Tuesday, December 21, 2004

Mid-day Report

S&P 500 1,200.58 +.50%
NASDAQ 2,142.83 +.70%

Leading Sectors
Transports +1.64%
Airlines +1.53%
Software +1.51%

Lagging Sectors
Foods +.16%
Energy +.13%
Defense -.24%

Crude Oil 45.70 -.17%
Natural Gas 6.78 -2.40%
Gold 443.00 -.14%
Base Metals 121.19 +.49%
U.S. Dollar 81.89 +.27%
10-Yr. T-note Yield 4.17% -.32%
VIX 11.57 -2.20%
Put/Call .79 -15.05%
NYSE Arms .81 -22.86%

Market Movers
IACI +7.8% after saying it will spin off its travel-related assets into a new business named Expedia.
RMBS -14.28% after Infineon Technologies AG filed a motion to dismiss one case and said Rambus destroyed evidence.
ATYT -5.0% after missing 1Q estimates and raising 2Q outlook.
ANGO +17.7% after beating 2Q estimates and raising 05 guidance.
CMC +8.5% on continuing optimism over 1Q results.
UNP +5.1% after boosting 4Q estimates.
CVC +11.6% after suspending the spin-off of its Rainbow Media Enterprises unit.
YRK -12.15% after lowering 05 estimates and multiple downgrades.
LFUS -10.1% after lowering 4Q guidance substantially.
IVC -10.7% after lowering 4Q and 05 guidance.

Economic Data
None of note.

-Goldman Sachs reiterated Underperform on CVC.
-Citi SmithBarney reiterated Buy on HYGS, target $7.50. Citi reiterated Buy on SYY, target $42. Citi reiterated Buy on ACI, target $43. Citi reiterated Buy on CNX, target $49. Citi reiterated Buy on ILSE, target $24. Citi reiterated Buy on JBL, target $33. Citi reiterated Buy on NRG, target $45. Citi reiterated Buy on JNJ, target $72.
-UBS raised NEM to Buy, target $54.25. UBS raised ABX to Buy, target $27.50. UBS raised KGC to Buy, target $9. UBS rated ASCL Buy, target $18. UBS raised BVN to Buy, target $27.50. UBS raised PDG to Buy, target $22. UBS rated TIBX Buy, target $15.
-Lehman Brothers raised INTC to Overweight.
-JP Morgan rated MDC Underweight. JPM rated HOV Overweight. JPM rated RYL Overweight. JPM rated PIR Underweight. JPM rated PVN Underweight. JPM rated TOC Overweight. JPM rated COF Overweight. JPM rated AXP Overweight. JPM rated TSN Overweight. JPM rated PPC Overweight. JPM rated BZH Underweight.
-Moran Stanley downgraded HRB to Underweight.
-Legg Mason rated NILE Buy, target $34. Legg rated GSIC Buy, target $20.
-Prudential rated RBK Overweight, target $47.
-CSFB raised NXTL to Outperform, target $26. CSFB raised RIG to Outperform, target $53.
-Oppenheimer rated ENDP Buy, target $26. Oppenheimer rated MOT Buy, target $22. Oppenheimer raised CMA to Buy, target $68. Oppenheimer raised SMDI to Buy, target $8.
-Deutsche Bank rated NWL Buy, target $28. Deutsche rated DRL Buy, target $55. Deutsche rated NDE Buy, target $38.

Mid-day News
U.S. stocks are quietly higher mid-day on strength in transportation and software stocks. Comcast will boost the speeds of its broadband service in the first quarter of 2005 at no extra cost to customers, the NY Times reported. Acupuncture relieves knee pain in patients with osteoarthritis, the Wall Street Journal reported, citing a study published today in the Annals of Internal Medicine. Several popular Internet file-sharing sites shut down a week after movie studios sued more than 100 operators of sites in the US and Europe that host links to downloadable music, movies and books, the AP reported. Russian President Putin said state-owned companies may buy the former main oil-producing unit of OAO Yukos Oil from the company that acquired it in a government auction held on Sunday, Bloomberg reported. Morgan Stanley said fiscal fourth-quarter profit rose 18%, boosted by stock underwriting and a surge in fees for advising companies on takeovers, Bloomberg said. Tenet Healthcare agreed to establish a $395 million fund to settle litigation over allegedly unnecessary medical procedures performed at Redding Medical Center in California, Bloomberg reported. Iran will continue to enrich raw "yellowcake" uranium, a process that can be used to derive fuel for a nuclear weapon, through February, after signing a pledge to suspend all such activities, Reuters reported. Washington Post said it reached an agreement with Microsoft to acquire online magazine Slate, Bloomberg said. Pfizer's bid to head off a Celebrex recall may get a boost from new government data showing the painkiller didn't raise heart risks in a study, while naproxen, which is sold as Aleve, did, investors said.

Bottom Line: The Portfolio is slightly higher mid-day on gains in my software and semi-equipment longs. I have not traded today and the Portfolio is still 100% net long. The tone of the market is pretty good and improving. It is good to see the Transports making another ALL-TIME high today. As well, declining long-term rates, falling energy prices and a stabilizing US dollar are boosting equities. I expect the major indices to rise into the close on short-covering and year-end repositioning.

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