Friday, December 17, 2004

Mid-day Report

S&P 500 1,194.17 -.75%
NASDAQ 2,139.13 -.33%

Leading Sectors
Hospitals +.62%
Iron/Steel +.51%
Biotech +.29%

Lagging Sectors
Homebuilders -1.24%
Airlines -1.25%
Drugs -4.03%

Crude Oil 45.80 +3.67%
Natural Gas 7.44 +6.29%
Gold 443.00 +1.07%
Base Metals 118.28 +.05%
U.S. Dollar 82.13 -.40%
10-Yr. T-note Yield 4.21% +.60%
VIX 12.24 -.24%
Put/Call .82 +22.39%
NYSE Arms 1.55 +124.64%

Market Movers
PFE -13.9% after saying Celebrex increased the risk of heart attacks in a study of cancer patients.
PLMO -19.7% after meeting 2Q estimates, but failing to give 3Q guidance.
OSIP +42.6% on AZN news.
ZOLT +19.5% after saying that it received a contract from Vestas Wind Systems A/S, the world's largest producer of wind turbine generators, to provide $80 million to $100 million of carbon fiber and materials during the next three years.
NKE +6.4% after beating 2Q estimates and giving strong 3Q/4Q guidance.
MATR +13.8% after boosting 05 guidance.
WLT +8.1% after announcing its Board approved up to $135 million for a capital investment program to significantly increase coal production capacity.
KMX +7.7% after beating 3Q estimates and raising 4Q outlook.
AHG +6.0% on multiple upgrades.
LF -11.55% after cutting 04 outlook substantially.
VIP -8.8% after denying a report it may receive a $322 million tax bill for 2002.
TELK -12.5% on AZN news.
AZN -8.8% after saying its Iressa lung cancer treatment didn’t help patients live longer in a study.
LEG -7.1% after lowering 4Q guidance.

Economic Data
Consumer Price Index for November rose .2% versus estimates of .2% and a .6% increase in October.
CPI Ex Food & Energy for November rose .2% versus estimates of .2% and a .2% increase in October.

-Goldman Sachs reiterated Outperform on DHR, DNA, PFE, NKE and Underperform on SCS.
-Citi SmithBarney reiterated Buy on PRE, target $71. Citi reiterated Buy on KBH, target $141. Citi reiterated Buy on DRS, target $52. Citi reiterated Buy on MXRE, target $24. Citi reiterated Sell on UST, target $38. Citi reiterated Buy on PBG, target $33. Citi reiterated Sell on GMR, target $35. Citi reiterated Sell on SEPR, target $40. Citi reiterated Sell on LF, target $10. Citi reiterated Buy on CCE, target $25. Citi reiterated Buy on GS, target $125. Citi reiterated Buy on CTAS, target $55.
-CSFB reiterated Outperform on DE.
-Banc of America rated SBSA Buy, target $12. BofA rated EVC Buy, target $10. BofA rated UVN Buy, target $33. BofA rated KWK Buy, target $43. BofA rated LNCR Buy, target $48. BofA rated AHG Buy, target $40.
-Bear Stearns downgraded PLMO to Underperform.
-JP Morgan rated LNG Overweight. JPM rated ONXX Overweight.

Mid-day News
U.S. stocks are modestly lower mid-day on worries over higher energy prices and weakness in the pharmaceutical sector. Oil prices will drop through March, losing as much as 25%, as inventories increase in industrialized countries, according to Merrill Lynch. Reuters Group is expected to buy Telerate, the bond data company, early next week, Financial News said. Cox Communications, Time Warner and Comcast are among cable companies laying their own fiber-optic networks or leasing them to offer new services combining telephone and the Internet as well as tv, the Wall Street Journal reported. Resistance to new financial regulations is rising in the US and Europe, the NY Times reported. The Los Angeles region likely attracted a record high number of visitors this year, thanks in part to a weaker US dollar providing bargains for foreign tourists, the LA Times reported. EBay agreed to buy privately held for $415 million in cash and stock as it expands into classified listings, Bloomberg said. Pfizer said Celebrex posed a greater risk to the heart than a placebo in a long-term study of the painkiller, Bloomberg reported. AstraZeneca Plc's Iressa lung cancer treatment didn't help patients live longer in a study, Bloomberg said. Crude oil is rising, heading for its biggest weekly gain since March 2003, on expectations that below-normal temperatures will boost demand for heating oil, Bloomberg reported. President Bush signed into law a bill creating a director to oversee US intelligence gathering and making other changes the Sept. 11 commission said were needed to prevent future attacks, Bloomberg said. Eli Lilly said it added a safety warning to the label of its attention-deficit drug Strattera, Bloomberg reported.

Bottom Line: The Portfolio is slightly lower mid-day on losses in my semi and internet longs. I have not traded and the Portfolio is still 75% net long. Considering the news today, it is a mild positive that the major indices are only showing modest losses. Energy prices are spiking, interest rates are rising and the pharmaceutical sector is sustaining significant damage. Also on the positive side, the ARMS Index and Put/Call readings are soaring and the ECRI Weekly Leading Index rose again this week and is now at its highest level since the first week of May. I expect US stocks to trade mixed-to-higher into the close.

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