Wednesday, February 23, 2005

Mid-day Report

S&P 500 1,188.73 +.39%
Dow 10,658.86 +.44%
NASDAQ 2,028.80 -.07%
Russell 2000 621.87 +.64%
DJ Wilshire 5000 11,703.52 +.41%
S&P Barra Growth 571.41 +.30%
S&P Barra Value 613.03 +.47%
Morgan Stanley Consumer 581.60 +.49%
Morgan Stanley Cyclical 756.83 +.53%
Morgan Stanley Technology 460.17 -.76%
Transports 3,619.43 +2.24%
Utilities 346.16 +.94%
Put/Call .84 +10.53%
NYSE Arms 1.02 -30.61%
Volatility(VIX) 12.67 -3.58%
ISE Sentiment 145.00 +2.11%
US Dollar 82.78 +.45%
CRB 298.98 +.44%

Futures Spot Prices
Crude Oil 51.45 +.06%
Unleaded Gasoline 131.30 +.31%
Natural Gas 6.25 +2.49%
Heating Oil 147.20 +2.21%
Gold 436.00 +.05%
Base Metals 128.61 -.13%
Copper 149.40 +.34%
10-year US Treasury Yield 4.27% -.14%

Leading Sectors
Oil Service +1.47%
Energy +1.36%
Airlines +1.31%

Lagging Sectors
Networking -.63%
Semis -1.15%
Disk Drives -1.36%

Market Movers
MAS -8.81% after beating 4Q estimates and lowering 1Q/05 outlook.
ACDO +38.5% after Medco Health Solutions agreed to buy it for about $2.2 billion to expand into faster-growing specialty drugs.
USFC +11.51% after the Wall Street Journal reported it may be acquired by Yellow Roadway.
OPTN +11.74% after beating 4Q estimates, announcing 3-for-2 split and raising 05 estimates.
IAAI +23.69% after agreeing to be purchased by closely held investment firm Kelso & Co. for about $385M.
YELL +5.33% on USFC news.
PFGC +9.08% after Chiquita Brands agreed to buy its Fresh Express for $855M in cash.
CPS +6.26% on Smith Barney recommendation to Buy on weakness.
LCAV +10.17% after meeting 4Q estimates and raising 05 guidance.
APSG -21.5% after missing 1Q estimates substantially.
COGT -14.2% after beating 4Q estimates and Needham downgrade to Hold.
POSS -9.57% after missing 2Q estimates, lowering 3Q guidance and 05 outlook.
NANO -9.89% after missing 4Q estimates.
LAMR -5.23% after meeting 4Q estimates and lowering 1Q outlook.
ADM -7.34% after saying it won’t be able to increase prices for high fructose corn syrup this year and Merrill downgrade to Neutral.
SNDA -5.6% after SINA introduced a poison pill plan to try to rebuff its takeover attempt.

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

Economic Data
- Consumer Price Index for January rose .1% versus estimates of a .2% increase and unchanged in December.
- CPI Ex Food & Energy for January rose .2% versus estimates of a .2% increase and a .2% rise in December.

- Goldman Sachs: Reiterated Outperform on KSS, JTX, GILD.
- Smith Barney: Upgraded MCCC to Buy, target $7.75. Said to Buy CPS on weakness. Reiterated Buy on BLS, target $32. Reiterated Buy on MRO, target $47. Reiterated Buy on DPZ, target $21. Reiterated Buy on HD, target $48. Reiterated Buy on TYC, target $40. Reiterated Buy on FD, target $70. Reiterated Buy on EEFT, target $33. Reiterated Buy on CVH, target $73.50.
- Morgan Stanley: Raised FD to Overweight, target $65. Raised ONXX to Overweight, target $44.
- UBS: Raised SKYW to Buy, target $20.25. Raised PG to Buy, target $65.
- JP Morgan: Raised CCU to Overweight.
- Thomas Weisel: Raised ARRS to Outperform.
- CIBC: Raised PGNX to Sector Outperform, target $30.
- Banc of America: Upgraded JBL to Buy, target $30.
- Legg Mason: Raised CLDN to Buy, target $25. Raised FWRD to Buy, target $47.

Mid-day News
US stocks are mixed mid-day as gains in energy-related stocks are being offset by losses in the technology sector. OPEC may boost output to lower prices that are trading close to a four-month high, Agence France-Presse reported, citing the group’s president. Macau territory, the only place in mainland China where casinos are allowed, is likely to outstrip Las Vegas as the world’s biggest gambling center, and global investors are looking for ways to profit from that, the Wall Street Journal said. Toymakers such as Mattel and Playmates Holdings are struggling to remain relevant as children gravitate from toys at a younger age, the NY Times reported. Procter & Gamble has been unable to make its Pur water purifying tablets a profitable venture by selling it to poor countries with unclean drinking supplies because of cost, the Wall Street Journal reported. Time Warner plans to sell DVDs at discounted prices in China, to combat the sale of illegally made home videos there, the Wall Street Journal reported. Canadian cattle imports may resume slowly when the US removes a ban on March 7, because rules are so complicated, the Wall Street Journal said. Time Warner’s cable tv unit’s success with its Internet-based telephone service shows that cable companies are able to compete for residential phone customers, the Wall Street Journal said. US amputations of legs, feet and toes have increased as the number of cases of diabetes rises, the Wall Street Journal reported. Fannie Mae will say today that its regulator extended the deadline for the company to increase its capital, the Wall Street Journal said. New Jersey is second only to New York and well above the national average in the amount of cancer-causing diesel soot emitted from buses, trucks and other vehicles, the Star-Ledger reported. CVS Corp. will become a sponsor for the Boston Red Sox in a five-year agreement that will give it a sign at the base of Fenway Park’s famous Green Monster, the Boston Herald reported. California Assemblyman Leno is proposing a law banning the sale of Taser International’s stun guns to civilians and requiring police officers to log all use of Tasers on suspects, the San Francisco Chronicle reported. Harvard University researchers plan to test whether the illegal psychedelic party drug ecstasy can help terminally ill cancer patients, the Boston Globe reported. German Chancellor Schroeder said differences of opinion with the US over the liberation of Iraq are a thing of the past and that Germany is ready to play a larger role in building democracy in the country, Bloomberg reported. Martha Stewart Living Omnimedia, in its last earnings report before the company’s founder leaves prison, posted a fourth-quarter loss because sales at its flagship magazine and tv unit plummeted, Bloomberg said. Fannie Mae said its federal regulator has found additional policies that may violate accounting rules, Bloomberg reported. Prices paid by US consumers rose .1% in January, less than forecast and suggesting companies haven’t been able to pass on their higher raw materials costs, Bloomberg said. Southern California residents face a seventh day of downpours in what may be the region’s wettest season in history, Bloomberg reported. Apple Computer cut the prices of its iPod mini by 20% and introduced new models to capitalize on demand that has made iPods the top-selling digital music players in the US, Bloomberg said. The Fed “still has a ways to go” in raising interest rates as it seeks to thwart inflation, Fed Bank of Atlanta President Guynn said. The FOMC considers interest rates too low to ensure stable prices and future rate decisions will depend on incoming data, according to minutes of their Feb. 1-2 meeting, Bloomberg reported.

BOTTOM LINE: The Portfolio is slightly lower mid-day as losses in my computer hardware and steel shorts are more than offsetting gains in my alternative energy longs. I have not traded today, thus leaving the Portfolio market neutral. The tone of the market is mixed as the advance/decline line is slightly higher, sector performance is mixed and volume is light. As well, measures of investor anxiety are mostly lower. Technology stocks are underperforming, while interest-rate sensitive shares and energy-related stocks are outperforming. Today’s muted gains appear to be just a temporary technical bounce after yesterday’s steep losses. I expect US stocks to trade modestly lower into the close on continuing worries over higher interest rates, increasing commodity prices and slowing global growth.

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