Thursday, February 03, 2005

Mid-day Report

S&P 500 1,187.68 -.46%
Dow 10,569.01 -.26%
NASDAQ 2,054.20 -1.0%
Russell 2000 627.58 -.70%
DJ Wilshire 5000 11,697.15 -.47%
S&P Barra Growth 571.56 -.44%
S&P Barra Value 611.89 -.47%
Morgan Stanley Consumer 586.45 -.31%
Morgan Stanley Cyclical 760.16 -.54%
Morgan Stanley Technology 465.05 -1.91%
Transports 3,577.43 -.74%
Utilities 347.28 -.17%
Put/Call .74 +1.37%
NYSE Arms 1.33 +56.47%
Volatility(VIX) 11.89 +1.97%
ISE Sentiment 182.00 +49.18%
US Dollar 84.02 +.57%
CRB 281.19 -.63%

Futures Spot Prices
Crude Oil 46.15 -1.20%
Unleaded Gasoline 125.90 -2.67%
Natural Gas 6.14 -3.70%
Heating Oil 126.75 -2.27%
Gold 418.50 -1.06%
Base Metals 121.09 +.14%
Copper 139.00 -.25%
10-year US Treasury Yield 4.16% +.57%

Leading Sectors
Iron/Steel +.92%
Telecom +.51%
Retail +.45%

Lagging Sectors
Semis -1.64%
Internet -2.18%
Networking -3.02%

Market Movers
AMZN -18.9% after beating 4Q revenue estimates, missing 4Q earnings estimates, raising 1Q/05 revenue guidance and multiple downgrades.
CYBX +33.5% after saying the FDA is close to approving an implanted device that treats depression by electrically stimulating patients’ nerves and multiple upgrades.
SBUX -7.9% after saying same-store-sales rose 7% during January and Citi SmithBarney downgrade to Hold.
JNPR -5.1% on ALA report.
KONG +23.3% after beating 4Q estimates and raising 1Q guidance.
DHC +20.68% on continuing optimism over recent purchase of American Ref-Fuel Holdings to expand its waste-to-energy business.
AMSC +11.36% after substantially beating 3Q estimates and raising 05 guidance.
SPF +6.81% after beating 4Q estimates, raising 1Q estimates and increasing 05 guidance.
GETI +9.89% after saying it plans to pay $320 million to shareholders in the form of a special dividend.
MERQ +8.93% after beating 4Q estimates, raising 1Q guidance, boosting 05 outlook and multiple upgrades..
KMX +13.3% after boosting 4Q estimates and Fulcrum Global upgrade to Buy.
ANF +8.35% after reporting substantially better-than-expected same-store-sales for January.
FLR +4.2% after beating 4Q estimates and raising 05 guidance.
MNT +8.43% after beating 3Q estimates and raising 05 outlook.
FEIC +12.71% after beating 4Q estimates, widening 1Q guidance and Needham upgrade to Buy.
BMC -13.76% after missing 3Q estimates, lowering 4Q guidance and Legg Mason downgrade to Hold.
AZR -12.74% after missing 4Q estimates and multiple downgrades.
ALA -12.5% after missing 4Q estimates, lowering 05 guidance and multiple downgrades.
NEW -8.49% after meeting 4Q estimates and lowering 05 outlook.
AMSG -12.28% after meeting 4Q estimates and lowering 05 guidance.
DIGE -8.84% after missing 2Q estimates, widening 3Q outlook and lowering 05 guidance.
TMO -9.97% after meeting 4Q estimates, lowering 1Q guidance and JP Morgan downgrade to Neutral.

Market Internals
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon

Economic Data
-Preliminary 4Q Non-farm Productivity rose .8% versus estimates of a 1.5% increase and a 1.8% gain in 3Q.
-Preliminary 4Q Unit Labor Costs rose 2.3% versus estimates of a 2.0% gain and a 1.6% increase in 3Q.
-Initial Jobless Claims for last week fell to 316K versus estimates of 330K and 325K the prior week.
-Continuing Claims fell to 2696K versus estimates of 2765K and 2812K prior.
-Factory Orders for December rose .3% versus estimates of a .6% increase and a 1.4% gain in November.
-ISM Non-Manufacturing for January fell to 59.2 versus estimates of 61.5 and a reading of 63.9 in December.

-Goldman Sachs: Reiterated Outperform on ALL, HEP, GILD, IP, MERQ, ROH, DD, MDT and HOT. Reiterated Underperform on AZR, BMC and KZL.
-Banc of America: Upgraded BA to Buy, target $60. Upgraded SALM to Buy, target $28.
-Citi SmithBarney: Said to Buy TOY now, target $27. Reiterated Buy on ATVI, target $29. Reiterated Buy on ERTS, target $76. Reiterated Buy on UNM, target $20. Reiterated Sell on BA, target $40. Reiterated Buy on SPF, target $98. Reiterated Buy on PNR, target $52. Reiterated Buy on PHM, target $86. Reiterated Buy on QSFT, target $18. Reiterated Buy on MERQ, target $58.
-Bear Stearns: Downgraded AZR to Underperform.
-JP Morgan: Raised SBC to Overweight. Raised CAH, MCK to Overweight. Rated IBI Overweight.
-Lehman Brothers: Raised HPQ to Overweight, target $25.
-Prudential: Cut AXL to Underweight, target $24.
-UBS: Raised COO to Buy, target $95. Raised XJT to Buy, target $15.75. Raised STZ to Buy, target $65.

Mid-day News
US stocks are lower mid-day on losses in the technology sector and worries over slowing economic growth. Qwest Communications is holding talks to buy MCI Inc. for about $6.3 billion, the Wall Street Journal reported. General Motors, Ford and other automakers are allowing hundreds of thousands of potential buyers to test drive cars on racing tracks to boost sales, the Wall Street Journal reported. German Interior Minister Otto Schily pledged to expand German aid to reconstruct Iraq at a meeting with President Bush yesterday, Der Spiegel reported. Dinakar Singh’s hedge fund, TPG-Axon Capital, is the latest hedge fund being started by former employees of Goldman Sachs Group, many of whom worked for Robert Rubin, the NY Times reported. A group of 30 companies, including Mattel and Eastman Chemical, are forming a group to monitor the pharmacy benefit managers that most businesses use to obtain discounted drugs, the NY Times reported. Galena, Alaska, is considering using a Toshiba Corp. nuclear reactor to power the town’s electricity, the NY Times reported. Boston workers said they are more optimistic about job opportunities than they were in the summer and fall, the Boston Globe reported. Partial election results from six of Iraq’s 18 provinces indicate that the list endorsed by top Shiite Muslim cleric Ali al-Sistani has the most votes so far, the AP reported. Demand for homes priced at $1 million and above in the San Francisco Bay area rose 73% in 2004, the San Francisco Chronicle reported. The Palestinians will announce a cease-fire in hostilities with Israel when the two sides meet next week in Eqypt, Bloomberg reported. Sales gains at US retailers including Wal-Mart and May Department Stores slowed for a third consecutive month in January, hurt by blizzards and a climb in fuel costs, Bloomberg said. Michael Price, who had one of the best records in the mutual fund industry during the 80s and 90s, is bullish on shares of Sears and Unocal, Bloomberg reported. A bill to move most class-action lawsuits against companies from state to federal courts was approved by a US Senate committee, Bloomberg said. The US dollar is advancing against the euro after European Central Bank President Trichet said inflation is contained, suggesting the bank will keep its benchmark interest rate at a 60-year low, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my internet, retail and steel longs. I have not traded today and the Portfolio remains 75% net long. The tone of the market is weaker today as decliners outpace advancers, most sectors are lower and volume is decent. However, significant losses are mainly confined to the technology sector and energy prices are falling. As well, the US dollar appears to be breaking out to the upside of its recent trading range. Measures of investor anxiety are mostly higher. The labor market looks to have gained some momentum recently. An above-expectations employment report tomorrow would likely send stocks higher along with long-term interest rates. I expect US stocks to rise into the close on more optimism over US reforms, declining energy prices, low long-term interest rates, bargain-hunting and short-covering ahead of tomorrow’s economic data.

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