Monday, January 03, 2005

Monday Watch

Earnings of Note
Company/Estimate
NAV/1.86
SONC/.25
WAG/.29

Splits
CLF 2-for-1
LUK 3-for-2
MBT 4-for-1
NX 3-for-2

Economic Data
Construction Spending for November estimated up .4% versus 0.0% in October.
ISM Manufacturing for December estimated at 58.5 versus 57.8 in November.
ISM Prices Paid for December estimated at 72.0 versus 74.0 in November.

Weekend Recommendations
Forbes on Fox had guests that were positive on TXN, SDA, BRK/B, TOL, LEN, CTX, GE, BAC and mixed on PIXR. Cashin' In had guests that were positive on TXN, SCO, MRK, TGT, CME, mixed on CRM and negative on GG. Bulls and Bears had guests that were positive on HOV, EBAY, SIRI, CME, COCO, EQIX, LYG, WFII, mixed on MSFT, PKZ and negative on GT, AGI, MSO. Barron's had positive comments on ELN, IM and TEX. Goldman Sachs reiterated Outperform on MRVL, INTC, NSM, COH, RE, ENH. Goldman raised estimates on GOOG, YHOO and reiterated Outperform. Banc of America cut VSEA and CYMI to Sell. Forbes has 10 tech trends to watch in 2005.

Weekend News
The District of Columbia had few than 200 homicides in 2004 for the first time in nearly two decades, the Washington Post reported. The Post said experts attributed the lower homicide count to an improving economy, waning wars by gangs dealing cocaine, and a rising prison population. Walgreen, CVS Corp. and Rite Aid Corp. and other drugstores are losing some business as more corporations mandate the use of ordering drugs for chronic conditions through the mail, the NY Times reported. US military planes began bringing supplies to Phuket and other beach resorts in southern Thailand hit by the tsunami, as relief workers try to preserve the remains of the dead for identification, the NY Times reported. Rhode Island's health department has approved regulations allowing Canadian pharmacies to operate in the state, the AP reported. Braces, long considered a dental rite of passage for teenagers, are becoming more common among Americans 55 and older, the Chicago Tribune reported today. Lockheed Martin won two contracts from the US Air Force for $716 million to keep working on the F/A-22 stealth fighter-bomber amid media reports that funding for the fighter may be cut back, Reuters reported. US securities firms and investment advisers are looking forward to additional mergers and acquisitions in 2005 as companies feel more confident about the US economy, the NY Times reported. US helicopters began airlifting quake and tsunami survivors from an isolated region on the west coast of Aceh province today, Agence France-Presse reported. Malcolm Bricklin, an automotive entrepreneur, and US investment bank Allen & Co. have signed an agreement with Chery Automobile, owned by the government of eastern China's Anhui province, to import Chinese-built cars into the US, the Detroit News reported. Delta Air Lines is expected to overhaul its ticket prices and policies, including rules on Saturday-night stays, Times magazine reported. The Dept. of Homeland Security has created 18 fugitive squads to track down about 370,000 foreign nationals who never left the US after being ordered deported, the Washington Post reported. Medicare will start covering routine screening for alcoholism this week, the LA Times reported. The Dec. 26 earthquake and tsunami may have only a minor effect on the economies of Asian countries in the region, the NY Times reported. Bill Miller's $16 billion Legg Mason Value Trust beat the S&P 500 for a record 14th straight year after a holiday rally in Amazon.com shares capped a comeback for the fund, Bloomberg reported. Crude oil futures are falling tonight in NY as mild weather in the US Northeast cut heating oil demand and the New Year weekend passed without a major terrorist attack in an oil-producing country, Bloomberg said.

Late-Night Trading
Asian indices are mostly higher, -.25% to +.50% on average.
S&P 500 indicated -.05%.
NASDAQ 100 indicated -.12%.

BOTTOM LINE: I expect U.S. stocks to open modestly higher in the morning on falling energy prices, a stabilizing US dollar, more optimism and money managers putting new cash to work. The Portfolio is 125% net long heading into tomorrow.

Sunday, January 02, 2005

4th Quarter Scoreboard*

Indices
S&P 500 1,211.92 +7.11%
Dow 10,783.01 +5.79%
NASDAQ 2,175.44 +12.0%
Russell 2000 651.57 +11.37%
DJ Wilshire 5000 11,951.47 +8.07%
Morgan Stanley Consumer 590.79 +8.33%
MS Cyclical 784.10 +10.37%
MS Technology 507.67 +10.44%
Transports 177.61 +14.97%
Utilities 334.95 +12.28%
Put/Call .62 -24.39%
NYSE Arms 1.20 +27.66%
Volatility(VIX) 13.29 -.38%
AAII % Bulls 57.66 +40.39%
US Dollar 80.85 -7.48%
CRB 283.90 -.38%

Futures Spot Prices
Gold 438.40 +3.86%
Crude Oil 43.45 -9.48%
Natural Gas 6.15 -23.14%
Base Metals 125.66 +3.61%
10-year US Treasury Yield 4.22% +2.43%
Average 30-year Mortgage Rate 5.81% +1.93%

Leading Sectors
Airlines +35.59%
Gaming +25.8%
Boxmakers +25.41%

Lagging Sectors
Oil Service +.62%
Telecom unch.
Wireless -2.05%

*% Gain or loss for the quarter

Friday, December 31, 2004

Year-end Scoreboard*

Indices
S&P 500 1,211.92 +8.99%
Dow 10,783.01 +3.15%
NASDAQ 2,175.44 +8.59%
Russell 2000 651.57 +17.0%
DJ Wilshire 5000 11,951.47 +10.67%
Morgan Stanley Consumer 590.79 +7.76%
MS Cyclical 784.10 +15.36%
MS Technology 507.67 +6.69%
Transports 177.61 +28.22%
Utilities 334.95 +25.5%
Put/Call .62 -50.0%
NYSE Arms 1.20 +57.9%
Volatility(VIX) 13.29 -27.42%
AAII % Bulls 57.66 -12.0%
US Dollar 80.85 -6.83%
CRB 283.90 +11.21%

Futures Spot Prices
Gold 438.40 +4.13%
Crude Oil 43.45 +52.46%
Natural Gas 6.15 +9.8%
Base Metals 125.66 +24.35%
10-year US Treasury Yield 4.22% -.71%
Average 30-year Mortgage Rate 5.81% unch.

Leading Sectors
Gaming +64.63%
HMOs +46.27%
Iron/Steel +35.32%

Lagging Sectors
Airlines -2.10%
Drugs -5.65%
Semis -14.72%

*% Gain or loss for the year

Friday Watch

Earnings of Note
Company/Estimate
None of note

Splits
None of note.

Economic Data
None of note

Recommendations
Goldman Sachs reiterated Outperform on BSX and Underperform on PPS, TCO.

Late-Night News
Asian indices are mostly higher on optimism for exporters in the region. Saudi forces killed the suspected leader of the al-Qaeda terrorist network in Saudi Arabia, along with nine other members of the group, in separate gun battles, Agence-France Presse reported. A free trade agreement with China would boost Japan’s GDP by .5%, the Nihon Keizai newspaper reported. Oracle fired PeopleSoft’s Co-President and CFO and three other top executives, putting Oracle officials in their places as part of the $10.3 billion takeover, Bloomberg reported. Huawei Technologies, China’s largest phone-equipment maker, said it received a $10 billion credit line from China Development Bank to finance overseas expansion, Bloomberg said.

Late-Night Trading
Asian Indices are unch. to +.50% on average.
S&P 500 indicated +.07%.
NASDAQ 100 indicated +.18%.

BOTTOM LINE: I expect U.S. equities to open modestly higher in the morning on short-covering and window-dressing. The Portfolio is at its highs for the year and 125% net long heading into tomorrow.

Thursday, December 30, 2004

Thursday Close

S&P 500 1,213.55 +.01%
NASDAQ 2,178.34 +.06%


Leading Sectors
Airlines +1.07%
Hospitals +.74%
Networking +.64%

Lagging Sectors
Restaurants -.45%
Oil Service -.65%
Iron/Steel -2.50%

Other
Crude Oil 43.45 -.23%
Natural Gas 6.15 unch.
Gold 438.40 +.32%
Base Metals 124.97 +.63%
U.S. Dollar 80.62 -.28%
10-Yr. T-note Yield 4.25% -1.59%.
VIX 12.56 +8.09%
Put/Call .86 -24.56%
NYSE Arms 1.20 +33.33%

After-hours Movers

Recommendations

After-hours News

BOTTOM LINE: The Portfolio finished substantially higher today on gains in my security, internet, Chinese ADR and software longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The overall tone of the market was mildly positive today. Volume fell slightly as stocks continue to consolidate recent gains. The declines in base metal stocks likely mark the beginning of a period of underperformance for this sector through the first half of 05. However, one more test of recent highs may occur in January. I continue to believe all commodity-related stocks will underperform through this period as demand decelerates, supply increases and the US dollar stabilizes.

***Alert***

There will not be a mid-day report today due to a scheduling conflict.

Bottom Line: The Portfolio is higher mid-day on gains in my internet, security and software longs. I added a few new longs from various sectors this morning, thus bringing the Portfolio to 125% net long exposure. One of my new longs is AUDC and I am using a $15.25 stop-loss on this new position. The tone of the market is slightly positive today and I expect stocks to rise into the afternoon on falling energy prices/interest rates, short-covering, more optimism and year-end positioning.