Monday, December 20, 2004

Mid-day Report

S&P 500 1,197.13 +.25%
NASDAQ 2,133.50 -.08%

Leading Sectors
Utilities +1.23%
Energy +.98%
Iron/Steel +.81%

Lagging Sectors
Drugs -.83%
Broadcasting -.99%
Software -1.26%

Crude Oil 45.00 -2.77%
Natural Gas 6.88 -7.74%
Gold 443.00 +.05%
Base Metals 120.60 +1.96%
U.S. Dollar 81.70 -.56%
10-Yr. T-note Yield 4.18% -.51%
VIX 12.17 +1.84%
Put/Call .84 +1.20%
NYSE Arms 1.07 -25.17%

Market Movers
SYMC -4.5% on continuing worries over VRTS merger, TMIC news and slowing growth.
MFE -6.7% after MSFT said it would use TMIC's anti-virus computer technology for MSN Hotmail.
TASR +4.0% after saying it had entered into an exclusive distribution agreement with one of the largest firearm and accessory distributors in the US.
CATG +14.7% after winning a court ruling awarding it higher royalties from US partner Abbott Labs.
KRT +17.03% after Centro Properties and Watt Commercial Properties agreed to buy it for $610 million in cash.
CMC +9.42% after reporting strong 1Q and raising dividend.
TMIC +9.9% after announcing an agreement with MSN to provide anti-virus scanning and cleaning protection for Hotmail.
PEG +5.6% after Exelon Corp. agreed to buy it for about $12.8 billion to create the nation's biggest utility operator.
SMSC -16.5% after missing 3Q estimates substantially and lowering 4Q outlook.

Economic Data
Leading Indicators for November rose .2% versus estimates of a .1% gain and a .4% fall in October.

-Goldman Sachs reiterated Outperform on COH, TU, PFE, ACS, CCL, GILD and Underperform on SGP, PBG.
-Citi SmithBarney thinks semi equipment merger activity will accelerate in 05. Favorite combinations would be AMAT/VECO, KLAC/ORBK, MTSN/ACLS, AMAT/UTEK, LTXX/Eagle Test Systems, MYK/Celerity Group. Citi reiterated Buy on SANM, target $12. Citi reiterated Buy on WMT, target $65.
-UBS raised FCH to Buy, target $17. UBS cut COTT to Reduce, target $24.
-JP Morgan rated AGCC Underweight. JP Morgan cut BVN to Underweight.
-Banc of America rated CCRN Buy, target $21. BofA rated AHS Buy, target $19.
-Deutsche Bank rated ZIPR Buy, target $21.

Mid-day News
U.S. stocks are quietly mixed mid-day as weakness in the software and drug sectors is being offset by strength in energy shares. Sprint today will announce plans to add a radio service to its cell phones, allowing customers to listen to music for $5.99 a month, the NY Times reported. Cingular Wireless and other mobile-phone carriers are trying to not offer pornography and violent video games as more of this content is being adapted for wireless services, the NY Times said. and other Internet retailers are extending the cutoff date for last-minute orders to guarantee delivery of packages in time for Christmas, the NY Times reported. Campbell Soup is selling more of its products through food vendors at restaurants and college campuses to limit its dependency on grocery store sales, the Philadelphia Inquirer reported. US Steel Corp. plans to raise its prices on carbon flat-rolled steel products by $30 to $50 a ton on Jan. 3, American Metal Market reported. Wm. Wrigley Jr. Co. may consider buying Tootsie Roll Industries, Crain's Chicago Business reported. Bristol-Myers Squibb and biotechnology partner Gilead Sciences formed a venture to develop and market an HIV treatment that combines two of their drugs, Bloomberg reported. Crude oil is falling on expectations that temperatures in most of the US will rise, reducing demand for heating oil, Bloomberg said. The index of leading US economic indicators rose in November for the first time in six months, buoyed by higher stock prices, Bloomberg reported.

Bottom Line: The Portfolio is slightly higher mid-day on gains in my internet and security longs. I have not traded today and the Portfolio is still 100% net long. The underlying tone of the market is slightly negative. Given the positive news today with falling energy prices, declining interest rates and a better Leading Indicators report, today's action is disappointing for the bulls. I expect US stocks to rise modestly into the close.

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