Monday, December 06, 2004

Mid-day Report

S&P 500 1,188.73 -.20%
NASDAQ 2,148.71 +.03%

Leading Sectors
Disk Drives +1.24%
Boxmakers +.86%
Software +.41%

Lagging Sectors
Retail -.96%
Foods -1.09%
Airlines -1.31%

Crude Oil 42.95 +1.08%
Natural Gas 6.84 +.72%
Gold 456.10 -.26%
Base Metals 117.25 +.04%
U.S. Dollar 81.11 +.16%
10-Yr. T-note Yield 4.22% -.55%
VIX 13.40 +3.40%
Put/Call .74 +7.25%
NYSE Arms 1.11 -18.98%

Market Movers
CGTK -57.4% after saying a product its developing with BMY to treat vein-graft failure of the heart and leg didn't work in a late-stage trial.
SOL +24.6% after Carl Zeiss AG and EQT Partners AB agreed to buy it for $815 million in cash.
DVA +9.9% after the Wall Street Journal reported it was nearing an agreement to buy the dialysis operations of Gambro AB for about $3 billion.
OSTK +5.0% on short-covering after continuing strong holiday sales.
GYI +3.9% after positive comments about the company on Rukeyser's Wall Street.
IMDC +4.0% after announcing it silicone gel-filled breast implants PMA will be reviewed at an upcoming FDA panel meeting.
SHOP -13.3% after Deutsche Bank rated it Sell, target $20.
LNG -6.3% on profit-taking.

Economic Data
None of note.

-Goldman Sachs reiterated Outperform on COH, ACN, AMLN, BBY, WLP, DDR, NKE, RIO. Goldman upgraded CVRD to Outperform.
-Citi SmithBarney said to Buy CIT, target $50. Citi thinks another bidder for S will emerge. Citi reiterated Buy on VNO, target $79. Citi reiterated Buy on MSFT, target $32. Citi reiterated Buy on UTSI, target $26. Citi reiterated Buy on SANM, target $12. Citi reiterated Buy on HUM, target $32. Citi reiterated Buy on THC, target $17.50. Citi reiterated Buy on HOV, target $73. Citi reiterated Buy on GE, target $38. Citi SmithBarney reiterated Buy on TXN, target 27.
-Merrill Lynch rated D Focus 1 Stock of the Week.
-UBS cut DDS to Reduce, target $23. UBS raised ICOS to Buy, target $36. UBS raised MFE to Buy, target $36.
-Deutsche Bank raised CHKP to Buy, target $28.
-Prudential cut KWD to Underweight, target $30.

Mid-day News
U.S. stocks are quietly mixed mid-day as optimism over improving fundamentals in the tech sector is offsetting worries over consumer spending and a bounce-back in oil prices. The U.S. Chamber of Commerce has started a weekly newspaper in Illinois as part of a campaign against frivolous lawsuits, the Washington Post reported. The UN nuclear watchdog said it is certain that the nuclear fuel it monitored in North Korea has been turned into four to six nuclear bombs, the NY Times reported. NY Attorney General Spitzer, who will run for governor, hasn't pursued corruption in NY government with the same vigor he has shown in going after corporate wrongdoers, the NY Times said. Accessories for Apple's iPod digital music player amount to a more than $200 million a year business, the San Francisco Chronicle reported. U.S. Senate minority leader Reid said Democrats would oppose any plans by President Bush to create private accounts for Social Security or pick Clarence Thomas to replace William Rehnquist as chief justice if he leaves the Supreme Court, the Washington Post reported. Red Herring magazine founder Tony Perkins plans to introduce a printed "blogzine" in February with an annual subscription rate of $49 to highlight commentary and stories from blog sites, the San Jose Mercury News said. Best Buy is offering two new lines of electronics under its own Insignia and Geek Squad brands, Bloomberg reported. Cisco formed an alliance with Fujitsu to increase sales to Japanese telephone carriers, Bloomberg said. Crude oil is rising from a three-month low after an attack on the U.S. Consulate in Jeddah, Saudi Arabia, boosted concern that a revival of terrorist attacks might threaten oil shipments form the world's biggest oil exporter, Bloomberg said.

Bottom Line: The Portfolio is unchanged mid-day as strength in my internet and Russian ADR longs is offsetting weakness in my retail and security longs. I have not traded this morning and the Portfolio is still 125% net long. The tone of the market is weaker today, but improving. I view it as a positive that oil is only slightly higher, notwithstanding its recent fall and the news today. The rally in bonds is also a positive, especially considering all the recent talk that the declining dollar would send interest rates substantially higher. I expect U.S. stocks to rise modestly into the close on short-covering and strength in the technology sector.

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