Monday, December 27, 2004

Mid-day Report

S&P 500 1,208.69 -.12%
NASDAQ 2,154.14 -.29%

Leading Sectors
Airlines +.96%
Drugs +.51%
Internet +.44%

Lagging Sectors
Homebuilders -1.28%
Disk Drives -1.38%
Oil Service -1.74%

Crude Oil 42.00 -4.93%
Natural Gas 6.35 -4.77%
Gold 446.40 +.79%
Base Metals 122.53 +.76%
U.S. Dollar 80.63 -.80%
10-Yr. T-note Yield 4.29% +1.9%
VIX 12.04 +7.21%
Put/Call .81 -3.57%
NYSE Arms .94 unch.

Market Movers
AMZN +6.2% after saying it had its busiest holiday shopping season in its history during which time it set a single-day record with more than 2.8 million units orders, or 32 items per second.
DHB -7.9% on profit-taking after last Thur. rise.
WEB +20.1% on continuing optimism over demand for its tubing products.
NGPS +12.1% on continuing optimism over its GPS products.
DECK +5.22% on short-covering.
CRYP +4.98% on optimism over its on-line poker products.
SHRP -16.6% after cutting 4Q and 05 estimates substantially.
CALM -11.9% on disappointing 2Q results.
ALD -9.2% after saying it received letters from the US Attorney for the District of Columbia requesting information form the company and Business Loan Express in connection with a criminal investigation.
CTRP -5.7% on worries over travel in Asia.
*Oil Tanker stocks down across the board on worries over recent plunge in tanker rates.

Economic Data
None of note.

-Goldman Sachs reiterated Underperform on KSS.
-Citi SmithBarney reiterated Buy on NPSP, target $25.
-Deutsche Bank rated INPC Buy, target $32.

Mid-day News
U.S. stocks are quietly lower mid-day on profit-taking, concerns over the devastation in Asia and worries over rising interest rates. Computer terminals with a restricted number of functions that rely on servers and hard drives provided by companies such as Yahoo! are finding favor again with tech companies, the Wall Street Journal said. The number of leased local access telephone lines in the US rose 7% in the first half of this year as more carriers entered the market, the Wall Street Journal reported. Eastman Kodak's EasyShare digital camera brand has risen to almost 19% of US sales after the world's largest photography company designed and marketed products to women and first-time buyers, the NY Times reported. Plans to reduce pollution at the LA port complex, including fuel restrictions for ships and trucks, will be released this week, the LA Times said. Wal-Mart isn't close to getting its top 100 suppliers to ship goods with RFID tags, the NY Times reported. General Electric and MGM Mirage were among companies that sold $638.8 billion of debt in the US this year, little changed from 2003, as borrowing costs relative to Treasury notes shrank to the slimmest margin in eight years, Bloomberg reported. said consumer electronics outsold books for the first time during the holiday season, Bloomberg said. US Treasury notes are declining on signs holiday retail sales beat expectations, falling energy prices and a decline in the US dollar, Bloomberg reported. Shares of Sirius Satellite Radio and XM Satellite Radio are rising after both companies said they surpassed their subscriber goals for 2004, Bloomberg said. Natural disasters, including US hurricanes and Asian typhoons, made this year the costliest ever for the insurance industry, even before tsunamis struck tourist resorts in Thailand and Malaysia yesterday, Bloomberg said. Crude oil is plunging more than $2/bbl. in NY amid speculation that warmer temperatures in the eastern half of the US will limit heating oil needs, Bloomberg reported.

Bottom Line: The Portfolio is substantially higher mid-day on gains in my semi, software and internet longs. I have not traded today and the Portfolio is still 125% net long. Holiday shopping results, including internet sales and gift cards, were very strong and proved the bears' argument of a "spent-up" US consumer wrong again. Further declines in energy prices, free-elections in Iraq, decelerating inflation, relatively low interest rates, social security/tax reforms, an improving labor market and strong stock market should continue to boost sentiment and spending in 2005. I expect US stocks to rise modestly into the close on more optimism, declining energy prices, year-end positioning and short-covering.

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