Tuesday Close

S&P 500 1,130.56 unch.
NASDAQ 1,984.79 +.25%

Leading Sectors
Airlines +3.76%
Homebuilders +1.3%
Iron/Steel +1.2%

Lagging Sectors
Energy -1.47%
Utilities -1.73%
Oil Service -2.38%

Other
Crude Oil 49.21 -.83%
Natural Gas 8.50 -.78%
Gold 422.60 +.43%
Base Metals 114.64 -.17%
U.S. Dollar 85.47 +.32%
10-Yr. T-note Yield 4.06% -.24%
VIX 16.18 -.55%
Put/Call .75 -17.58%
NYSE Arms 1.14 -10.94%

After-hours Movers
MLNM +4.3% after announcing the FDA has granted VELCADE fast track designation for relapsed and refractory mantle cell lymphoma.
ENWV +7.5% after beating 3Q estimates and raising 4Q outlook.
CDIS +5.8% after beating 3Q estimates and raising 04 guidance.
ITRI -5.03% after missing 3Q estimates and lowering 4Q outlook.
PCLN -5.5% after missing 3Q estimates and lowering 4Q outlook.

Recommendations
Goldman Sachs reiterated Outperform on AMLN, IR and VZ. Goldman reiterated Underperform on PPS.

After-hours News
U.S. stocks finished mixed today after a late-session sell-off related to rumors of a strong showing by Senator Kerry in exit polls from Pennsylvania, Florida and Ohio. After the close, Apple Computer shares rose to a four-year high as demand for the iPod digital music player surges before the year-end shopping season, Bloomberg said. Delta Air Lines, seeking to avoid bankruptcy, said bondholders offered to swap $252 million of debt in response to part of an exchange offer for as much as $680 million in new notes, Bloomberg reported. Crude oil futures fell for a third day, after closing yesterday below $50 for the first time in four weeks, on expectations rising U.S. inventories will be able to meet demand, Bloomberg reported. The U.S. dollar traded near a six-month low against the yen on speculation Senator Kerry is leading President Bush in early counting of votes in the election, Bloomberg said.

BOTTOM LINE: The Portfolio finished higher today on strength in my gaming, restaurant and wireless longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. I continue to believe the market will move higher tomorrow regardless of who wins the Presidency tonight. However, a delay in the outcome would send shares lower. As well, a Democratic takeover of the Senate or House would send stocks sharply lower. I do not believe either one of these outcomes is very likely.

Mid-day Update

S&P 500 1,139.59 +.80%
NASDAQ 2,000.22 +1.03%

Leading Sectors
Airlines +3.34%
I-Banks +1.71%
Wireless +1.54%

Lagging Sectors
Commodity -.56%
Energy -.56%
Oil Service -1.45%

Other
Crude Oil 49.95 -.40%
Natural Gas 8.56 -1.83%
Gold 420.30 -1.82%
Base Metals 114.64 -.17%
U.S. Dollar 85.42 +.26%
10-Yr. T-note Yield 4.08% +.19%
VIX 15.46 -4.98%
Put/Call .80 -12.09%
NYSE Arms .87 -32.03%

Market Movers
NXTL +4.8% after saying it resolved disputes with Verizon over airwaves and trademark names.
BJS -6.3% after missing 4Q estimates and giving disappointing guidance.
UNA +26.0% after substantially beating 3Q estimates.
NANO +24.9% after substantially beating 3Q estimates.
ODSY +18.3% after meeting 3Q estimates and announcing $30M share buyback.
RYAAY +17.7% after beating 2Q estimates and giving positive guidance.
SRX +12.8% after beating 1Q estimates and raising 2Q/05 outlook.
NUE +5.3% after multiple upgrades.
MNT -13.6% after meeting 2Q estimates and lowering 05 outlook.
USFC -11.7% after saying CEO DiStasio resigned.
ALO -12.6% after missing 3Q estimates and lowering 04 outlook.
BLUD after saying its Italian subsidiary and the subsidiary's former President and now President are the subject of a criminal investigation in Milan, Italy.
MVSN -8.7% after beating 3Q estimates and lowering 2Q outlook.

Economic Data
None of note.

Recommendations
-Goldman Sachs reiterated Outperform on DNA, BIIB and IGT. Goldman reiterated Underperform on MMC and FRX. Goldman raised X and NUE to Outperform.
-Citi SmithBarney reiterated Buy on FRE, target $76. Citi reiterated Buy on ACGL, target $48. Citi reiterated Buy on MXRE, target $24. Citi reiterated Buy on TYC, target $40. Citi reiterated Buy on PFG, target $42. Citi reiterated Buy on NSM, target $21. Citi reiterated Sell on SPW, target $35. Citi reiterated Buy on MXIM, target $53. Citi reiterated Buy on KCI, target $67. Citi reiterated Buy on AGN, target $85.
-UBS raised WLK to Buy, target $28.
-CIBC lowered ABS to Sector Underperform, target $24.
-Deutsche Bank rated ATRS Buy, target $32.
-Legg Mason raised SRX to Buy, target $65.
-Prudential rated ERICY Underweight, target $25. COTT cut to Underweight at Prudential, target $24. BWA rated Overweight at Prudential, target $50.
-Merrill Lynch cut AOC to Sell.

Mid-day News
U.S. stocks are higher mid-day as domestic terrorism fears plunge, energy prices fall and optimism over future economic growth increases. Yahoo! named Lloyd Braun, former chairman of ABC Entertainment, its top executive for entertainment and media content, the NY Times reported. Sinclair Broadcast Group's license-renewal applications for tv stations it owns in North and South Carolina are being challenged by a Massachusetts-based non-profit group, the LA Times reported. Palestinian leader Arafat is responding well to medical treatment in a Paris-area hospital and is following today's U.S. elections, Agence France-Presse reported. Theo van Gogh, the Dutch critic of Islam through newspaper columns and maker of a film about violence against women in Muslim societies, was shot and stabbed to death in Amsterdam today, Bloomberg reported. Wal-Mart plans to open as many as 15 new stores in China next year, competing for a foothold with Carrefour SA and Metro Group as the government lifts curbs on foreign retailers, Bloomberg said. Shares of OAO Yukos, Russia's biggest oil exporter, dropped after the company said outstanding tax claims exceed its market value, fueling concern a 16-month dispute with the government may destroy Yukos, Bloomberg said. Voters around the country waited in line for hours for a chance to help select the next U.S. President, as independent election experts predicted a record turnout, Bloomberg said. Nokia plans to introduce more than 20 handsets featuring cameras with at least 1 megapixel resolution next year in a bid to regain lost market share, Bloomberg reported. Crude oil futures are falling for a fourth session in five on expectations that growth in consumption will slow next year, reducing concern that supplies will be inadequate to meet demand, Bloomberg reported.

Bottom Line: The Portfolio is substantially higher mid-day on strength in my gaming, biotech, RFID and semi-equipment longs. I have not traded today and the Portfolio is still 125% net long. The tone of the market is good as most stocks and sectors are rising, notwithstanding recent gains and election apprehension. It is also very positive to see oil falling again even with the prospects for accelerating economic growth, attacks on pipelines in Iraq and more problems at OAO Yukos. The only real negative I see is a decline in measures of investor anxiety. However, this should be expected considering the fact that after the Madrid bombings an overwhelming majority of people felt an attack on U.S. soil before our election was likely. I expect U.S. stocks to move modestly higher into the close and gap higher on the open tomorrow.

Tuesday Watch

Earnings of Note
Company/Estimate
ABC/.76
ADBL/.02
BJS/.55
BMC/.14
CLX/.54
EMR/.79
IGT/.33
MBI/1.32
PCLN/.27
THC/-.05
UNA/.03

Splits
VIDE 2-for-1

Economic Data
None of note.

Recommendations
Goldman Sachs reiterated Outperform on DDR, GILD and KRB.

Late-Night News
Asian indices are higher on optimism over falling energy prices and better economic growth in the region. EchoStar Communications' Dish Network is showing Michael Moore's "Fahrenheit 9/11" tonight, ahead of tomorrow's U.S. presidential election, Reuters reported. China will need to add 2,194 new planes in the next two decades to meet demand for air travel, the China Daily newspaper reported. As many as 121 million people may vote tomorrow, surpassing the record of 106 million set in the 2000 election, the NY Times reported. The U.S. government issued a travel alert for its citizens in the Philippines, saying the terrorist threat in the country "remains high," Bloomberg said. North Korea poses a "serious challenge" to UN efforts to control the spread of nuclear weapons, said Mohamed ElBaradei, director general of the IAEA, Bloomberg reported. PNC Financial Services proposed acquisition of Riggs National may fall through, the Washington Post reported. The European Union is "failing" to meet its economic goals and needs to become more urgent, the Wall Street Journal reported. Advisers and directors of the Federal Reserve's 12 regional banks and branches gave $1.4 million to federal campaigns and political action committees in this year's election. Those who gave to one party favored Republicans over Democrats by a 2-to-1 margin, Bloomberg reported.

Late-Night Trading
Asian Indices are +.25% to +1.75% on average.
S&P 500 indicated +.05%.
NASDAQ 100 indicated -.07%

BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning and move higher into the afternoon on falling energy prices, diminishing domestic terrorism fears, short-covering, improving sentiment and optimism over future U.S. economic growth. The Portfolio is trading at its highs for the year and is 125% net long heading into tomorrow.

Monday Close

S&P 500 1,130.51 +.03%
NASDAQ 1,979.87 +.25%

Leading Sectors
Airlines +1.30%
Telecom +1.23%
Software +1.09%

Lagging Sectors
Energy -.70%
Drugs -.76%
Oil Service -1.36%

Other
Crude Oil 49.95 -3.50%
Natural Gas 8.72 -.06%
Gold 428.30 -.26%
Base Metals 114.83 -1.10%
U.S. Dollar 85.20 +.34%
10-Yr. T-note Yield 4.07% +1.15%
VIX 16.27 unch.
Put/Call .91 +35.82%
NYSE Arms 1.28 +37.63%

After-hours Movers
AVNX +9.7% after beating 1Q estimates and raising 2Q outlook.
COGT +9.0% after beating 3Q estimates.
WLDA+7.96% after announcing the DOT and CAAC have given it approval to operate a weekly charter air cargo flights between Dayton,OH and Shanghai Pudong Airport.
ODSY +15.1% after strong 3Q results and announcing $30M share buyback.
NSM -7.1% after cutting 2Q forecast.
MVSN -7.1% after beating 3Q estimates and lowering 4Q guidance.
FWHT -6.7% after beating 3Q estimates and widening 4Q guidance.

Recommendations
Goldman Sachs reiterated Outperform on LMT. Goldman reiterated Underperform on SCS.

After-hours News
U.S. stocks finished quietly higher today as falling oil prices more than offset election apprehension. After the close, Merck said an experimental vaccine that may be the first to fight a virus linked to cervical cancer reduced the risk of infections in a company-funded study. Computer Associates Intl. may look in areas beyond security software for future acquisitions, chief operating officer Jeff Clarke told CNBC. Ford Motor failed to reach full production of its three newest car models at a Chicago factory as planned last month, Automotive News said. The second-largest U.S. automaker may not achieve its output goal until late this month, the trade publication said. Freddie Mac, the second biggest provider of financing for U.S. residential mortgages, will resume quarterly reports of its earnings for the second quarter of 2005 after a two-year hiatus, Bloomberg reported. Visteon, an auto-parts supplier, said it will support its biggest customer by giving $1,000 to employees who buy vehicles from Ford Motor, Bloomberg said.

BOTTOM LINE: The Portfolio finished higher today on strength in my internet and wireless longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The tone of the market improved modestly throughout the day. More stocks rose than fell and measures of investor anxiety climbed ahead of the most anticipated and bitter election in modern history. Energy prices dropped again today and have most likely seen their highs for at least the intermediate-term. I continue to expect a modest upwards move for U.S. stocks tomorrow before a more substantial move higher on Wednesday.

Mid-day Update

S&P 500 1,128.17 -.18%
NASDAQ 1,974.87 -.01%

Leading Sectors
Software +.94%
Telecom +.80%
Homebuilders +.69%

Lagging Sectors
Biotech -.48%
Drugs -1.03%
Oil Service -1.43%

Other
Crude Oil 49.80 -3.79%
Natural Gas 8.75 +.29%
Gold 428.10 -.30%
Base Metals 114.83 -1.10%
U.S. Dollar 85.22 +.37%
10-Yr. T-note Yield 4.08% +1.34%
VIX 16.36 +.55%
Put/Call .92 +37.31%
NYSE Arms 1.20 +29.03%

Market Movers
PSFT +10.5% after ORCL raised its offer for the company by 14%.
MRK -8.3% after the Wall Street Journal reported that the drugmaker tried for years to stop safety concerns from hurting sales of its Vioxx painkiller.
IVX -18.7% after missing 3Q estimates and lowering 04 guidance.
KSL +36.3% after Valero(VLI) agreed to purchase it for $2 billion.
TZOO +21.5% on short-squeeze.
CHLN +15.2% after it accepted Domaines Barons de Rothschild's increased bid for the 51% of the company it doesn't already own.
LFUS +16.6% after beating 3Q outlook.
KCI +12.0% after beating 3Q estimates and boosting 04/05 guidance.
WSTC +12.2% on SunTrust Robinson upgrade to Buy.
OSTK +5.0% on short-covering.
SHOP +7.9% on continuing strong demand after IPO.
DE +3.7% on Citi SmithBarney upgrade to Buy.
LZ -7.0% after missing 3Q estimates and lowering 4Q guidance.
NTE -9.8% after beating 3Q estimates substantially and lowering 4Q guidance.
PSRC -8.6% on Needham downgrade to Hold.

Economic Data
Personal Income for September rose .2% versus estimates of a .3% rise and a .3 increase in August.
Personal Spending for September rose .6% versus estimates of a .6% rise and a .1% decline in August.
PCE Deflator(YoY) for September rose 2.0% versus estimates of a 2.0% increase and a 2.1% gain in August.
PCE Core(YoY) for September rose 1.5% versus estimates of a 1.5% increase and a 1.4% rise in August.
Construction Spending for September was unchanged versus estimates of a .4% rise and a .9% increase in August.
ISM Manufacturing for October was 56.8 versus estimates of 58.5 and a reading of 58.5 in September.
ISM Prices Paid for October was 78.5 versus estimates of 79.0 and a reading of 76.0 in September.

Recommendations
-Goldman Sachs reiterated Outperform on VLTR, KSS, FRX, AIG, PXD, AGN and MDT. Goldman reiterated Underperform on AMCC, FHCC, AKS and DCLK. Goldman initiated CBG with Outperform rating.
-Citi SmithBarney upgraded DE to Buy, target $74. Citi upgraded EXC to Buy, target $45. Citi reiterated Buy on GIS, target $51.50. Citi said RSH, BBY, CC and PETC had good Sept. sales. Citi reiterated Buy on WMT, target $65. Citi reiterated Buy on CAM, target $60.
-Prudential cut PAYX to Underweight, target $25.
-JP Morgan raised CAM, MVL to Overweight. ICCI cut to Underweight at JP Morgan.
-CSFB raised ECA to Outperform, target $58.

Mid-day News
U.S. stocks are quietly lower mid-day as optimism over falling energy prices is offset by apprehension over the election. General Electric's NBC is trying to take more risks to retake its position as the leading network in term of viewers, the LA Times said. A federal judge issued an order barring political parties from challenging the eligibility of voters at polling locations in Ohio during the presidential election tomorrow, the AP reported. Oracle raised its takeover offer for PeopleSoft to $24 a share from $21 and said the offer is final, Bloomberg reported. Tyco Intl., the world's biggest maker of security systems, said it had a fourth-quarter profit as electronics and health sales rose, Bloomberg said. Crude oil prices plunged below $50/bbl. in NY for the first time since Oct. 5 on speculation that demand growth will fall next year as supplies increase, Bloomberg said. General Electric agreed to delay for two months its $900 million purchase of InVision Technologies while U.S. officials continue an investigation, Bloomberg reported.

Bottom Line: The Portfolio is slightly higher mid-day on strength in my internet and wireless longs. I have not traded today and the Portfolio remains 125% net long. The underlying tone of the market is pretty good today considering recent gains and election apprehension. The breakdown in energy prices makes me more confident in my prediction for accelerating U.S. economic growth over the next few months. Areas of technology that have been plagued by excess inventory should benefit as demand increases. Measures of investor anxiety are rising today which is also a positive. I expect U.S. stocks to rise modestly this afternoon on short-covering, optimism over falling energy prices and diminishing domestic terrorism fears.

Monday Watch

Earnings of Note
Company/Estimate
ACDO/.36
ASF/.10
CHK/.30
MXIM/.42
NBIX/-.39
PDLI/-.21
TYC/.43
SYY/.35

Splits
Rock 3-for-2

Economic Data
Personal Income for September is estimated to rise .3% versus a .4% increase in August.
Personal Spending for September is estimated to rise .6% versus no change in August.
PCE Deflator for September is estimated to rise 2.0% versus a 2.1% increase in August.
PCE Core for September is estimated to rise 1.5% versus a 1.4% gain in August.
Construction Spending for September is estimated up .4% versus a .8% gain in August.
ISM Manufacturing for October is estimated at 58.5 versus a reading of 58.5 in September.
ISM Prices Paid for October is estimated at 79.0 versus a reading of 76.0 in September.

Weekend Recommendations
Cashin' In had guests that were positive on FHRX and mixed on HD, SZE, MRK. Forbes on Fox had guests that were positive on KRB, SYY, PLMO, MOT, AAPL and TXN. Bulls and Bears had guests that were positive on EBAY, VLO, LLL, CMCSA, RUK, CAN and SMH. Barron's had positive comments on PGR, NVS, FTI, AIG, HSP, VAR, WSH, CLE, PMI, RDN, DE, MOV, TIF, COH, JWN, NMG/A and negative comments on LVLT. Goldman Sachs reiterated Outperform on HC, AMGN, TU, GILD, EBAY, BBY and KO. Goldman reiterated Underperform on FRNT.

Weekend News
Survivors in the U.S. airline industry will be carriers that forget full-service and improve operating efficiency to keep fares and travel delays to a minimum, the NY Times reported. Sempra Energy, owner of the largest U.S. natural gas utility, won approval to build a liquefied natural gas terminal in Mexico, the first such facility on North America's West Coast, the LA Times reported. Democratic NY Attorney General Spitzer may file civil fraud accusations against insurance broker Aon Corp. within two weeks as part of his investigation into the industry, the NY Times reported. Northwest Airlines, which has pared about a quarter of its workforce since 2001, plans to bring back about 600 furloughed flight attendants, the AP reported. Kaiser Permanente, a California-based HMO, may be a model for the U.S. health care system, with its emphasis on preventive care and controlling chronic illnesses, the NY Times reported. U.S. venture capital investment fell 15% in the third quarter, after five straight quarters of growth, evidence of a cooling-off that may benefit the industry, the NY Times reported. Iraqi Prime Minister Allawi said he will order an assault on the insurgent-controlled city of Fallujah if efforts to end the standoff aren't resolved soon, the AP reported. Afghanistan will create a ministry for narcotics to fight drug trafficking the country, Agence France-Presse said. FedEx Corp. will increase its trans-Atlantic shipping capacity by one-fifth in March, the Wall Street Journal said. GM, which has four manufacturing ventures in China, said it will help the country's largest carmaker develop low-polluting vehicles that run on gasoline-electric engines and fuel cells, Bloomberg said. U.S. employers probably added 175,000 workers to payrolls in October, the most in five months, while the unemployment rate held at a three-year low of 5.4%, the median forecast in a Bloomberg News survey of economists show. Crude oil is rising modestly in NY after reports said unions in Nigeria, the fifth-biggest supplier to the U.S., called a strike this month to disrupt the country's oil exports, Bloomberg said.

Late-Night Trading
Asian indices are mixed, -.75% to +.25% on average.
S&P 500 indicated -.17%.
NASDAQ 100 indicated -.27%

BOTTOM LINE: I expect U.S. stocks to open mixed in the morning and rise modestly into the afternoon on good economic reports, diminishing domestic terrorism fears, stable oil prices, good earnings reports, short-covering. The Portfolio is 125% net long heading into tomorrow.