Tuesday Watch

Earnings of Note
Company/Estimate
None of note.

Splits
None of note.

Economic Data
Consumer Confidence for December estimated at 94.0 versus 90.5 in November.

Recommendations
None of note.

Late-Night News
Asian indices are higher on a better-than-expected industrial production report from Japan and declining energy prices. Deutsche Telekom AG, Europe's biggest telephone company, has ruled out buying regional US companies to expand its T-Mobile USA business, even as two rivals plan to merge, the Financial Times reported. China will take measures to restrict construction of commercial and high-end residential properties, the official Xinhua news agency reported. China Telecom and China Netcom have begun to form strategic alliances with overseas equipment and networking companies including Motorola and Nokia, Beijing Morning Post reported. The US Transportation Dept. Inspector General will begin a review of the nation's airline service triggered by flight and baggage disruptions at US Airways and Comair during Christmas weekend, Bloomberg said. Ford Motor expects to sell a record number of its F-Series large pickup trucks this year, fending off a challenge from Nissan Motor and Toyota Motor in a market that accounts for more than a quarter of the No. 2 US automaker's domestic sales, Bloomberg said. The death toll from the weekend's earthquake and tsunamis in Asia may rise to more than double the current 23,000 estimates as devastation to more remote areas is uncovered and diseases spread, Bloomberg reported.

Late-Night Trading
Asian Indices are +.25% to +.75% on average.
S&P 500 indicated +.13%.
NASDAQ 100 indicated +.12%.

BOTTOM LINE: I expect U.S. equities to open modestly higher on a better consumer confidence reading, declining energy prices, stabilizing US dollar/interest rates, short-covering and year-end positioning. The Portfolio is 100% net long heading into tomorrow.

Monday Close

S&P 500 1,204.92 -.43%
NASDAQ 2,154.22 -.30%

Leading Sectors
Broadcasting +2.17%
Airlines +.64%
Internet +.56%

Lagging Sectors
Homebuilders -1.32%
Energy -1.78%
Oil Service -2.34%

Other
Crude Oil 41.20 -.29%
Natural Gas 6.16 +.02%
Gold 446.40 +.04%
Base Metals 122.53 +.76%
U.S. Dollar 80.72 -.69%
10-Yr. T-note Yield 4.29% +1.81%
VIX 12.14 +8.10%
Put/Call .84 unch.
NYSE Arms .84 +18.09%

After-hours Movers

Recommendations

After-hours News

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my software and internet longs. I took profits in a few technology longs in the afternoon, thus leaving the Portfolio 100% net long. The tone of the market was mildly weaker today as stocks consolidated recent gains. Measures of investor anxiety rose and energy prices plunged, likely setting the stage for another push higher into year-end on Wed. and Thur. I do not expect the yield on the 10-yr. T-note to rise above the 4.92% hit in June during the first half of 05.

Mid-day Report

S&P 500 1,208.69 -.12%
NASDAQ 2,154.14 -.29%

Leading Sectors
Airlines +.96%
Drugs +.51%
Internet +.44%

Lagging Sectors
Homebuilders -1.28%
Disk Drives -1.38%
Oil Service -1.74%

Other
Crude Oil 42.00 -4.93%
Natural Gas 6.35 -4.77%
Gold 446.40 +.79%
Base Metals 122.53 +.76%
U.S. Dollar 80.63 -.80%
10-Yr. T-note Yield 4.29% +1.9%
VIX 12.04 +7.21%
Put/Call .81 -3.57%
NYSE Arms .94 unch.

Market Movers
AMZN +6.2% after saying it had its busiest holiday shopping season in its history during which time it set a single-day record with more than 2.8 million units orders, or 32 items per second.
DHB -7.9% on profit-taking after last Thur. rise.
WEB +20.1% on continuing optimism over demand for its tubing products.
NGPS +12.1% on continuing optimism over its GPS products.
DECK +5.22% on short-covering.
CRYP +4.98% on optimism over its on-line poker products.
SHRP -16.6% after cutting 4Q and 05 estimates substantially.
CALM -11.9% on disappointing 2Q results.
ALD -9.2% after saying it received letters from the US Attorney for the District of Columbia requesting information form the company and Business Loan Express in connection with a criminal investigation.
CTRP -5.7% on worries over travel in Asia.
*Oil Tanker stocks down across the board on worries over recent plunge in tanker rates.

Economic Data
None of note.

Recommendations
-Goldman Sachs reiterated Underperform on KSS.
-Citi SmithBarney reiterated Buy on NPSP, target $25.
-Deutsche Bank rated INPC Buy, target $32.

Mid-day News
U.S. stocks are quietly lower mid-day on profit-taking, concerns over the devastation in Asia and worries over rising interest rates. Computer terminals with a restricted number of functions that rely on servers and hard drives provided by companies such as Yahoo! are finding favor again with tech companies, the Wall Street Journal said. The number of leased local access telephone lines in the US rose 7% in the first half of this year as more carriers entered the market, the Wall Street Journal reported. Eastman Kodak's EasyShare digital camera brand has risen to almost 19% of US sales after the world's largest photography company designed and marketed products to women and first-time buyers, the NY Times reported. Plans to reduce pollution at the LA port complex, including fuel restrictions for ships and trucks, will be released this week, the LA Times said. Wal-Mart isn't close to getting its top 100 suppliers to ship goods with RFID tags, the NY Times reported. General Electric and MGM Mirage were among companies that sold $638.8 billion of debt in the US this year, little changed from 2003, as borrowing costs relative to Treasury notes shrank to the slimmest margin in eight years, Bloomberg reported. Amazon.com said consumer electronics outsold books for the first time during the holiday season, Bloomberg said. US Treasury notes are declining on signs holiday retail sales beat expectations, falling energy prices and a decline in the US dollar, Bloomberg reported. Shares of Sirius Satellite Radio and XM Satellite Radio are rising after both companies said they surpassed their subscriber goals for 2004, Bloomberg said. Natural disasters, including US hurricanes and Asian typhoons, made this year the costliest ever for the insurance industry, even before tsunamis struck tourist resorts in Thailand and Malaysia yesterday, Bloomberg said. Crude oil is plunging more than $2/bbl. in NY amid speculation that warmer temperatures in the eastern half of the US will limit heating oil needs, Bloomberg reported.

Bottom Line: The Portfolio is substantially higher mid-day on gains in my semi, software and internet longs. I have not traded today and the Portfolio is still 125% net long. Holiday shopping results, including internet sales and gift cards, were very strong and proved the bears' argument of a "spent-up" US consumer wrong again. Further declines in energy prices, free-elections in Iraq, decelerating inflation, relatively low interest rates, social security/tax reforms, an improving labor market and strong stock market should continue to boost sentiment and spending in 2005. I expect US stocks to rise modestly into the close on more optimism, declining energy prices, year-end positioning and short-covering.

Monday Watch

Earnings of Note
Company/Estimate
NT/-.04

Splits
None of note.

Economic Data
None of note.

Recommendations
Goldman Sachs reiterated Outperform on BBY, BSX and EBAY. Investors should buy Asian computer-related stocks such as Taiwan Semiconductor Manufacturing(TSM), and Japanese shares, said Merrill Lynch's Spencer White.

Late-Night News
Asian indices are mostly lower on concerns over the effects from the earthquake and tsunamis in the region. Stem cells, known for their potential to heal, also are one of the main forces behind cancer, the Boston Globe reported, citing researchers. Massachusetts was the only state in the US to lose residents in 2004, the Boston Globe reported today, citing US Census data. LG Electronics Inc. aims to take the largest share of Taiwan's flat-panel television market, the Commercial Times reported. More than 79% of Chinese individual investors lost money on the stock markets this year, the China Securities Journal reported. The death toll rose to at least 12,300 after the world's most powerful earthquake in 40 years, off the Indonesian island of Sumatra, unleashed waves that flooded coastal towns from Thailand to India, Bloomberg reported. Samsung Electronics, Canon Inc., Flextronics and other electronics makers in Asia said they're assessing whether yesterday's earthquake in Idonesia will hamper regional shipments, Bloomberg said. Brazil is ending its biggest year for IPOs since 1986, and more companies are lining up to go public next year as a rising stock market and a growing economy encourage investment, Bloomberg said. Viktor Yushchenko claimed victory in Ukraine's disputed presidential election before tens of thousands of cheering supporters after he took a clear lead over Prime Minister Viktor Yanukovych, Bloomberg reported. Shanda Interactive, China's biggest provider of Internet games, said it plans to increase its research staff by as much as 50% over the next year to develop more games in-house, Bloomberg reported. New York crude oil futures are falling, extending last week's 5.1% decline, on expectations warmer weather in the US will reduce demand on the country's fuel stockpiles, Bloomberg reported. US stocks are on pace for the largest post-election rally in more than 50 years, Bloomberg reported. US retailers holiday gift-card sales may have risen to more than $20 billion, topping forecasts and boosting after-Christmas shopping, Bloomberg said. US holiday spending this year was 8.1% more than last year, the Wall Street Journal reported. Sales of goods costing more than $1,000 jumped 13.5% while purchases between $500 and $999 rose 6.6%. Spending on apparel and home furnishings increased 9.8% and 9.7%, respectively. Consumer electronics and appliances purchases rose 4.2%, the paper reported. Regionally, spending increased the most in the Great Plains states.

Late-Night Trading
Asian Indices are -.50% to +.25% on average.
S&P 500 indicated +.11%.
NASDAQ 100 indicated +.15.

BOTTOM LINE: I expect U.S. equities to open modestly higher on better-than-expected holiday shopping results, falling energy prices, short-covering and year-end positioning. The Portfolio is 125% net long heading into tomorrow.

Have a Happy and Safe Holiday!

Mid-day Report

S&P 500 1,211.20 +.14%
NASDAQ 2,162.00 +.23%

Leading Sectors
Oil Service +.87%
Drugs +.66%
Computer Service +.55%

Lagging Sectors
Homebuilders -.49%
Restaurants -.52%
Airlines -.65%

Other
Crude Oil 44.05 -.43%
Natural Gas 6.66 -2.35%
Gold 442.90 +.34%
Base Metals 121.73 -.36%
U.S. Dollar 81.48 -.55%
10-Yr. T-note Yield 4.21% +.46%
VIX 11.28 -1.48%
Put/Call .72 -27.27%
NYSE Arms .86 +2.38%

Market Movers

Economic Data
Personal Income for November rose .3% versus estimates of a .2% increase and a .6% rise in October.
Personal Spending for November rose .2% versus estimates of a .3% increase and a .8% rise in October.
PCE Deflator for November rose 2.6% versus estimates of a 2.5% increase and a 2.5% gain in October.
PCE Core for November rose 1.5% versus estimates of a 1.5% increase and a rise of 1.5% in October.
Durable Goods Orders for November rose 1.6% versus estimates of a .6% increase and a .9% decline in October.
Durable Goods Orders Less Transportation for November fell .8% versus estimates of a .8% increase and a 1.3% decline in October.
Initial Jobless Claims for last week were 333K versus estimates of 335K and 316K the prior week.
Continuing Claims were 2721K versus estimates of 2736K and 2730K prior.
Final Univ. of Mich. Consumer Confidence for December rose to 97.1 versus estimates of 95.7 and a prior estimate of 95.7.
New Home Sales for November were 1125K versus estimates of 1200K and 1278K in October.

Recommendations
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Mid-day News

Bottom Line: The Portfolio is substantially higher mid-day on gains in my software, semi and internet longs. I exited a Chinese ADR long this morning and bought ERES, thus leaving the Portfolio 125% net long. I am keeping a $14.75 stop-loss on this new position. The decline in New Home Sales is a bit worrisome, however I am not ready to conclude this is a trend, considering their recently elevated levels. The New Home Sales uptrend remains firmly in tact at this point. As well, I continue to expect Consumer Confidence will reach new cycle highs during 05. The overall tone of the market today is mildly positive. Measures of investor anxiety are reaching levels normally associated with a period of consolidation. However, year-end positioning, short-covering, falling energy prices, low interest rates, good corporate profitability, more optimism and reasonable valuations will likely result in strength through year-end. I expect US stocks to rise modestly into the close.