Tuesday, February 08, 2005

Mid-day Report

S&P 500 1,201.91 +.01%
Dow 10,722.41 +.06%
NASDAQ 2,085.64 +.17%
Russell 2000 636.89 +.04%
DJ Wilshire 5000 11,842.07 +.02%
S&P Barra Growth 577.32 +.04%
S&P Barra Value 620.39 +.01%
Morgan Stanley Consumer 591.24 -.02%
Morgan Stanley Cyclical 762.58 -.13%
Morgan Stanley Technology 475.60 -.05%
Transports 3,590.69 -.32%
Utilities 353.57 +.50%
Put/Call .80 +11.11%
NYSE Arms .96 -21.95%
Volatility(VIX) 11.57 -1.36%
ISE Sentiment 166.00 -16.58%
US Dollar 85.00 -.14%
CRB 281.40 +.07%

Futures Spot Prices
Crude Oil 45.15 -.29%
Unleaded Gasoline 121.50 +.23%
Natural Gas 6.07 +1.78%
Heating Oil 123.50 +.36%
Gold 414.90 -.12%
Base Metals 119.66 -.42%
Copper 138.70 -.11%
10-year US Treasury Yield 4.03% -.43%

Leading Sectors
Semis +1.91%
Networking +1.34%
Homebuilders +.81%

Lagging Sectors
Gaming -.97%
Software -.99%
Airlines -1.54%

Market Movers
SINA -15.6% after beating 4Q estimates, lowering 1Q guidance and multiple downgrades.
TASR -11.80% after missing 4Q estimates, declining to give forward guidance and Morgan Keegan downgrade to Underperform.
ABCO +17.7% after beating 3Q estimates and raising 4Q guidance.
CUTR +16.6% after substantially beating 4Q estimates and raising 1Q outlook.
BMHC +14.97% on strong 4Q results.
IVGN +5.48% after agreeing to acquire closely held Dynal Biotech for about $379M to gain technology for cell research.
BOBJ +12.36% after beating 4Q estimates, raising 1Q outlook and multiple upgrades.
RSTI +6.15% on strong 1Q report.
DIOD +7.70% after beating 4Q estimates and raising 1Q guidance.
GRU -11.34% on profit-taking.
HANS -9.75% on profit-taking.
NFI -6.91% after missing 4Q forecast.
SLM -5.3% on Friedman, Billings, Ramsey downgrade to Market Perform.
ELNK -10.49% after missing 4Q estimates and lowering 1Q 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 DELL, SYK and PFE. Reiterated Underperform on LVLT.
-Citi SmithBarney: Reiterated Buy on PFCB, target $69. Reiterated Sell on EAT, target $36. Reiterated Buy on CEY, target $43. Reiterated Buy on EEFT, target $33. Reiterated Buy on EFD, target $26. Reiterated Buy on EOG, target $92. Lowered CSK to Sell, target $21. Reiterated Buy on JNPR, target $36. Reiterated Buy on JBL, target $33. Reiterated Buy on MXRE, target $24. Reiterated Buy on HAS, target $24. Reiterated Buy on LZ, target $48. Reiterated Buy on PRE, target $71. Reiterated Buy on NPSP, target $25. Reiterated Buy on PFG, target $45. Reiterated Buy on INTC, target $26.50. Reiterated Sell on EDS, target $17. Reiterated Buy on ATVI, target $29. Reiterated Buy on LPX, target $33.
-Bear Stearns: Raised TS to Outperform, target $61.50. Raised BIIB to Outperform, target $79.
-Deutsche Bank: Rated DELL Buy, target $48. Rated IBM Buy, target $110.
-CSFB: Raised QLGC to Outperform, target $48. Downgraded HYDL to Underperform, target $54.
-Oppenheimer: Rated DIIB Buy, target $45.00. Raised VYYO to Buy.
-Prudential: Raised TIN to Overweight, target $71.
-Raymond James: Raised ATW to Strong Buy, target $75.

Mid-day News
US stocks are mostly unchanged mid-day as worries over slowing earnings growth are being offset by declining interest rates. The US dollar may strengthen to 110 yen, the strongest since October, in the coming two months as Japanese investors are lured by the higher yields offered on US Treasury securities, according to Morgan Stanley. Kenneth Langone, a Wall Street investment banker, is to quit as a director of GE to defend his actions when he was head of the NYSE’s compensation committee, the Wall Street Journal reported. BNP Paribas SA, France’s second biggest bank by assets, was struck off the list of financial companies recommended by the state of Missouri to investors in its pension fund because of concern over its involvement in the UN/Iraq oil-for-food scandal, La Tribune reported. The sales growth of large pickup trucks in 2004 outpaced sport utility vehicles for the first time in a decade, the NY Times reported. China’s coal production rose 13% to 1.96 billion tons in 2004 compared with a year ago, the Tex Report said. Timothy Roemer, the only remaining challenger to Howard Dean’s bid to become chairman of the Democratic National Committee, dropped out of the race, paving the way for the former Vermont governor to take the post, the NY Times reported. Microsoft will release the first full trial version of its big Windows computer software by the end of June, CNet News reported. Acting New Jersey Democratic Governor Codey is considering a tax on 401K retirement plans to help close the state’s budget deficit, the Star-Ledger reported. Pennsylvania reached an agreement with the state’s four Blue Cross and Blue Shield health plans to pay about $1 billion for six years to cover cost for the uninsured, the Philadelphia Inquirer reported. President Bush’s $2.57 trillion budget is an attempt to send a message to supporters in the US, on Wall Street and to overseas investors that the administration is committed to reducing the nation’s budget deficit, the NY Times said. A Japanese food safety panel accepted US data assuring that a specific grade and age of beef would be free of mad cow disease, moving Japan one step closer to lifting a 13-month ban on US imports, the AP reported. SAP AG said it doesn’t plan larger acquisitions and will instead focus on smaller purchases this year to enhance its product offering, Sueddeutsche Zeitung reported. EBay said it will now pay only cash for Rent.com instead of a combination of cash and stock after its shares fell since announcing the deal, Bloomberg reported. Microsoft said it will buy Sybari Software, a provider of anti-virus programs, Bloomberg reported. Saudi Arabia will keep pumping 9M barrels a day to help maintain stable oil prices and meet world demand for crude, Bloomberg said. Gold prices in NY fell to the lowest in almost four months as a gain in the value of the US dollar eroded the appeal of the metal as an alternative against US stocks and bonds, Bloomberg reported. Sears, Roebuck, which agreed to be bought by Kmart Holding, will open a new type of store called Sears Essentials to compete with Target and Kohl’s, Bloomberg said. US 10-year T-notes are rising in NY trading as proposed pension plan reform and speculation inflation will remain in check is boosting demand for longer-maturity debt securities, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly higher mid-day on gains in my homebuilding, semiconductor and networking longs. I have not traded today, thus the Portfolio remains 125% net long. The tone of the market is mildly positive as sector performance is mixed, volume is increasing and the advance/decline line is slightly positive. The strength in semis is also a positive. I will closely monitor the market’s reaction to Cisco’s report after the close before shifting the Portfolio’s composition. I anticipate a positive reaction. I also expect US stocks to rise modestly into the close on short-covering, lower interest rates, a stabilizing US dollar and weaker energy prices.

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