have been the only real source of inflation and this should quell those fears to an extent. Commodity prices will remain high, but have likely peaked for the intermediate-term. Commodity-related companies will still find the environment very profitable. I expect U.S. stocks to move modestly higher into the close on declining energy prices and short-covering.