Market Week in Review

S&P 500 1,200.08 -1.80%


Click here for the Weekly Wrap by Briefing.com.

Bottom Line: Overall, last week's market performance was negative. The advance/decline line fell, almost every sector declined and volume was light. Measures of investor anxiety were mixed on the week, which is a negative considering the steep losses in many market-leading stocks. The CRB Index has gone parabolic over the last 3 weeks and is now up 13.7% for the year. I suspect we have entered the blow-off phase in commodity prices before declines begin sometime during the next 2 quarters. The sharp losses in commodity-related stocks, even with the rise in the CRB, may be a result of investors anticipating the declines I foresee in the underlying commodity prices. Small-caps and interest rate sensitive sectors also underperformed for the week as worries over inflation increased. On the positive side, technology shares outperformed even with Friday's sell-off in the Semis. As well, the economically sensitive Transports hit an all-time high earlier in the week and finished roughly unchanged. Finally, volume was pretty light, which is also a positive.

Weekly Scoreboard*

Indices
S&P 500 1,200.08 -1.80%
Dow 10,774.36 -1.52%
NASDAQ 2,041.60 -1.40%
Russell 2000 626.84 -2.81%
DJ Wilshire 5000 11,820.74 -1.81%
S&P Equity Long/Short Index 1,037.72 +.36%
S&P Barra Growth 577.68 -1.76%
S&P Barra Value 618.01 -1.85%
Morgan Stanley Consumer 583.21 -1.42%
Morgan Stanley Cyclical 776.87 -.94%
Morgan Stanley Technology 469.11 -1.09%
Transports 3,832.09 +.03%
Utilities 354.15 -2.10%
Put/Call .98 +19.51%
NYSE Arms 1.03 -6.36%
Volatility(VIX) 12.80 +7.20%
ISE Sentiment 142.00 -6.58%
AAII % Bulls 49.66 +25.69%
US Dollar 81.42 -1.33%
CRB 318.61 +3.06%

Futures Spot Prices
Crude Oil 54.43 +1.45%
Unleaded Gasoline 151.75 +.56%
Natural Gas 6.77 +.33%
Heating Oil 154.27 +3.96%
Gold 446.80 +2.52%
Base Metals 130.99 +.54%
Copper 147.90 -1.14%
10-year US Treasury Yield 4.54% +5.34%
Average 30-year Mortgage Rate 5.85% +1.04%

Leading Sectors
Networking +.86%
Broadcasting -.22%
Software -.23%

Lagging Sectors
Homebuilders -5.01%
Iron/Steel -5.12%
Oil Service -5.53%

*% Gain or loss for the week

Mid-day Report

Indices
S&P 500 1,205.01 -.35%
Dow 10,817.96 -.31%
NASDAQ 2,049.43 -.50%
Russell 2000 628.02 +.17%
DJ Wilshire 5000 11,862.00 -.25%
S&P Barra Growth 580.25 -.39%
S&P Barra Value 620.13 -.34%
Morgan Stanley Consumer 585.40 -.45%
Morgan Stanley Cyclical 779.11 +.82%
Morgan Stanley Technology 472.07 -.92%
Transports 3,843.38 +.63%
Utilities 355.64 -.27%
Put/Call 1.06 +7.07%
NYSE Arms .84 +15.07%
Volatility(VIX) 12.45 -.32%
ISE Sentiment 133.00 +2.31%
US Dollar 81.39 -.25%
CRB 317.84 +.85%

Futures Spot Prices
Crude Oil 54.45 +1.70%
Unleaded Gasoline 151.15 +1.95%
Natural Gas 6.81 +.62%
Heating Oil 154.80 +2.58%
Gold 447.00 +.81%
Base Metals 130.99 +.08%
Copper 147.80 -1.20%
10-year US Treasury Yield 4.52% +1.41%

Leading Sectors
Iron/Steel +2.79%
Oil Service +.88%
Gaming +.50%

Lagging Sectors
Networking -1.39%
I-Banks -1.39%
Semis -2.50%

Market Movers
ERES -18.53% after cutting 1Q estimates.
S +5.2% on UBS upgrade of KMRT to Buy. KMRT +9.3%.
VC +17.1% after Ford Motor agreed to provide it some assistance while continuing to negotiate broader changes in their 2000 spinoff agreement and multiple upgrades.
NUE +6.85% after raising 05 guidance substantially.
SKO +12.53% after beating 4Q guidance and raising 05 outlook.
PETC +6.8% on ThinkEquity upgrade to Buy and continued optimism over 4Q results.
FRO +5.5% after Persian Gulf oil-tanker rates rose.
ZQK +6.54% after beating 1Q estimates and raising 05 outlook.
HORC +8.2% after pricing a secondary offering of 1.5M shares yesterday at $36.25.
JILL -13.0% after meeting 4Q estimates, lowering 1Q guidance and multiple downgrades.
LIN -12.2% after lowering 1Q outlook and CIBC downgrade to Sector Perform.
WBSN -4.79% on Deutsche Bank downgrade to Hold.
TECD -6.5% after beating 4Q estimates, lowering 1Q guidance and multiple downgrades.
NTMD -10.6% on disappointing 4Q results.

Mid-day Overview
Market Internals
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Data
- The Trade Balance for January fell to -$56.8B versus estimates of -$56.8B and -$55.7B in December.

Recommendations
- Goldman Sachs: Reiterated Outperform on JTX, SSP and BBG.
- Smith Barney: Upgraded MANH to Buy, target $27. Reiterated Buy on INTC, target $29. Reiterated Buy on NSM, target $28. Reiterated Buy on UPS, target $90. Rated SFI Buy, target $47. Rated NLY Sell, target $16. Rated GKK Buy, target $25. Reiterated Buy on INTU, target $54. Reiterated Buy on NOI, target $57. Reiterated Buy on HAL, target $50. Reiterated Buy on FITB, target $58. Reiterated Buy on PETC, target $42. Reiterated Buy on F, target $16. Reiterated Buy on BVF, target $20.
- Piper Jaffray: Raised CNCT to Outperform, target $32. Raised BMC to Outperform, target $19.
- Banc of America: Rated PRU Buy, target $66. Rated UNM Buy, target $21.
- Deutsche Bank: Raised SIRF to Buy, target $14.
- Morgan Stanley: Rated INCY Overweight, target $11.
- CSFB: Downgraded AIV to Underperform, target $34. Rated TSS Underperform, target $14. Downgraded SAFT to Underperform, target $31.
- Raymond James: Downgraded KEG to Underperform.
- Lehman Brothers: Raised NSM to Overweight.

Mid-day News
US stocks are lower mid-day on contining worries over rising energy prices/interest rates and losses in the tech sector. Advantest, the world’s biggest maker of memory-chip testing equipment, cut its full-year profit forecast 9.3%, citing a slowdown in capital spending by its customers, Bloomberg reported. Iron-ore prices may be at their peak and could fall next year as demand from steelmakers fails to match supply, the Wall Street Journal reported. Starbucks Corp. will open its first Irish outlet in Dublin this summer, the Irish Times reported. Coach Inc. and LVMH Moet Hennessy Louis Vuitton SA are intensifying their rivalry in Japan, the Wall Street Journal reported. Every Japanese household will own a robot by 2015 because of technology advances, the Washington Post reported. Consumer spending on the Internet rose 14% last year to $1.8 billion, led by music and dating sites, the AP reported. Bear Stearns’ Merchant Banking Group bought a 50% stake in closely held 7 for All Mankind Jeans for as much as $100 million, the NY Times reported. Ford Motor is ending production of the Thunderbird convertible in July, the AP reported. SAP AG plans to simplify its pricing structure and expects to increase market share in the US this year, Euro am Sonntag reported. The average price of a condominium in Manhattan rose 19% to $969,000 in 2004, the NY Post reported. United Airlines plans to recall 500 flight attendants as the carrier adds flights because of increasing demand, the Rocky Mountain News reported. The Univ. of Colorado has reached an agreement for less than $500,000 with Professor Ward Churchill, who compared 9/11 victims to Nazis and praised the terrorists, for his dismissal from the school, the Denver Post reported. Siemens AG and Samsung Electronics are among mobile-phone makers that may have a tougher time convincing telephone companies to pick their new handsets as the service providers reduce their offerings to consumers, Bloomberg said. Syria has withdrawn about 6,000 soldiers from northern Lebanon, leaving only Syrian intelligence service offices to be evacuated from the area, AFP reported. The US trade gap widened in January as record imports for automobiles and other consumer goods outpaced exports, Bloomberg said. Interpublic Group may restate financial results for the second time in two years after the company found errors in its accounting for acquisitions, Bloomberg reported. President Bush called on Republicans and Democrats to stop criticizing each other over proposals to save Social Security and instead offer solutions to the problem, Bloomberg said. The US agreed to join Europe in offering Iran economic incentives to end its nuclear weapons program, Bloomberg reported. Crude oil in NY is rising after the IEA increased its estimate for global demand growth for a third straight month, Bloomberg said. US Treasury notes are falling, heading for their biggest weekly drop since May, as increased consumer demand for imported goods led to a wider trade deficit, Bloomberg rerpoted.

BOTTOM LINE: The Portfolio is slightly lower mid-day as losses in my Semi and Software longs are more than offsetting gains in my Steel and Oil Service longs. I exited a number of tech longs this morning as they hit stop-losses and added a few new tech shorts, thus leaving the Portfolio’s market exposure at 25% net long. One of my new shorts is FFIV and I am using a $59.25 stop-loss on this position. The tone of the market is negative as the advance/decline line is lower, most sectors are declining and volume is light. Measures of investor anxiety are mostly higher, which is a positive. Gains are mainly confined to commodity-related sectors and losses are heaviest in tech. Today’s overall market action is negative, considering recent positive news from the semis. I continue to expect US shares to trade mixed-to-weaker near-term until there is a clear stabilization in the rise in energy and interest rates. My trading indicators are now giving Sell signals. I expect US stocks to trade mixed-to-lower from current levels into the close on worries over rising interest rates/energy prices and technical deterioration.

Friday Watch

Late-Night News
Asian indices are mostly higher, led by semiconductor shares in the region, after Intel said first quarter sales will be at the high end of its forecast. Nippon Steel Corp. will increase the price of steel sold to Toshiba Corp., Hitachi Ltd. and other electrical appliance makers my more than $96 a metric ton, the Japan Metal Daily reported. Investment banks worldwide earned $25 billion, or about an eighth of their total revenue, from hedge funds, the Financial Times reported. Thyra Zerhusen, manager of the ABN Amro Mid Cap Fund, topped Standard & Poor's/Business Week's 2005 list of the best mutual-fund managers, Bloomberg said. The British Broadcasting Corp. has announced 1,730 job losses in its first round of cut to save $683 million, the Guardian said. MCI Inc. is still considering whether to favor a takeover offer from Verizon Communications over rival Qwest Communications, the Financial Times reported. Eurochambres, a pan-European business organization, said that it found in a study that "it will take the European Union until 2056 to reach US productivity rates" per person employed, and then only if EU productivity growth exceeds "that of the US by .5% per year," the Financial Times reported. The study also said unemployment in the EU is similar to the 70s in the US, the paper also said. 76% of China's reserves were in US dollars last year, down from 82% in 2003, Lehman Brothers said in an analysis yesterday. Posco, South Korea's largest steelmaker, will raise domestic prices for its steel products to a record, to cover rising raw material costs and narrow a price gap with imports from Japan, Bloomberg reported. China's inflation accelerated to 2.9% in the first two months of the year, gathering pace for the first time since July as fuel prices rose, Bloomberg said. Crude oil prices in NY are more likely to fall than rise as US inventories are higher than a year ago and OPEC may refrain from cutting production, a Bloomberg survey showed.

Late Recommendations
- Goldman Sachs: Reiterated Outperform on NSM, INTC, PETC, TAP, TPX, MSFT and MMM.
- Banc of America: Upgraded LPNT to Buy, target $47. Upgraded TRI to Buy, target $51.
- Business Week: Shares of HealthTronics(HTRN), the largest provider of urological services, could almost double to $20 in a year, citing an unidentified hedge fund manager that owns almost 5% of the stock.

Night Trading
Asian Indices are unch. to +.75% on average.
S&P 500 indicated +.02%.
NASDAQ 100 indicated +.26%.

Morning Preview
US AM Market Call
NASDAQ 100 Pre-Market Indicator/Heat Map
Pre-market Commentary
Before the Bell CNBC Video(bottom right)
Asian Indices
European Indices
Top 20 Business Stories
In Play
Bond Ticker
Analyst Actions
Macro Calls
Rasmussen Consumer/Investor Daily Indices
CNBC Guest Schedule

Earnings of Note
Company/Estimate
EIX/.22
RDEN/.55
FLML/.31
GMRK/.13

Splits
None of note

Economic Data
The Trade Balance for January is estimated to rise to -$56.8B versus -.56.4B in December.

BOTTOM LINE: I expect US equities to open modestly higher in the morning on strength in technology shares and further weakness in energy prices. Gains could accelerate later in the day on a decline in long-term interest rates. The Portfolio is 75% net long heading into tomorrow.

Thursday Close

Indices
S&P 500 1,209.25 +.19%
Dow 10,851.51 +.42%
NASDAQ 2,059.72 -.08%
Russell 2000 626.94 -.66%
DJ Wilshire 5000 11,892.11 +.07%
S&P Barra Growth 581.11 -.90%
S&P Barra Value 622.25 +.12%
Morgan Stanley Consumer 588.02 +.49%
Morgan Stanley Cyclical 772.81 -.11%
Morgan Stanley Technology 476.46 +.25%
Transports 3,819.09 -.55%
Utilities 356.60 +.74%
Put/Call .99 +4.21%
NYSE Arms .73 -19.78%
Volatility(VIX) 12.49 -1.65%
ISE Sentiment 130.00 -23.98%
US Dollar 81.59 -.05%
CRB 315.15 +.46%

Futures Spot Prices
Crude Oil 53.39 -.28%
Unleaded Gasoline 148.25 -.04%
Natural Gas 6.73 -.49%
Heating Oil 150.40 -.34%
Gold 443.00 -.09%
Base Metals 130.89 -.30%
Copper 149.20 -.27%
10-year US Treasury Yield 4.46% -1.25%

Leading Sectors
Broadcasting +1.55%
Semis +1.41%
Drugs +.74%

Lagging Sectors
Energy -1.85%
Iron/Steel -2.24%
Airlines -2.81%

After-hours Movers
KMRT +6.11% on UBS upgrade to Buy, target $160.
VC +6.23% after Ford Motor agreed to provide it some assistance while continuing to negotiate broader changes in their 2000 spinoff agreement.
S +3.64% on KMRT news.
TECD -4.07% after beating 4Q estimates and lowering 1Q guidance.
ERES -26.9% after cutting 1Q estimates.
JILL -16.9% after meeting 4Q estimates and lowering 1Q guidance.

Evening Review
Detailed Market Summary
Daily ETF Performance
Style Performance
Market Wrap CNBC Video(bottom right)
Futures Recap
S&P 500 Gallery View
Timely Economic Charts
PM Market Call
Real-time/After-hours Stock Quote
In Play

Afternoon Recommendations
- Goldman Sachs: Reiterated Outperform on ADP and ENH. Reiterated Underperform on DDS.
- UBS: Raised KMRT to Buy, target $160. Upgraded S to Buy, target $66.50. Raised QCOM to Buy.
- Business Week: Pier 1 Imports(PIR) shares may rise as much as 60% within the next 12 months as sales may increase on a new ad campaign, different items for sale and higher prices for some products.

After-hours News
US stocks finished mixed today as gains in consumer-related stocks were offset by losses in commodity shares. After the close, Muslim clerics in Spain issued what they described as the first fatwa, or religious decree, against al-Qaeda leader Osama bin Laden, the AP reported. Taiwan froze plans to expand transportation and economic links with China as the mainland’s National People’s Congress moves toward passage of an anti-secession law targeting the island, the Financial Times reported. Hewlett-Packard may name a new CEO as early as the end of the month, Business Week reported. Advanced Micro Devices is seeking to add to suppliers that include Chartered Semiconductor Manufacturing, the Commercial Times reported. The EPA tightened limits on air pollution from power plants in 28 eastern states, one day after legislation with similar cuts for the entire US stalled in the Senate, Bloomberg said. Bill Gates is the world’s richest person for the 11th consecutive year, even as his net worth fell slightly to $46.5 billion, according to Forbes magazine’s annual survey. Fed Chairman Greenspan said he sees no market crisis occurring as a result of the level of the US current account and budget deficits, Bloomberg reported. Intel said first-quarter sales will be at the high end of the company’s forecast and unexpectedly boosted its estimated profit margin as development costs drop, Bloomberg reported. The US Senate gave credit-card issuers long-sought relief from unpaid loans by approving legislation to force some consumers to pay off part of their debts in bankruptcy, Bloomberg said. Tenet Healthcare agreed to settle lawsuits over prices charged to patients without adequate health insurance for prescription drugs and services, Bloomberg reported. Time Warner might take its cable-tv unit public after an acquisition of Adelphia Communications assets, Business Week reported.

BOTTOM LINE: The Portfolio finished slightly lower today as losses in my Biotech, Software and Alternative Energy longs more than offset gains in my Computer and Semi longs. I did not trade in the afternoon, thus leaving the Portfolio 75% net long. The tone of the market deteriorated slightly into the afternoon as the advance/decline line finished lower, sector performance was mixed and volume was light. Commodity-related stocks underperformed throughout the day, while semiconductors outperformed ahead of Intel’s mid-quarter update. Tech is trading marginally higher after-hours on the report. Measures of investor anxiety were mixed into the close. Overall, today’s market action was a bit disappointing for the Bulls, considering the fall in long-term interest rates and energy prices. I expect to see tech lead to the upside tomorrow. A failure to do so would lead me to cut exposure to this sector.

Mid-day Report

Indices
S&P 500 1,210.93 +.32%
Dow 10,870.35 +.59%
NASDAQ 2,062.82 +.07%
Russell 2000 631.61 +.08%
DJ Wilshire 5000 11,912.96 +.23%
S&P Barra Growth 582.95 +.31%
S&P Barra Value 623.41 +.31%
Morgan Stanley Consumer 589.81 +.80%
Morgan Stanley Cyclical 774.34 +.09%
Morgan Stanley Technology 475.71 +.10%
Transports 3,865.35 -.10%
Utilities 356.38 +.68%
Put/Call 1.06 +11.58%
NYSE Arms .84 -9.89%
Volatility(VIX) 12.51 -1.50%
ISE Sentiment 126.00 -26.32%
US Dollar 81.54 -.11%
CRB 315.47 +.56%

Futures Spot Prices
Crude Oil 53.80 -1.77%
Unleaded Gasoline 149.90 -2.34%
Natural Gas 6.80 -1.02%
Heating Oil 151.10 -1.40%
Gold 443.40 +.11%
Base Metals 130.89 -.30%
Copper 149.60 -.50%
10-year US Treasury Yield 4.47% -.98%

Leading Sectors
Broadcasting +1.69%
Drugs +.88%
Utilities +.83%

Lagging Sectors
Airlines -1.88%
Iron/Steel -1.94%
Energy -2.0%

Market Movers
DISH -6.83% after reports that the company may have improperly booked transactions with suppliers and made suspect consulting payments to a friend of the Chairman.
NGPS +16.51% after beating 4Q estimates and giving positive guidance.
VLTR +9.61% on Thomas Weisel upgrade to Outperform.
GBX +11.6% after saying it received orders for almost 5,000 railcars valued at about $260 million.
HITK +13.2% after beating 3Q estimates.
HIBB +9.05% after beating 4Q estimates and raising 1Q outlook.
MW +4.75% after beating 4Q estimates and raising 1Q outlook.
ADRX +6.4% after beating 4Q estimates.
BXC -18.05% after reporting disappointing 4Q results.
MTEX -14.86% after reporting disappointing 4Q results.
MATK -12.81% after meeting 1Q estimates, giving disappointing guidance and First Albany downgrade to Neutral.
KWK -5.9% after missing 4Q estimates.
MTEX -14.91% after disappointing 4Q report.

Mid-day Overview
Market Internals
I-Watch Sector Overview
NYSE Unusual Volume
NASDAQ Unusual Volume
NASDAQ 100 Heatmap
DJIA Quick Charts
Chart Toppers
Hot Spots
Option Dragon
Real-time Intraday Chart/Quote

Economic Data
- Initial Jobless Claims for last week rose to 327K versus estimates of 310K and 310K the prior week.
- Continuing Claims rose to 2703K versus estimates of 2662K and 2664K prior.
- Wholesale Inventories for January rose 1.1% versus estimates of a .6% increase and a .4% gain in December.

Recommendations
- Goldman Sachs: Reiterated Outperform on HEW, CVD, MSFT and COH. Reiterated Underperform on FGP.
- Smith Barney: Reiterated Buy on ALTR, target $25. Reiterated Sell on FR, target $26. Reiterated Buy on RA, target $35. Reiterated Buy on EGP, target $40. Reiterated Buy on PKY, target $54.25. Reiterated Sell on HIW, target $21. Reiterated Sell on JBX, target $34. Reiterated Buy on MCD, target $37.
- Merrill Lynch: Named DG to Focus 1 List.
- JP Morgan: Raised ALTR to Overweight.
- Deutsche Bank: Raised MOT to Buy, target $18. Raised CK to Buy, target $18.
- Thomas Weisel: Raised VLTR to Outperform.
- Banc of America: Raised AVY to Buy, target $67.
- CSFB: Raised GSF to Outperform, target $48.

Mid-day News
US stocks are mostly higher mid-day on optimism over falling energy prices and interest rates. PalmOne, Apple Computer and other US companies have taken a lead in the $125 billion global consumer electronics market, the Wall Street Journal reported. China’s imports of steel products fell 47% to 3.5 million metric tons in the first two months this year, the Beijing-based customs office said. Nokia Oyj may benefit from holding the rights to technology used in so-called 3G cellphones, as its competitors have to pay more for license rights, the Wall Street Journal said. One of four possible bidders for Toys “R” Us, an investment group including Cerberus Capital Management LP, values the entire toy and baby-products company at about $5 billion, the Wall Street Journal reported. Google has put Web sites at a disadvantage by adding links using its Google Toolbar for the Internet Explorer browser, Walter Mossberg wrote in today’s Wall Street Journal. Kmart Holding plans put about 400 locations, or more than a quarter of its stores, under the Sears name after it completes the $11 billion acquisition of Sears, Roebuck & Co., the NY Post reported. “Robots,” the animated film from News Corp.’s Twentieth Century Fox that debuts tomorrow, is the latest computer-generated effort as movie studios seek to meet consumers’ growing demand for animated films, the Wall Street Journal reported. Samsung Electronics now is more profitable than Sony Corp. and has taken Sony’s position as a premium electronics brand, the NY Times reported. Hewlett-Packard’s printer business is being hurt by price undercutting from competitors such as Dell and Seiko Epson, the Wall Street Journal reported. Verizon Communications will spend $200 million this year to build a fiber-optic network in New Jersey, which will help it compete with cable companies in offering high-speed Internet, voice service and television programming, the Star-Ledger reported. Motorola delayed plans to release a phone that can play music bought from Apple Computer’s iTunes Web site, the Chicago Tribune said. Biogen Idec officials may have known that an “adverse event” occurred with a patient taking the company’s Tysabri MS drug before Feb. 18, the NY Times reported. Iraq’s main Shiite party and a Kurdish bloc have reached an agreement to form a coalition government following Iraq’s Jan. 30 election, the AP said. The US House Resources committee is sending to trade groups a draft bill that would lift Congressional bans on new offshore oil and gas drilling, the San Francisco Chronicle reported. A CBS News producer sued the network for defamation and age discrimination after she was demoted for errors in Dan Rather’s report about President Bush’s National Guard service, the NY Times reported. Citigroup removed Daniel Dantas as manager of a $651 million fund that has stakes in some of Brazil’s biggest phone companies, after years of disputes over control of its investments, Bloomberg reported. Microsoft Chairman Bill Gates said he wants to make more acquisitions and he’s pushing his most senior managers to help find the right candidates, Bloomberg reported. US wholesale inventories rose 1.1% in January, almost twice as much as expected, led by increased supplies of metals and cars, Bloomberg said. Microsoft agreed to buy Lotus Notes creator Ray Ozzie’s software company, Groove Networks, and to hire Ozzie as a chief technical officer, Bloomberg reported. Bill Gross, manager of the world’s biggest bond fund, said his firm bought US Treasury notes after a two-day tumble pushed yields up to levels he considered attractive, Bloomberg said. Crude oil in NY is falling for the first time in seven sessions amid strengthening US inventories and lower shipments to China, Bloomberg reported. The number of Americans filing first-time claims for unemployment insurance increased to a level that still reflects labor market strength, Bloomberg said.

BOTTOM LINE: The Portfolio is slightly lower mid-day on losses in my Software, Alternative Energy and Biotech longs. I exited a few longs from various sectors this morning as they hit stop-losses and added a few new energy-related and tech longs, thus leaving the Portfolio’s market exposure 75% net long. One of my new longs is SMH and I am using a $33.70 stop on this position. The tone of the market is modestly negative as the advance/decline line is slightly lower, sector performance is mixed and volume is decent. Measures of investor anxiety are mixed. However, the AAII % Bulls rose 25.7% this week to 49.66%, which is a negative. Consumer-related stocks are outperforming on declines in energy and interest rates. Today’s overall market action is modestly negative, considering the declines in energy and interest rates. I expect US shares to trade mixed-to-higher from current levels into the close as short-covering and more optimism over lower energy prices/interest rates more than offsets continued profit-taking in commodity-related stocks.