Friday, February 18, 2005

Mid-day Report

S&P 500 1,201.38 +.05%
Dow 10,757.07 +.02%
NASDAQ 2,060.88 -.02%
Russell 2000 629.15 -.32%
DJ Wilshire 5000 11,826.68 -.02%
S&P Barra Growth 578.07 +.17%
S&P Barra Value 618.72 -.10%
Morgan Stanley Consumer 589.18 +.19%
Morgan Stanley Cyclical 766.79 +.36
Morgan Stanley Technology 469.36 +.01%
Transports 3,621.74 +.48%
Utilities 352.39 -1.07%
Put/Call 1.03 +15.73%
NYSE Arms .65 -48.80%
Volatility(VIX) 11.62 -1.36%
ISE Sentiment 124.00 -25.30%
US Dollar 83.52 +.05%
CRB 290.50 +.18%

Futures Spot Prices
Crude Oil 48.20 +1.39%
Unleaded Gasoline 125.00 +1.09%
Natural Gas 5.93 +.12%
Heating Oil 134.50 +2.45%
Gold 428.40 -.05%
Base Metals 126.99 +1.59%
Copper 148.50 -.07%
10-year US Treasury Yield 4.25% +1.82%

Leading Sectors
Energy +2.37%
Oil Service +1.61%
Commodity +1.53%

Lagging Sectors
Utilities -1.08%
I-Banks -1.62%
Disk Drives -2.0%

Market Movers
MCIP +5.95% after Qwest Communications said it plans to sweeten its takeover offer in an effort to derail MCI’s agreement with Verizon Communications.
FNM -3.42% after Fed Chairman Greenspan urged Congress to require it to shrink its $905 billion portfolio.
AKAM +14.59% after beating 4Q revenue estimates.
MRK +3.8% after the president of its research labs, declined to rule out returning Vioxx to the market should a US government advisory panel determine that all drugs in the same class have a similar hear risk.
NVDA +8.43% after beating 4Q estimates, raising 1Q guidance and multiple upgrades.
CRM +14.61% after beating 4Q estimates, raising 1Q outlook and Merrill Lynch upgrade to Buy.
ZLC +12.47% after beating 2Q earnings estimates and KeyBanc upgrade to Hold.
MDRX +12.42% after meeting 4Q earnings estimates, but saying bookings were very strong.
CRYP +9.72% on strong 4Q results.
TIN +4.43% after saying billionaire investor Carl Icahn plans to nominate candidates for its board to challenge the re-election of three current directors and CSFB upgrade to Buy.
UNP +4.87% on Morgan Stanley upgrade to Overweight.
NTGR -15.6% after missing 4Q revenue estimates and widening 1Q revenue estimates.
MALL -16.88% after disappointing 4Q results.

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

Economic Data
-Producer Price Index for January rose .3% versus estimates of a .3% increase and a .3% decline in December.
-PPI Ex Food & Energy for January rose .8% versus estimates of a .2% increase and a .2% gain in December.
-Preliminary Univ. of Mich. Consumer Confidence for February fell to 94.2 versus estimates of 95.5 and a reading of 95.5 in January.

-Goldman Sachs: Reiterated Outperform on WGR.
-Smith Barney: Upgraded NBR to Buy, target $68. Upgraded PTEN to Buy, target $29. Downgraded ITU to Sell. Downgraded BBD to Sell.
-JP Morgan: Downgraded WWY to Underweight. Raised WCN to Overweight.
-Thomas Weisel Partners: Rated QCCO Outperform.
-Bear Stearns: Raised STX to Outperform. Downgraded ADIC to Underperform. Cut CMI to Underperform.
-Oppenheimer: Raised AEIS to Sector Outperform, target $12.
-Deutsche Bank: Downgraded CSGP to Sell, target $33.
-CSFB: Rated CBI Outperform, target $51. Rated FLR Underperform, target $53.
-Morgan Stanley: Rated ARW Underweight. Raised UNP to Overweight, target $70. Cut IO to Underweight. Rated AVT Underweight.
-Raymond James: Cut AX to Underperform. Raised REM to Strong Buy, target $36.

Mid-day News
US stocks are mixed mid-day as worries over rising long-term interest rates are offsetting optimism over increased merger activity. China’s coal companies produced 33% more coal in the first 46 days of this year to meet rising demand, China Coal News said. Federated Department Stores’ acquisition talks with May Department Stores resumed by phone this week, and may be coming closer to a resolution, the Wall Street Journal said. Iraq’s elections last month show President Bush’s policy is working and the administration should now set a timetable for withdrawing US forces, the Wall Street Journal said, citing a WSJ/NBC poll. Bertelsmann’s Random House said yesterday it bought a portion of Vocel, a company that provides educational content through cellular phones for a monthly fee, the NY Times reported. Orange County, California, which underwent the largest US municipal bankruptcy ever in 1994, may refinance its debt and pay it off 11 years ahead of schedule, the LA Times reported. The number of default notices on homes in the San Francisco Bay area declined 21% last year from 2003, and was the lowest number since at least 1992, the San Francisco Chronicle reported. Citigroup and Nordea Bank AB are arranging $2 billion of loans for European shipping companies this week as tanker and cargo vessel owners take advantage of booming demand to buy ships and expand their businesses, Bloomberg reported. Russia said it will cooperate with Iran in the nuclear energy field, even after US and European Union concerns over Iran’s possible plans to produce nuclear weapons, Bloomberg said. Deloitte Touche Tohmatsu, the world’s second-largest accounting firm by revenue, asked the SEC to add oil and gas reserves to company data requiring stricter financial oversight, Bloomberg said. US consumer confidence unexpectedly fell for the second straight month in February, Bloomberg reported. Crude oil rose above $48/bbl. in NY as lower-than-normal temperatures in the US Northeast may boost consumption of heating oil, Bloomberg reported. Time Warner will stop giving stock options to all of its 80,000 employees because it has become “prohibitively” expensive, Bloomberg reported. Exxon Mobil overtook GE as the world’s biggest company by market value, Bloomberg said. President Bush signed a bill to curb multi-state class-action lawsuits by shifting most of them from state to federal courts, Bloomberg reported. US Treasury notes are falling, pushing the yield on the 10-year note to its biggest weekly decline since October, after a government report showed a measure of wholesale prices rose more than forecast, Bloomberg reported. Pfizer’s Celebrex painkiller should stay on the US market because its benefits outweigh its cardiovascular risks, US government advisers ruled today.

BOTTOM LINE: The Portfolio is unchanged mid-day as gains in my steel and alternative energy longs are offsetting losses in my homebuilding and medical information longs. I added a few new longs this morning, thus bringing the Portfolio’s market exposure to 75% net long. One of my new longs is PFE and I am using a $25 stop-loss on this position. The tone of the market is mildly weaker as the advance/decline line is modestly negative and sector performance is mixed. As well, volume is light and measures of investor anxiety are mixed. Commodity-related stocks are outperforming and interest-rate sensitive shares and small-caps are underperforming. I expect US stocks to trade mixed-to-lower into the close on worries over higher interest rates and energy prices.

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