Thursday, February 24, 2005

Mid-day Report

S&P 500 1,192.62 +.15%
Dow 10,684.12 +.09%
NASDAQ 2,033.17 +.09%
Russell 2000 622.10 +.25%
DJ Wilshire 5000 11,736.01 +.15%
S&P Barra Growth 573.54 +.19%
S&P Barra Value 614.72 +.11%
Morgan Stanley Consumer 584.42 +.31%
Morgan Stanley Cyclical 760.98 +.25%
Morgan Stanley Technology 463.28 +.08%
Transports 3,647.19 +.98%
Utilities 347.39 +.58%
Put/Call 1.10 +27.91%
NYSE Arms 1.08 +44.0%
Volatility(VIX) 11.94 -3.63%
ISE Sentiment 184.00 +23.49%
US Dollar 82.82 +.17%
CRB 298.68 -.16%

Futures Spot Prices
Crude Oil 51.55 +.84%
Unleaded Gasoline 129.00 -1.63%
Natural Gas 6.45 +2.20%
Heating Oil 146.50 -1.22%
Gold 435.50 -.14%
Base Metals 127.28 -1.03%
Copper 147.80 -1.14%
10-year US Treasury Yield 4.27% +.32%

Leading Sectors
Iron/Steel +2.47%
Homebuilders +1.98%
Semis +1.28%

Lagging Sectors
Gaming -.31%
Drugs -.41%
Internet -.78%

Market Movers
YHOO -5.0% on RBC Capital downgrade to Sector Perform.
GOOG -4.7% on RBC Capital downgrade to Sector Perform.
ANIK +35.29% after beating 4Q estimates substantially.
JOYG +17.66% after substantially beating 1Q estimates and raising 05 forecast.
PRST +11.97% on strong 4Q results.
YELL +5.2% after saying it successfully launched its next-day service with a 98% on-time performance record.
MATK +4.83% after saying it will replace Banknorth Group(BNK) in the S&P MidCap 400 after the close of trading on March 1.
FWHT -21.48% after missing 1Q revenue estimates and lowering 05 outlook.
ASKJ -7.82% on YHOO, GOOG and FWHT news.

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

Economic Data
- Durable Goods Orders for January fell .9% versus estimates of unch. and an upwardly revised 1.4% rise in December.
- Durables Ex Transportation for January rose .8% versus estimates of a .3% increase and an upwardly revised 2.8% gain in December.
- Initial Jobless Claims for last week rose to 312K versus estimates of 309K and 303K the prior week.
- Continuing Claims fell to 2650K versus estimates of 2693K and 2712K prior.
- Help Wanted Index for January rose to 41 versus estimates of 38 and a reading of 38 in December.

- Goldman Sachs: Reiterated Outperform on HD, MO, NEM, YUM, MSFT, DELL, GILD, BSX, JTX, ECA, CEN and JTX. Reiterated Underperform on INFA.
- Smith Barney: Reiterated Buy on PLUG, target $13. Reiterated Buy on ROP, target $70. Reiterated Buy on WTS, target $35. Reiterated Sell on JBX, target $34. Reiterated Sell on CIEN, target $2.40. Reiterated Buy on ESV, target $48. Reiterated Buy on LOW, target $70. Reiterated Buy on EEFT, target $35. Reiterated Buy on EFD, target $27. Reiterated Buy on BLS, target $25.41.
- UBS: Raised KRB to Buy, target $30.
- JP Morgan: Raised PLD to Overweight. Downgraded RPM to Underweight. Raised MDG to Overweight.
- Bear Stearns: Raised NTAP to Outperform.
- Legg Mason: Raised ANT to Buy, target $46.
- Oppenheimer: Rated RHB Buy, target $35.
- CIBC: Raised LAMR to Sector Outperform, target $50.
- Merrill Lynch: Rated BVN Buy, target $28. Raised MWV to Buy, target $36.
- Raymond James: Raised WCN to Strong Buy.

Mid-day News
US stocks are modestly higher mid-day on gains in transportation and homebuilding stocks. IBM is starting to provide shorter more limited technology service contracts because they are more profitable and favored by customers, the Wall Street Journal reported. Honeywell International, Philips Electronics, Motorola are among more than 100 companies that have agreed to make devices using ZigBee wireless technology, the Wall Street Journal reported. A NYC-based developer dropped plans to include a Wal-Mart Stores outlet in its planned Queens shopping center, ending the world’s largest retailer’s plans to open its first NYC store, the NY Times reported. GM, AT&T, Alcoa and other US companies may hold software vendors such as Microsoft responsible for flaws in their systems, the Wall Street Journal reported. Utah’s system of partial health insurance may become a model for changing the US Medicaid system, the NY Times said. Coca-Cola has allocated $125 million of a $400 million increase in marketing and innovation spending to North America, the Wall Street Journal reported. A Maryland House of Delegates committee voted to pass a slot-machine gambling bill, bringing closer the prospect of for-profit slots coming to the state for the first time since 1968, the Washington Post said. Gangsta rap star 50 Cent is joining Sirius Satellite Radio to host his own show called “G Unit Radio,” the NY Post reported. Cablevision Systems, the largest cable-tv operator in NY, may put its cable systems up for sale later this year, the NY Post reported. Saudi Arabian Oil Minister al-Naimi said oil prices are likely to trade between $40-$50/bbl. this year, Dow Jones Newswires reported. Demand in the US for debt with maturities of 30 years or more may be spurred on expectations changes to legislation will be made to ensure company pension plans are properly funded, the Financial Times said. The number of unemployed in Germany rose to 5.2 million in February, the highest since WW II, Die Welt reported. Ryanair Holdings, Europe’s biggest low-cost airline, ordered 70 Boeing single-aisle planes worth more than $4 billion to more than double its capacity by 2012, Bloomberg reported. Wal-Mart CEO Scott said the company plans to expand in California because prices of food and household supplies are too high, Bloomberg said. China’s fixed-asset investment growth is at risk of rebounding and raw material and service price increases my push up inflation, the central bank said, signaling policies aimed at slowing the economy are unlikely to be relaxed, Bloomberg reported. The US and Russia pledged to extend previous agreements to prevent terrorists from obtaining nuclear weapons as President Bush met with President Putin to express concern about Putin’s commitment to democracy, Bloomberg said. Duke Energy is selling its interests in pipeline owner Teppco Partners LP to a company controlled by billionaire Dan Duncan and will use the proceeds to buy back up to $2.5 billion in stock, Bloomberg reported. Crude oil is nearly unchanged after the Energy Department reported that US stockpiles rose less than some forecast, Bloomberg said. IBM offered US national-security regulators concessions aimed at overcoming objections to the sale of its personal-computer unit to China’s Lenovo Group, Bloomberg reported. President Bush said he and Russian President Putin agreed that Iran and North Korea shouldn’t develop nuclear weapons, in talks he described as “open and candid,” Bloomberg said. US durable goods orders fell .9% in January, the first drop in three months, as lower demand for planes and autos offset a surge in capital equipment demand, 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 and software shorts. I exited a few shorts this morning as they hit stop-losses, thus leaving the Portfolio 50% net long. The tone of the market is mixed again as the advance/decline line is nearly unchanged, sector performance is mixed and volume is better. Measures of investor anxiety are also mixed, however the AAII % Bulls fell 12.49% this week to 31.82% which is a positive. As well, while the Help-wanted Index is not widely followed anymore, it jumped out of its trading range and to the highest levels since Feb.03. However, it is a negative that crude oil isn’t declining on today’s inventory data and OPEC seems happy with oil at $50/bbl. I expect US stocks to trade modestly higher into the close on short-covering ahead of tomorrow’s economic data.

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