Monday, February 28, 2005

Monday Close

S&P 500 1,203.60 -.64%
Dow 10,766.23 -.70%
NASDAQ 2,051.72 -.66%
Russell 2000 634.06 -.54%
DJ Wilshire 5000 11,859.80 -.61%
S&P Barra Growth 579.99 -.47%
S&P Barra Value 619.17 -.82%
Morgan Stanley Consumer 585.28 -.38%
Morgan Stanley Cyclical 771.85 -.61%
Morgan Stanley Technology 473.04 -.07%
Transports 3,726.65 +.31%
Utilities 352.89 -.89%
Put/Call .68 -18.07%
NYSE Arms 1.44 +77.78%
Volatility(VIX) 12.08 +5.13%
ISE Sentiment 202.00 +39.31%
US Dollar 82.51 -.18%
CRB 305.00 +1.59%

Futures Spot Prices
Crude Oil 51.81 +.12%
Unleaded Gasoline 124.56 unch.
Natural Gas 6.72 -.21%
Heating Oil 149.14 unch.
Gold 436.70 -.21%
Base Metals 128.29 +1.20%
Copper 149.30 -.37%
10-year US Treasury Yield 4.38% +2.64%

Leading Sectors
Computer Hardware +1.40%
Internet +.55%
Computer Service +.40%

Lagging Sectors
Airlines -1.56%
Homebuilders -1.59%
Biotech -4.32%

After-hours Movers
OVTI -9.45% after beating 3Q estimates, raising 4Q eps guidance and lowering 4Q revenue outlook.
LTON +11.59% after beating 4Q estimates and raising 1Q guidance.
ADIC +4.69% after reporting a director purchased an additional 250,000 shares on 2/24/05.
CAL +3.93% after reaching agreements on about $330 million in pay and other reductions with unions for pilots, attendants, mechanics and dispatchers.
INCX -35.48% after meeting 4Q estimates and lowering 1Q outlook substantially.
FNLY -5.47% on continuing worries over Federated/May merger.

Detailed Market Summary
Market Wrap CNBC Video(bottom right)
Futures Recap
NASDAQ 100 After-hours Indicator
Real-time/After-hours Stock Quote

Afternoon Recommendations
- Goldman Sachs: Reiterated Outperform on XOM and LIZ.
- Raymond James: Reiterated Strong Buy on WGR, target $45. Reiterated Strong Buy on RDC, target $42.
- Morgan Stanley: Upgraded JTX to Overweight.
- CIBC: Upgraded XMSR to Sector Outperform, target $55.

After-hours News
US stocks finished lower today on worries over higher interest rates and weakness in the biotechnology sector. The US Dept. of Homeland Security has notified state and local law enforcement about a “credible” threat of terrorist operations outside of Iraq, Bloomberg reported. Johnson & Johnson CEO Weldon told CNBC that it’s “very important” for the US to set up post-marketing drug surveillance. HJ Heinz, the world’s largest ketchup maker, said third-quarter sales rose the most in two years, led by gains in North America, Bloomberg reported. Univision Communications, the largest US Spanish-language tv and radio broadcaster, said fourth-quarter profit rose 14% as its TeleFutura network boosted audience ratings and advertising sales, Bloomberg reported. Biogen Idec’s suspension of its Tysabri multiple sclerosis drug today after a patient died represents a setback to about 5,000 others who were taking it and many more who hoped the treatment would ease their symptoms, Bloomberg reported. A federal judge in South Carolina said the US must charge or free Jose Padilla, a US citizen held as an enemy combatant since his arrest in 2002 on suspicion he plotted to explode a radioactive “dirty bomb” in the US, Bloomberg said.

BOTTOM LINE: The Portfolio finished slightly lower today on losses in my homebuilding, semi and pharmaceutical longs. I exited a homebuilder long in the afternoon and added BIIB long, thus leaving the Portfolio 50% net long. I am using a $35.75 stop-loss on this new position. The tone of the market improved modestly into the afternoon as the advance/decline line rose, several more sectors registered gains and volume remained healthy. Measures of investor anxiety were mixed on the day and technology shares outperformed. Finally, the CRB Index made another new high today, which is a negative. I am not worried about a significant correction in housing stocks at this point. The weakness in New Home Sales is likely the result of the extraordinarily wet weather most of the country is seeing this winter. However, these shares will likely remain under pressure near-term on rising long-term interest rates.

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