S&P 500 1,089.19 +.05%
NASDAQ 1,896.59 -.08%
Leading Sectors
Airlines +2.78%
Broadcasting +.77%
Defense +.66%
Lagging Sectors
Restaurants -1.08%
Networking -1.22%
Disk Drives -1.64%
Other
Crude Oil 40.61 -.47%
Natural Gas 6.31 -.22%
Gold 379.50 +.26%
Base Metals 102.54 -.13%
U.S. Dollar 90.93 +.44%
10-Yr. T-note Yield 4.70% -1.49%
VIX 18.67 -1.37%
Put/Call 1.20 +50.00%
NYSE Arms 1.77 +63.89%
After-hours Movers
MRVL +2.94% after beating 1Q estimates.
SRNA +14.72% after beating 1Q estimates and raising 2Q guidance.
JWN +4.08% after beating 1Q estimates and raising 2Q guidance.
Recommendations
BEC and GPRO rated new Buys by UBS.
After-hours News
U.S. stocks finished nearly unchanged Thursday after economic reports gave conflicting messages and interest rates dropped. After the close, the Financial Times said the U.S. may have to import an average of 10.4 million barrels of oil a day throughout the summer to avoid dipping into its reserves. Federal Reserve Bank of Dallas President McTeer told CNBC that a "bad inflation report" is the only thing that could "legitimately" prompt a Fed meeting before June 29. Bonds rallied today after Fed Governor Bernanke said inflation "appears likely to remain in the zone of price stability" this year and into 05, Bloomberg reported. Draining the U.S. Strategic Petroleum Reserve to lower energy prices in the short-term would encourage terrorists who might be trying to disrupt energy supplies and the economy, President Bush told CNBC. The contest between President Bush and Senator Kerry may push spending for the presidential and congressional election campaigns to a record $3 billion this year, Bloomberg reported. Nordstrom said profits soared 140% and sales at stores open more than a year rose 13%, the most in more than a decade, Bloomberg reported.
BOTTOM LINE: The Portfolio had a good day today and I took profits in a couple of tech longs and homebuilding shorts and added a few airline and paper longs, leaving the Portfolio with 100% net long market exposure. One of my new longs is GP and I am keeping a $32.50 stop-loss on the position. With interest rates falling, oil stabilizing and the Put/Call ratio and ARMs index soaring, I expect U.S. stocks to make another rally attempt in the next couple of days.
Thursday, May 20, 2004
Mid-day Update
S&P 500 1,090.41 +.15%
NASDAQ 1,900.66 +.12%
Leading Sectors
Airlines +1.55%
Broadcasting +.94%
Banks +.67%
Lagging Sectors
Restaurants -1.04%
Networking -1.05%
Disk Drives -1.33%
Other
Crude Oil 41.12 -.92%
Natural Gas 6.36 -1.39%
Gold 378.70 -1.12%
Base Metals 102.54 -.13%
U.S. Dollar 91.13 +.66%
10-Yr. T-note Yield 4.73% -.96%
VIX 18.81 -.53%
Put/Call 1.27 +58.75%
NYSE Arms 1.60 +48.15%
Market Movers
AFCI +11.40% after announcing TLAB would acquire it for $1.9B.
INTU -8.11% after beating 3Q estimates and lowering 4Q and 05 forecast.
NAV -16.17% after missing 2Q and lowering 3Q guidance.
PHRM +49.2% after the FDA approved its Vidaza drug for treating a cancer-like bone-marrow illness.
NILE +32.2% on strong demand for its IPO.
SNPS +8.1% after beating 2Q estimates and raising 3Q guidance.
PETM +5.98% after beating 1Q estimates and raising 2Q/04 forecast.
CUNO +6.83% after beating 2Q estimates and raising 04 forecast.
BBOX -14.04% after missing 4Q estimates.
SFCC -12.62% after Jeffries downgrade to Hold.
Economic Data
Initial Jobless Claims for May came in at 345K versus expectations of 328K and 333K prior week.
Continuing Claims came in at 2943K versus 2956K estimate and 2966K prior.
Leading Indicators for April rose .1% versus expectations of .2% and .8% in March.
Philadelphia Fed. for May came in at 23.8 versus a 30.5 estimate and 32.5 in April.
Recommendations
THC rated Buy at Oppenheimer, target $17. JCP raised to Overweight at Morgan Stanley, target $42. PX raised to Buy at Bank of America, target $42. WMI rated Outperform at CSFB, target $36. DAL raised to Overweight at Lehman, target $10. QCOM raised to Overweight by Prudential, target $75. Goldman Sachs said AVP is top pick in household products/personal care universe. Goldman reiterated Outperform on SYMC. Citi SmithBarney said to Buy SSCC, GP and WY. Citi also said to Buy MAS, target $36. Citi reiterated Sell on BA, target $36. Citi said to Buy UNH ahead of conference next week, target $86. Citi reiterated Buy on GE, target $36.
Mid-day News
U.S. stocks are hovering near the flat-line today on conflicting signals from recent economic reports. Best Buy, Sears and CompUSA are offering consumers in-home installation and repair services in an effort to boost loyalty, the Wall Street Journal reported. The company overseeing aid for the United Nations' scandal-plagued oil-for-food program in Iraq failed to staff important checkpoints and couldn't account for "massive discrepancies" between reported and actual aid shipments, the Washington Times reported, citing an internal UN audit. Verizon said it will install its fiber-optic network in only 7 towns in Bergen County, NJ, instead of 34, after a state ruling limited the amount it could charge competitors that lease its local phone lines, the Star-Ledger of Newark, NJ, reported. U.S. TV executives are curtailing reruns and scheduling more reality shows to compete with cable and win young adult viewers, the LA Times reported. The median sale price of a home in LA county rose 28% in April, to $387,000, the LA Times reported. Verizon, privacy advocates and some members of Congress fear that the new Cellular Telecommunications and Internet Association's directory could make users vulnerable to telemarketers and e-mail spammers, the LA Times reported. Manmohan Singh, India's prime minister designate, promised a business-friendly government, Bloomberg reported. Above normal heat will prevail from the U.S. plains to the Pacific Coast and along much of the Eastern Seaboard during the summer, a government forecaster said. Comcast agreed to offer Microsoft's video-on-demand software to its customers, Bloomberg said. The Department of Homeland Security ordered Amtrak and operators of commuter trains to boost security against terrorism by increasing inspections and the use of bomb-sniffing dogs, Bloomberg reported. The Philadelphia Fed index of factory employment surged to a 31-year high and prices paid by manufacturers rose, fueling speculation the Fed will hike rates next month, Bloomberg said.
BOTTOM LINE: The Portfolio is having a good day today as my tech and Chinese ADR longs are rising and retail shorts are falling. I have not traded today and the Portfolio is still 75% net long. I expect U.S. stocks to rise modestly into the afternoon as the Put/Call ratio and ARMs index are soaring, interest rates are dropping and oil is lower.
NASDAQ 1,900.66 +.12%
Leading Sectors
Airlines +1.55%
Broadcasting +.94%
Banks +.67%
Lagging Sectors
Restaurants -1.04%
Networking -1.05%
Disk Drives -1.33%
Other
Crude Oil 41.12 -.92%
Natural Gas 6.36 -1.39%
Gold 378.70 -1.12%
Base Metals 102.54 -.13%
U.S. Dollar 91.13 +.66%
10-Yr. T-note Yield 4.73% -.96%
VIX 18.81 -.53%
Put/Call 1.27 +58.75%
NYSE Arms 1.60 +48.15%
Market Movers
AFCI +11.40% after announcing TLAB would acquire it for $1.9B.
INTU -8.11% after beating 3Q estimates and lowering 4Q and 05 forecast.
NAV -16.17% after missing 2Q and lowering 3Q guidance.
PHRM +49.2% after the FDA approved its Vidaza drug for treating a cancer-like bone-marrow illness.
NILE +32.2% on strong demand for its IPO.
SNPS +8.1% after beating 2Q estimates and raising 3Q guidance.
PETM +5.98% after beating 1Q estimates and raising 2Q/04 forecast.
CUNO +6.83% after beating 2Q estimates and raising 04 forecast.
BBOX -14.04% after missing 4Q estimates.
SFCC -12.62% after Jeffries downgrade to Hold.
Economic Data
Initial Jobless Claims for May came in at 345K versus expectations of 328K and 333K prior week.
Continuing Claims came in at 2943K versus 2956K estimate and 2966K prior.
Leading Indicators for April rose .1% versus expectations of .2% and .8% in March.
Philadelphia Fed. for May came in at 23.8 versus a 30.5 estimate and 32.5 in April.
Recommendations
THC rated Buy at Oppenheimer, target $17. JCP raised to Overweight at Morgan Stanley, target $42. PX raised to Buy at Bank of America, target $42. WMI rated Outperform at CSFB, target $36. DAL raised to Overweight at Lehman, target $10. QCOM raised to Overweight by Prudential, target $75. Goldman Sachs said AVP is top pick in household products/personal care universe. Goldman reiterated Outperform on SYMC. Citi SmithBarney said to Buy SSCC, GP and WY. Citi also said to Buy MAS, target $36. Citi reiterated Sell on BA, target $36. Citi said to Buy UNH ahead of conference next week, target $86. Citi reiterated Buy on GE, target $36.
Mid-day News
U.S. stocks are hovering near the flat-line today on conflicting signals from recent economic reports. Best Buy, Sears and CompUSA are offering consumers in-home installation and repair services in an effort to boost loyalty, the Wall Street Journal reported. The company overseeing aid for the United Nations' scandal-plagued oil-for-food program in Iraq failed to staff important checkpoints and couldn't account for "massive discrepancies" between reported and actual aid shipments, the Washington Times reported, citing an internal UN audit. Verizon said it will install its fiber-optic network in only 7 towns in Bergen County, NJ, instead of 34, after a state ruling limited the amount it could charge competitors that lease its local phone lines, the Star-Ledger of Newark, NJ, reported. U.S. TV executives are curtailing reruns and scheduling more reality shows to compete with cable and win young adult viewers, the LA Times reported. The median sale price of a home in LA county rose 28% in April, to $387,000, the LA Times reported. Verizon, privacy advocates and some members of Congress fear that the new Cellular Telecommunications and Internet Association's directory could make users vulnerable to telemarketers and e-mail spammers, the LA Times reported. Manmohan Singh, India's prime minister designate, promised a business-friendly government, Bloomberg reported. Above normal heat will prevail from the U.S. plains to the Pacific Coast and along much of the Eastern Seaboard during the summer, a government forecaster said. Comcast agreed to offer Microsoft's video-on-demand software to its customers, Bloomberg said. The Department of Homeland Security ordered Amtrak and operators of commuter trains to boost security against terrorism by increasing inspections and the use of bomb-sniffing dogs, Bloomberg reported. The Philadelphia Fed index of factory employment surged to a 31-year high and prices paid by manufacturers rose, fueling speculation the Fed will hike rates next month, Bloomberg said.
BOTTOM LINE: The Portfolio is having a good day today as my tech and Chinese ADR longs are rising and retail shorts are falling. I have not traded today and the Portfolio is still 75% net long. I expect U.S. stocks to rise modestly into the afternoon as the Put/Call ratio and ARMs index are soaring, interest rates are dropping and oil is lower.
***Special Report***
Please read this recent report by GlobalInsight entitled "What if Oil Prices Stay at $40?", by Nigel Gault.
Thursday Watch
Earnings of Note
Company/Estimate
ARO/.09
CIEN/-.07
ELBO/.09
GPS/.32
MRVL/.32
JWN/.43
PETM/.21
Splits
SFCC 3-for-2
Economic Data
Initial Jobless Claims for last week estimated at 325K versus 331K the prior week.
Continuing Claims estimated at 2950K versus 2974K prior.
Leading Indicators for April estimated +.2% versus +.3% in March.
Philadelphia Fed. for May estimated at 31.0 versus 32.5 in April.
Recommendations
Goldman Sachs reiterated Outperform on TPX, BIIB, IP, DTC, ABK, PETC and SPP.
Late-Night News
Asian indices are lower on concerns over the political situation in Taiwan and rising energy prices. Hynix Semiconductor of South Korea plans to double shipments of so-called NAND flash memory chips to 2 million units a month by the end of June, Digitimes reported. China's coal shortages have left some power plants with sufficient inventories to keep them running for a day and forced others to shut down, the China Daily reported. HSBC Holdings, Europe's largest bank by market value, may consider buying a U.S. deposit and savings bank to boost its presence in the U.S., the Financial Times said. President Bush reiterated that the U.S.-led coalition would complete a full transfer of sovereignty in Iraq by June 30, Bloomberg reported. OPEC may as soon as this weekend approve Saudi Arabia's plan to boost oil output quotas because of concerns that near record-high prices will slow economic growth, Bloomberg said. Taiwan President Chen Shui-bian said he will press ahead with constitutional revisions without mentioning his plan to put the changes to a public vote, a referendum China has denounced as a ruse to declare independence, Bloomberg reported.
Late-Night Trading
Asian Indices -1.75% to -.25% on average.
S&P 500 indicated -.15%.
NASDAQ indicated -.36%.
BOTTOM LINE: U.S. stocks will likely fall tomorrow morning on weakness in Asia and higher energy prices. Oil would have to reach $78/bbl. on an inflation-adjusted basis to equal levels seen during the Iran hostage crisis in the early 80's. The price of oil has barely risen over the last 23 years while other goods and services have risen continuously. The U.S. CPI is expected to rise just 2.2% this year, below its 84-year average of 3.0%. Worldwide inflation is projected to rise at its slowest pace ever this year. According to GlobalInsight.com, a well-repected economic consultant, $40/bbl. oil for the next 2 years would only shave .3% off of GDP growth each year. Under this scenario, the U.S. CPI would rise 2.1% next year and 1.9% in 06, still well below the 84-year average.
Company/Estimate
ARO/.09
CIEN/-.07
ELBO/.09
GPS/.32
MRVL/.32
JWN/.43
PETM/.21
Splits
SFCC 3-for-2
Economic Data
Initial Jobless Claims for last week estimated at 325K versus 331K the prior week.
Continuing Claims estimated at 2950K versus 2974K prior.
Leading Indicators for April estimated +.2% versus +.3% in March.
Philadelphia Fed. for May estimated at 31.0 versus 32.5 in April.
Recommendations
Goldman Sachs reiterated Outperform on TPX, BIIB, IP, DTC, ABK, PETC and SPP.
Late-Night News
Asian indices are lower on concerns over the political situation in Taiwan and rising energy prices. Hynix Semiconductor of South Korea plans to double shipments of so-called NAND flash memory chips to 2 million units a month by the end of June, Digitimes reported. China's coal shortages have left some power plants with sufficient inventories to keep them running for a day and forced others to shut down, the China Daily reported. HSBC Holdings, Europe's largest bank by market value, may consider buying a U.S. deposit and savings bank to boost its presence in the U.S., the Financial Times said. President Bush reiterated that the U.S.-led coalition would complete a full transfer of sovereignty in Iraq by June 30, Bloomberg reported. OPEC may as soon as this weekend approve Saudi Arabia's plan to boost oil output quotas because of concerns that near record-high prices will slow economic growth, Bloomberg said. Taiwan President Chen Shui-bian said he will press ahead with constitutional revisions without mentioning his plan to put the changes to a public vote, a referendum China has denounced as a ruse to declare independence, Bloomberg reported.
Late-Night Trading
Asian Indices -1.75% to -.25% on average.
S&P 500 indicated -.15%.
NASDAQ indicated -.36%.
BOTTOM LINE: U.S. stocks will likely fall tomorrow morning on weakness in Asia and higher energy prices. Oil would have to reach $78/bbl. on an inflation-adjusted basis to equal levels seen during the Iran hostage crisis in the early 80's. The price of oil has barely risen over the last 23 years while other goods and services have risen continuously. The U.S. CPI is expected to rise just 2.2% this year, below its 84-year average of 3.0%. Worldwide inflation is projected to rise at its slowest pace ever this year. According to GlobalInsight.com, a well-repected economic consultant, $40/bbl. oil for the next 2 years would only shave .3% off of GDP growth each year. Under this scenario, the U.S. CPI would rise 2.1% next year and 1.9% in 06, still well below the 84-year average.
Wednesday, May 19, 2004
Wednesday Close
S&P 500 1,088.68 -.26%
NASDAQ 1,898.17 +.02%
Leading Sectors
Nanotechnology +2.20%
Fashion +1.87%
Networking +1.78%
Lagging Sectors
Hospitals -1.51%
Biotech -1.58%
Homebuilders -2.59%
Other
Crude Oil 41.59 +.22%
Natural Gas 6.48 +.42%
Gold 382.50 -.13%
Base Metals 102.67 +1.97%
U.S. Dollar 90.53 -.79%
10-Yr. T-note Yield 4.78% +1.05%
VIX 18.93 -2.07%
Put/Call .80 -13.98%
NYSE Arms 1.08 +33.33%
After-hours Movers
INTU -9.0% after beating 3Q estimates and lowering 4Q and 05 forecast.
SNPS +6.2% after beating 2Q estimates and raising 3Q guidance.
BBOX -11.86% after missing 4Q estimates.
CMOS +5.28% after significantly beating 2Q estimates and raising 3Q forecast substantially.
Recommendations
Goldman Sachs said key takeaway from day one of Steel Conference is that the very strong steel cycle is sustainable on strong demand, no signs of a slowing Chinese economy, stability in scrap prices, tight supply for carbon steel sheet, no price weakness and stainless demand/pricing improving. Goldman reiterated Outperform on GDT, FDC and ARG. Goldman said IBM has 22% upside from here.
After-hours News
U.S. stocks finished mildly lower Wednesday as climbing interest rates and energy prices led to afternoon profit-taking. After the close, Taiwan President Chen Shui-bian said his inaugural speech today will outline a positive approach to improving relations with China and will seek to repair U.S. ties strained by his pro-independence politics, the South China Morning Post reported. The U.S. government should continue filling the strategic petroleum reserve instead of releasing oil from it to lower prices temporarily, T. Boone Pickens told CNBC. American Airlines, United Airlines and Northwest Airlines raised fares in some markets after Continental Airlines boosted prices as much as $20 one way on higher jet fuel costs, Bloomberg reported. SBC Communications is facing the largest U.S. strike since 1997 after the union negotiating labor contract for 100,000 workers rebuffed the telephone company's latest offer and called a four-day walkout, Bloomberg said. Crude oil rose and gasoline futures surged today after the Energy Department said U.S. stockpiles of the motor fuel increased less than expected, Bloomberg reported.
BOTTOM LINE: The Portfolio had a good day today as a few of my tech and Chinese ADR longs rose substantially. However, performance was better earlier in the day. I took profits in a few longs and put on a few new shorts in the homebuilding and retail sectors in the afternoon. The Portfolio is now 75% net long. It was a very disappointing day for the Bulls as investors seem completed fixated on oil prices to the detriment of all other fundamentals. While I think a short-term bottom was made in most stocks last week, it appears that the market will need a few more weeks of consolidation before a real intermediate-term advance begins.
NASDAQ 1,898.17 +.02%
Leading Sectors
Nanotechnology +2.20%
Fashion +1.87%
Networking +1.78%
Lagging Sectors
Hospitals -1.51%
Biotech -1.58%
Homebuilders -2.59%
Other
Crude Oil 41.59 +.22%
Natural Gas 6.48 +.42%
Gold 382.50 -.13%
Base Metals 102.67 +1.97%
U.S. Dollar 90.53 -.79%
10-Yr. T-note Yield 4.78% +1.05%
VIX 18.93 -2.07%
Put/Call .80 -13.98%
NYSE Arms 1.08 +33.33%
After-hours Movers
INTU -9.0% after beating 3Q estimates and lowering 4Q and 05 forecast.
SNPS +6.2% after beating 2Q estimates and raising 3Q guidance.
BBOX -11.86% after missing 4Q estimates.
CMOS +5.28% after significantly beating 2Q estimates and raising 3Q forecast substantially.
Recommendations
Goldman Sachs said key takeaway from day one of Steel Conference is that the very strong steel cycle is sustainable on strong demand, no signs of a slowing Chinese economy, stability in scrap prices, tight supply for carbon steel sheet, no price weakness and stainless demand/pricing improving. Goldman reiterated Outperform on GDT, FDC and ARG. Goldman said IBM has 22% upside from here.
After-hours News
U.S. stocks finished mildly lower Wednesday as climbing interest rates and energy prices led to afternoon profit-taking. After the close, Taiwan President Chen Shui-bian said his inaugural speech today will outline a positive approach to improving relations with China and will seek to repair U.S. ties strained by his pro-independence politics, the South China Morning Post reported. The U.S. government should continue filling the strategic petroleum reserve instead of releasing oil from it to lower prices temporarily, T. Boone Pickens told CNBC. American Airlines, United Airlines and Northwest Airlines raised fares in some markets after Continental Airlines boosted prices as much as $20 one way on higher jet fuel costs, Bloomberg reported. SBC Communications is facing the largest U.S. strike since 1997 after the union negotiating labor contract for 100,000 workers rebuffed the telephone company's latest offer and called a four-day walkout, Bloomberg said. Crude oil rose and gasoline futures surged today after the Energy Department said U.S. stockpiles of the motor fuel increased less than expected, Bloomberg reported.
BOTTOM LINE: The Portfolio had a good day today as a few of my tech and Chinese ADR longs rose substantially. However, performance was better earlier in the day. I took profits in a few longs and put on a few new shorts in the homebuilding and retail sectors in the afternoon. The Portfolio is now 75% net long. It was a very disappointing day for the Bulls as investors seem completed fixated on oil prices to the detriment of all other fundamentals. While I think a short-term bottom was made in most stocks last week, it appears that the market will need a few more weeks of consolidation before a real intermediate-term advance begins.
Mid-day Update
S&P 500 1,102.54 +1.01%
NASDAQ 1,929.61 +1.68%
Leading Sectors
Nanotechnology +3.74%
Networking +3.63%
Semis +3.46%
Lagging Sectors
Homebuilders -.17%
Hospitals -.19%
HMO's -.43%
Other
Crude Oil 41.15 +1.50%
Natural Gas 6.34 +2.94%
Gold 382.80 +1.84%
Base Metals 102.67 +1.97%
U.S. Dollar 90.56 -.76%
10-Yr. Long-Bond Yield 4.78% +.96%
VIX 17.86 -7.5%
Put/Call .66 -29.03%
NYSE Arms .44 -44.44%
Market Movers
HPQ +5.6% after beating 2Q revenue estimates and boosting 2nd half revenue forecast by $1B.
KROL +29.9% after announcing that MMC would acquire it for $1.9B in cash.
RIMM +6.59% on Legg Mason upgrade.
AMD +7.16% after announcing it established AMD China, enabling it to conduct an increased scope of business in the country.
SKYE +22.35% after winning U.S. FDA approval for their DepoDur pain treatment.
AMI +17.74% after it agreed to be acquired by CAH for about $1.62B. in cash.
DRIV +9.91% after positive comments at Piper Jaffray conference.
CCDC -19.71% after lowering 04 forecast.
ADSK -5.0% after beating 1Q estimates and lowering 2Q forecast.
Economic Data
None of note.
Recommendations
PHRM raised to Overweight at JP Morgan. PETM rated Buy at Deutsche Bank, target $32. UVN raised to Overweight at Moran Stanley, target $36. HPQ raised to Sector Outperform at CIBC, target $30. ERICY rated Buy at Legg Mason, target $31. RIMM rated Buy at Legg Mason, target $124. CNO rated Overweight at Morgan Stanley, target $24. Goldman Sachs reiterated Outperform on MERQ, UST and PEP. Goldman thinks EMS names are attractive at 18x CY05 estimates, favorites are SLR and CLS. Citi SmithBarney upgraded DNET to Buy, target $28. Citi rated MDT Buy, target $57. Citi rated GDT Sell, target $57. Citi reiterated Buy on BJ, target $30. Citi reiterated Buy on JCP, target $46. Citi reiterated Buy on DIS, target $32.
Mid-day News
U.S. stocks are higher mid-day on strong earnings reports and strength in Asia. PIMCO's Mohamed El-Erian, who manages more emerging-market debt than any other fund manager, told CNBC that credit fundamentals are improving in emerging markets. OPEC recognizes that near-record crude oil prices may hurt importing nations and can increase supply if needed, Bloomberg reported. The U.S. Department of Health and Human Services plans to speed up investigations of marketing practices by medical-device makers and may bring more charges of fraud and abuse, the Boston Globe reported. More than 100 companies are planning to submit offers for a five-year contract to provide phone and Internet connections for New York City agencies, in the first open-bid process, the New York Daily News reported. Pharmaceutical companies, seeking to cut costs and find new medicines as patents expire, are merging at a record pace this year, making the $430 billion global drug industry the most active acquisition market behind banking, Bloomberg said. Merrill Lynch picked Morningstar and BNY Jaywalk to provide research to its clients as part of the company's settlement with regulators over biased stock advice, Bloomberg reported. Manmohan Singh will form a Congress-led government to run India for the next five years after Sonia Gandhi, who led the party to a surprise election victory, said she wouldn't become prime minister, Bloomberg said. An index of U.S. mortgage applications fell 12% last week as home purchases slowed for the first time in more than a month and loan refinancing dropped to the lowest level since early January, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a very good day today as my Chinese cyclical and tech longs are rising substantially. Rising interest rates and energy prices are keeping U.S. stocks from rising even more. Volume and breadth are pretty good today and I would like to see stocks rally into the close as shorts cover and investors sense they have missed the bottom. I have not traded today and the Portfolio is still 125% net long.
NASDAQ 1,929.61 +1.68%
Leading Sectors
Nanotechnology +3.74%
Networking +3.63%
Semis +3.46%
Lagging Sectors
Homebuilders -.17%
Hospitals -.19%
HMO's -.43%
Other
Crude Oil 41.15 +1.50%
Natural Gas 6.34 +2.94%
Gold 382.80 +1.84%
Base Metals 102.67 +1.97%
U.S. Dollar 90.56 -.76%
10-Yr. Long-Bond Yield 4.78% +.96%
VIX 17.86 -7.5%
Put/Call .66 -29.03%
NYSE Arms .44 -44.44%
Market Movers
HPQ +5.6% after beating 2Q revenue estimates and boosting 2nd half revenue forecast by $1B.
KROL +29.9% after announcing that MMC would acquire it for $1.9B in cash.
RIMM +6.59% on Legg Mason upgrade.
AMD +7.16% after announcing it established AMD China, enabling it to conduct an increased scope of business in the country.
SKYE +22.35% after winning U.S. FDA approval for their DepoDur pain treatment.
AMI +17.74% after it agreed to be acquired by CAH for about $1.62B. in cash.
DRIV +9.91% after positive comments at Piper Jaffray conference.
CCDC -19.71% after lowering 04 forecast.
ADSK -5.0% after beating 1Q estimates and lowering 2Q forecast.
Economic Data
None of note.
Recommendations
PHRM raised to Overweight at JP Morgan. PETM rated Buy at Deutsche Bank, target $32. UVN raised to Overweight at Moran Stanley, target $36. HPQ raised to Sector Outperform at CIBC, target $30. ERICY rated Buy at Legg Mason, target $31. RIMM rated Buy at Legg Mason, target $124. CNO rated Overweight at Morgan Stanley, target $24. Goldman Sachs reiterated Outperform on MERQ, UST and PEP. Goldman thinks EMS names are attractive at 18x CY05 estimates, favorites are SLR and CLS. Citi SmithBarney upgraded DNET to Buy, target $28. Citi rated MDT Buy, target $57. Citi rated GDT Sell, target $57. Citi reiterated Buy on BJ, target $30. Citi reiterated Buy on JCP, target $46. Citi reiterated Buy on DIS, target $32.
Mid-day News
U.S. stocks are higher mid-day on strong earnings reports and strength in Asia. PIMCO's Mohamed El-Erian, who manages more emerging-market debt than any other fund manager, told CNBC that credit fundamentals are improving in emerging markets. OPEC recognizes that near-record crude oil prices may hurt importing nations and can increase supply if needed, Bloomberg reported. The U.S. Department of Health and Human Services plans to speed up investigations of marketing practices by medical-device makers and may bring more charges of fraud and abuse, the Boston Globe reported. More than 100 companies are planning to submit offers for a five-year contract to provide phone and Internet connections for New York City agencies, in the first open-bid process, the New York Daily News reported. Pharmaceutical companies, seeking to cut costs and find new medicines as patents expire, are merging at a record pace this year, making the $430 billion global drug industry the most active acquisition market behind banking, Bloomberg said. Merrill Lynch picked Morningstar and BNY Jaywalk to provide research to its clients as part of the company's settlement with regulators over biased stock advice, Bloomberg reported. Manmohan Singh will form a Congress-led government to run India for the next five years after Sonia Gandhi, who led the party to a surprise election victory, said she wouldn't become prime minister, Bloomberg said. An index of U.S. mortgage applications fell 12% last week as home purchases slowed for the first time in more than a month and loan refinancing dropped to the lowest level since early January, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a very good day today as my Chinese cyclical and tech longs are rising substantially. Rising interest rates and energy prices are keeping U.S. stocks from rising even more. Volume and breadth are pretty good today and I would like to see stocks rally into the close as shorts cover and investors sense they have missed the bottom. I have not traded today and the Portfolio is still 125% net long.
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