Wednesday, February 16, 2005

Mid-day Report

S&P 500 1,207.29 -.21%
Dow 10,811.68 -.23%
NASDAQ 2,084.31 -.23%
Russell 2000 635.96 +.16%
DJ Wilshire 5000 11,895.05 -.13%
S&P Barra Growth 580.42 -.07%
S&P Barra Value 623.08 -.31%
Morgan Stanley Consumer 590.28 -.44%
Morgan Stanley Cyclical 767.22 -.03%
Morgan Stanley Technology 475.99 -.51%
Transports 3,617.07 +.05%
Utilities 355.67 +.51%
Put/Call .76 -2.56%
NYSE Arms 1.01 +31.17%
Volatility(VIX) 11.32 +.44%
ISE Sentiment 158.00 -9.20%
US Dollar 83.71 +.13%
CRB 287.93 -.48%

Futures Spot Prices
Crude Oil 48.20 +2.09%
Unleaded Gasoline 126.80 +1.0%
Natural Gas 6.09 -1.38%
Heating Oil 132.70 +2.76%
Gold 426.90 -.09%
Base Metals 123.32 +.04%
Copper 144.70 -.79%
10-year US Treasury Yield 4.16% +1.56%

Leading Sectors
Iron/Steel +2.77%
Oil Service +1.98%
Energy +1.92%

Lagging Sectors
Computer Hardware -.99%
Restaurants -1.07%
Insurance -1.12%

Market Movers
NTAP -9.43% after beating 3Q estimates, lowering 4Q revenue guidance and UBS upgrade to Buy.
ADBL -29.7% after missing 4Q revenue estimates, saying it expects higher costs, raising 05 revenue guidance and multiple downgrades.
HURC +22.08% on strong 1Q report.
TZOO +16.65% on short-covering.
ITRI +18.61% after beating 4Q estimates and First Albany upgrade to Strong Buy.
INCX +13.42% on no news.
ASF +11.64% after beating 4Q estimates and giving positive outlook.
BRC +14.4% after substantially beating 2Q estimates and raising 05 guidance.
SSYS -15.31% after missing 4Q estimates and lowering 05 guidance.
JUPM -18.34% after beating 4Q estimates and giving disappointing 05 guidance.
LF -10.9% after missing 4Q revenue estimates, saying it expects higher costs and raising 05 revenue guidance.

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

Economic Data
-Housing Starts for January rose to 2159K versus estimates of 2000K and 2069K in December.
-Building Permits for January rose to 2105K versus estimates of 2000K and 2069K in December.
-Industrial Production for January was unchanged versus estimates of a .3% gain and a .7% increase in December.
-Capacity Utilization for January was 79.0% versus estimates of 79.3% and 79.1% in December.

-Goldman Sachs: Reiterated Outperform on MSFT, RIG, CMX and KO. Reiterated Underperform on AMAT, HCC and VICL. Reiterated Attractive view of Gold sector, favorite is ABX.
-Citi SmithBarney: Reiterated Buy on MAR, target $75. Reiterated Buy on AMAT, target $22. Reiterated Buy on MAY, target $36. Reiterated Buy on ROP, target $70. Reiterated Buy on CSCO, target $30. Reiterated Buy on GE, target $44. Reiterated Buy on MRO, target $47. Reiterated Buy on TYC, target $40. Reiterated Buy on ACGL, target $48.
-Banc of America: Downgraded PIXR to Sell, target $76.
-JP Morgan: Rated LSI Underweight. Cut MCO to Underweight.
-Deutsche Bank: Raised RIG to Buy, target $60.
-UBS: Rated FILE Buy, target $29. Raised NTAP to Buy.
-Oppenheimer: Rated AIRN Buy, target $8-$9.
-CSFB: Raised MET to Outperform, target $47.

Mid-day News
US stocks are modestly lower mid-day on worries over higher-interest rates and energy prices. Ubisoft Entertainment SA, a French video games maker, is in talks with Electronic Arts, two months after attacking the US company's purchase of a 20% stake as hostile, the Wall Street Journal reported. Mercora Inc., a closely held company based in Santa Clara, is pioneering so-called "peer-to-peer" radio that allows on-line music sharing without breaking the law, the Wall Street Journal reported. Time Warner plans to start a new series of cartoons based on its classic Looney Tunes characters to boost revenue at its animated franchises, the Wall Street Journal reported. Cerus Corp., a US biotech company specializing in blood-disease therapy, may be an investment opportunity, the Wall Street Journal reported, citing Anthony Marchese, of Insiders Trend Fund LP. Airbus SAS has signed an agreement that will give customers of its A380 airplane the option of installing equipment that would let passengers make calls using their own mobile phones, the AP reported. China will impose quotas on iron ore imports from March, Reuters reported. The race to be prime minister of Iraq has narrowed to Ibrahim Jafari of the Dawa Party and onetime US Pentagon favorite Ahmad Chalabi of the Iraqi National Congress, the NY Times reported. The International Association of Chiefs of Police will issue a notice to police departments within 10 days to look into the use of stun guns after numerous deaths that may be related to the weapon, USA Today reported. OPEC said oil demand will rise faster than expected this year, as the Chinese economy shows few signs of slowing, Bloomberg reported. Production at US factories, mines and utilities was unchanged last month, held back by a decline in energy demand, Bloomberg said. US housing start unexpectedly rose to a 21-year high in January, paced by record construction of single-family homes, Bloomberg reported. US lawmakers are beginning a new push to compel enforcement of a 1996 law imposing sanctions on foreign companies that do business in Iran, a move that might trigger a European Union protest to the WTO, Bloomberg said. The US economy has "firmed" and inflation is low, even with interest rates that remain "accommodative," Fed Chairman Greenspan said. The NHL canceled its season today after locking out players for 154 days, Bloomberg said. US Steel, Nucor and AK Steel rose on speculation that US steel producers may be acquisition targets for larger companies in Europe, Bloomberg reported. US 10-year T-Notes are falling the most in three weeks after Fed Chairman Greenspan made positive comments about the US economy, Bloomberg reported.

BOTTOM LINE: The Portfolio is higher mid-day on gains in my semi/software longs and internet shorts. I took profits in a short and a long this morning, thus leaving the Portfolio 100% net long. The tone of the market is mildly negative today as sector performance is mixed and the advance/decline line is slightly lower. However, most measures of investor anxiety are higher, small-caps are outperforming and economically sensitive groups are rising. The very strong housing report is a big positive and once again illustrates the staying power of this industry. The rate of homebuilding may be slowing, but should remain at very high levels compared to past history as long-term interest rates remain low, the labor market continues to improve and supply stays relatively low. I expect US stocks to rise into the close from current levels on optimism over US economic growth, strong earnings reports, short-covering and increasing fund inflows.

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