Monday, February 07, 2005

Mid-day Report

S&P 500 1,200.81 -.19%
Dow 10,710.38 -.05%
NASDAQ 2,079.95 -.32%
Russell 2000 637.12 -.05%
DJ Wilshire 5000 11,831.03 -.19%
S&P Barra Growth 567.47 -.30%
S&P Barra Value 619.96 -.09%
Morgan Stanley Consumer 591.53 -.09%
Morgan Stanley Cyclical 764.02 -.10%
Morgan Stanley Technology 475.21 -.12%
Transports 3,604.62 +.18%
Utilities 351.44 -.39%
Put/Call .72 -1.37%
NYSE Arms 1.16 +18.37%
Volatility(VIX) 11.49 +2.50%
ISE Sentiment 207.00 +54.48%
US Dollar 85.10 +.84%
CRB 280.91 -.12%

Futures Spot Prices
Crude Oil 45.20 -2.75%
Unleaded Gasoline 121.10 -3.93%
Natural Gas 5.98 -1.90%
Heating Oil 123.10 -3.39%
Gold 415.20 -.24%
Base Metals 120.17 -.02%
Copper 138.80 +1.24%
10-year US Treasury Yield 4.05% -.62%

Leading Sectors
Airlines +1.81%
Gaming +.85%
Broadcasting +.81%

Lagging Sectors
Disk Drives -1.40%
HMOs -1.70%
Oil Service -2.45%

Market Movers
RNWK +19.8% on positive comments in Barron’s.
ORCT +15.33% on continuing optimism over recent 4Q report.
GOSHA +14.6% on a report that it put itself up for sale.
ANTP +16.11% after announcing a subsidiary was recently awarded a $3.7M contract from BAE for the production of 270 Low Band Antenna Matching Unit Assemblies.
MATK +4.2% after Citi SmithBarney reiterated Buy.
WPSC +8.99% after positive comments on Barron’s.
LZ +7.72% after beating 4Q estimates and raising 1Q guidance.
IMCL +5.53% after saying in a SEC filing that billionaire financier Icahn boosted his stake in the company to 6.1%.
DIOD +7.85% after beating 4Q estimates.
RSTI -17.03% on disappointing 1Q results.
SYNA -11.96% on comments from Bear Stearns that Apple Computer has begun using some of its own products in one of its notebook computers, replacing those made by Synaptics.
SOHU -10.8% after meeting 4Q estimates and lowering 1Q guidance.
AGN -5.94% after beating 4Q estimates and lowering 1Q/05 guidance.

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

Economic Data
None of note.

-Goldman Sachs: Reiterated Outperform on EBAY, CAT, AGN, INTC, WLP,GD and KO.
-Citi SmithBarney: Raised their WTI Oil estimate to $40/bbl. for 2005 from $36/bbl. Raised AHC to Buy, target $109. Reiterated Buy on MRO, target $47. Reiterated Buy on MCD, target $37. Reiterated Buy on MXRE, target $24. Reiterated Buy on MATK, target $90. Reiterated Buy on SCH, target $14.50. Reiterated Buy on BWA, target $61. Reiterated Buy on TWX, target $22. Reiterated Buy on WMT, target $65. Reiterated Buy on EMC, target $16.50. Reiterated Buy on UNM, target $20. Reiterated Buy on PCG, target $38.50. Reiterated Sell on SNDK, target $22. Reiterated Buy on PRU, target $60.
-UBS: Raised PAYX to Buy, target $37.
-Bear Stearns: Raised SM to Outperform, target $58. Raised CAH to Outperform, target $75.
-Thomas Weisel: Rated DNEX Outperform.
-Legg Mason: Raised SWBT to Buy, target $22.
-Prudential: Downgraded AG to Underweight, target $20.
-Oppenheimer: Raised CHUX to Buy, target $25.
-Morgan Stanley: Raised MDT to Overweight, target $60.

Mid-day News
US stocks are modestly lower mid-day on earnings worries due to slowing US government spending and a rising US dollar. China’s central bank governor Zhou Ziaochuan said the yuan is not undervalued, state-run Xinhua News said. Webroot Software, a closely held software company, received $1008 million in venture capital to help expand its anti-spyware technology, the Wall Street Journal said. The Bush administration today will ask for a 4.8% increase in defense spending to $419.3 billion for 2006 that will little change the Army’s budget, the Wall Street Journal reported. Morningstar increased the number of mutual funds it grades on how well they govern themselves and today it will issue revised ratings, the Wall Street Journal reported. Activision and Electronic Arts are among video-game makers that may be acquisition targets of big media companies, the NY Times reported. Frontline, the world’s biggest oil-tanker company, may bid for the US-based dry-cargo shipowner Navios, the shipping weekly TradeWinds reported. Walt Disney’s ABC Television has ordered a reality-tv program called “Miracle Workers,” which will seek to provide medical care to people who can’t afford it, the NY Times reported. Nokia Oyj is working to develop advanced mobile phones with computer-like functions that are simple to use in order to boost demand for the devices, CEO Ollila said. The UN suspended the former head of its Iraq oil-for-food program and another senior official after an interim report by an independent commission criticized the conduct of both mean, the NY Times reported. Time Warner would likely control most of Los Angeles’s cable-television market if it wins the bidding for Adelphia Communications, the LA Times reported. Walt Disney has told its ABC television unit to come up with possible alternatives for the long-running “Nightline,” possibly signaling the late-night news program’s end, the LA Times reported. Internet radio, considered a commercial failure in the past several years following initial excitement by big media companies, may be making a comeback, the LA Times reported. US Secretary of State Rice praised Palestinian efforts to crack down on attacks against Israel and said the US will provide $40 million during the next three months in aid for the West Bank and Gaza Strip, Bloomberg reported. President Bush invited the leaders of Israel and the Palestinian Authority for separate meetings at the White House and appointed a US general to help Palestinians stop attacks against Israel, Bloomberg reported. Wal-Mart Stores and Target are likely to refinance $2 billion in bonds this month because the cost to borrow for US retailers is at a seven-year low, Bloomberg said. Merrill Lynch and UBS AG vaulted into the top three among merger advisers, joining perennial leader Goldman Sachs, in the hottest US takeover market since 2000, Bloomberg reported. Crude oil is falling to the lowest level in almost four weeks as mild weather reduced demand for heating fuel in the US and refineries increased gasoline stockpiles, Bloomberg said. Military contractors including Boeing, General Dynamics, United Defense Industries and Alliant TechSystems would benefit from President Bush’s proposal to spend $419.3 billion on defense next year, Bloomberg reported.

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my alternative energy, entertainment and telecom longs and oil service shorts. I have not traded today and the Portfolio remains 125% net long. The tone of the market is mildly negative today as the advance/decline line weakens. However, volume is lighter and a number of sectors are in positive territory. As I forecasted a couple of months ago, the US dollar continues to stabilize, energy prices are weakening and long-term interest rates are falling. Today’s weakness is likely a result of worries over the impact of decelerating government spending and a rising US dollar on corporate earnings. I expect US stocks to trade mixed-to-higher into the close as falling energy prices, increasing fund flows, more speculation over merger activity and lower interest rates mostly offset worries over slowing earnings growth.

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