Earnings of Note
Company/Estimate
BRCD/.03
EV/.50
INTU/1.16
SNPS/.33
Splits
None of note.
Economic Data
None of note.
Recommendations
Goldman Sachs reiterated Outperform on MDT, BIIB, ROH, GLK, CCU, ADP and FDC. GS reiterated Underperform on SKS and TFX.
Late-Night News
Asian indices are sharply higher on falling oil prices, U.S. technology earnings reports and optimism over the political situations in India and Taiwan. Al-Qaeda may be planning a chemical or biological attack on U.S. soil in an attempt to alter the outcome of the election in November, the top intelligence officer at the Homeland Security Department said, the AP reported. At least one soldier has been arrested in connection with faked pictures of Iraqi prisoners allegedly being abused by British servicemen, the BBC reported. Research reported in a conference in New Orleans found that a form of cancer of the esophagus has increased more than five times in the U.S. over the past 25 years in correlation with higher consumption of carbonated beverages, Reuters said. Taiwan President Chen Shui-bian will probably avoid making provocative statements in his inauguration speech that may futher strain relations with China, ETTV reported, citing U.S. Deputy Secretary of State Richard Armitage. Aluminum Corp. of China(ACH) said it's in talks to buy as much as 300,000 metric tons of capacity this year, snapping up assets from rivals weakened by soaring raw material costs, Bloomberg said. Indian stocks rose for a second day on optimism Manmohan Singh, the former finance minister who cut state controls and encouraged foreign investment, will be prime minister after Sonia Gandhi declined the post, Bloomberg reported.
Late-Night Trading
Asian Indices +2.50% to +4.5% on average.
S&P 500 indicated +.65%.
NASDAQ indicated +.93%.
BOTTOM LINE: I expect U.S. stocks to rally again tomorrow on strong corporate earnings, falling energy prices, positive developments in Asia and stabilizing interest rates. Tomorrow should confirm that last Wednesday marked the beginning of a short to intermediate-term rally. I am looking for a 2%+ broad-based rally tomorrow on good volume. In the last week the S&P 500's 04 P/E has fallen from 17.25 to 16.95, while stocks have risen, as many major U.S. companies are beating quarterly estimates and raising 04 forecasts. AMAT, the largest semi-equipment maker in the world, is down 26% from its recent high. The company posted sales growth of 82% and net income beat estimates by 16%. The CFO said on a conference call that "Under-investment in the past three years has created pent-up demand" and hinted that order growth is accelerating. Its valuation appears very reasonable considering this kind of growth from a global industry leader. I continue to believe that this semiconductor cycle will last substantially longer than analysts currently anticipate. AMAT joins MOT, EBAY, DELL, YHOO, QCOM, JNPR, BRCM, MU, ERTS, FLEX, A, XLNX, TXN, VRTSE, AMZN, CSCO and INTC, all major U.S. technology companies that reported 20%+ sales growth in their most recent quarters. Corporate spending on technology has improved significantly from last year and should accelerate throughout 04 for a variety of reasons. The Portfolio is 125% net long heading into trading tomorrow.
Wednesday, May 19, 2004
Tuesday, May 18, 2004
Tuesday Close
S&P 500 1,091.53 +.69%
NASDAQ 1,897.82 +1.13%
Leading Sectors
Iron/Steel +6.15%
Airlines +3.66%
Gaming +2.45%
Lagging Sectors
Tobacco +.06%
Energy -1.49%
Oil Service -1.71%
Other
Crude Oil 40.43 -.27%
Natural Gas 6.17 +.23%
Gold 376.50 +.16%
Base Metals 100.69 +.77%
U.S. Dollar 91.19 +.21%
10-Yr. T-note Yield 4.73% +.93%
VIX 19.33 -3.16%
Put/Call .93 -23.77%
NYSE Arms .81 -69.66%
After-hours Movers
KROL +29.89% after announcing that MMC would acquire it for $1.9B in cash.
HPQ +4.64% after beating 2Q revenue estimates and boosting 2nd half revenue by $1B.
ADSK -4.87% after beating 1Q estimates and lowering 2Q forecast.
NTAP -5.80% after beating 4Q revenue estimates and lowering 05 forecast.
Recommendations
UN raised to Overweight at Prudential, target $74. Goldman Sachs reiterated Outperform on GDT, KO, PG, TIF, HD and SPLS. Jim Cramer, of TheStreet.com, wrote a positive column on KMRT.
After-hours News
U.S. stocks finished higher Tuesday on a drop in energy prices and optimism that Asian growth is still in tact after a stellar Japanese economic report. After the close, Jim Lennon of Macquarie Bank said that China's iron-ore imports and steel consumption will slow down sharply for the rest of the year, Reuters reported. Applied Materials, the world's largest maker of semi-equipment, said second quarter sales rose 82% to $2.02 billion, its biggest gain since the tech sector collapsed in 2000, Bloomberg reported. Hewlett-Packard said second-quarter sales rose 12% to $20.1 billion, above analysts' estimates, Bloomberg said.
BOTTOM LINE: The Portfolio had a good day today as a few of my biotech and Chinese ADR longs rose substantially. I added a few new longs in the base metal and tech sectors in the afternoon, bringing the Portfolio's market exposure to 125% net long. Volume was not very good today, but the tone of the market was much improved from recent action.
NASDAQ 1,897.82 +1.13%
Leading Sectors
Iron/Steel +6.15%
Airlines +3.66%
Gaming +2.45%
Lagging Sectors
Tobacco +.06%
Energy -1.49%
Oil Service -1.71%
Other
Crude Oil 40.43 -.27%
Natural Gas 6.17 +.23%
Gold 376.50 +.16%
Base Metals 100.69 +.77%
U.S. Dollar 91.19 +.21%
10-Yr. T-note Yield 4.73% +.93%
VIX 19.33 -3.16%
Put/Call .93 -23.77%
NYSE Arms .81 -69.66%
After-hours Movers
KROL +29.89% after announcing that MMC would acquire it for $1.9B in cash.
HPQ +4.64% after beating 2Q revenue estimates and boosting 2nd half revenue by $1B.
ADSK -4.87% after beating 1Q estimates and lowering 2Q forecast.
NTAP -5.80% after beating 4Q revenue estimates and lowering 05 forecast.
Recommendations
UN raised to Overweight at Prudential, target $74. Goldman Sachs reiterated Outperform on GDT, KO, PG, TIF, HD and SPLS. Jim Cramer, of TheStreet.com, wrote a positive column on KMRT.
After-hours News
U.S. stocks finished higher Tuesday on a drop in energy prices and optimism that Asian growth is still in tact after a stellar Japanese economic report. After the close, Jim Lennon of Macquarie Bank said that China's iron-ore imports and steel consumption will slow down sharply for the rest of the year, Reuters reported. Applied Materials, the world's largest maker of semi-equipment, said second quarter sales rose 82% to $2.02 billion, its biggest gain since the tech sector collapsed in 2000, Bloomberg reported. Hewlett-Packard said second-quarter sales rose 12% to $20.1 billion, above analysts' estimates, Bloomberg said.
BOTTOM LINE: The Portfolio had a good day today as a few of my biotech and Chinese ADR longs rose substantially. I added a few new longs in the base metal and tech sectors in the afternoon, bringing the Portfolio's market exposure to 125% net long. Volume was not very good today, but the tone of the market was much improved from recent action.
Mid-day Update
S&P 500 1,091.82 +.71%
NASDAQ 1,897.31 +1.10%
Leading Sectors
Iron/Steel +2.50%
Retail +2.24%
Gaming +2.21%
Lagging Sectors
Restaurants -.01%
Energy -1.94%
Oil Service -1.95%
Other
Crude Oil 40.70 -2.05%
Natural Gas 6.20 -3.49%
Gold 377.00 -.68%
Base Metals 100.69 +.77%
U.S. Dollar 91.14 +.15%
10-Yr. Long-Bond Yield 4.72% +.76%
VIX 19.34 -3.11%
Put/Call .82 -32.79%
NYSE Arms .90 -66.29%
Market Movers
GILD +8.5% after saying regulators will decide on the company's application to sell a two-drug combination pill for HIV by 9/12, earlier than expected.
MLNM +9.07% after saying its Velcade medicine helped people with a blood cancer called multiple myeloma live longer.
HD +3.53% after beating 1Q estimates and raising 04 guidance.
TXU +10.5% after saying Cap Gemini will run its customer services for 10 years, reducing operating costs by $175M.
CSC +8.76% after beating 4Q estimates and raising 1Q/04 forecast.
ENDP -7.57%after saying it had decided to launch it oxycodone extended-release tablets after an appellate court decision.
TNP -5.83% after selling 2.5M shares at $28.75.
Economic Data
Housing Starts for April 1969K versus estimates of 1985K and 2011K in March.
Building Permits for April 1999K versus estimates of 1960K and 1975K in March.
Recommendations
Goldman Sachs upgraded integrated oil/E&P/R&M sector to Attractive. Goldman upgraded ETN and IR to Outperform. NAV cut to underperform at Goldman. Goldman reiterated Outperform on BSX, GILD, AGN and HD. Citi SmithBarney said to Sell SUP, target $29. Citi reiterated Buy on CI, target $75. Citi reiterated Sell on AMD, target $12. Citi reiterated Sell on MU, target $12. Citi reiterated Buy on INTC, target $33. Citi reiterated Buy on CY, target $21. Citi reiterated Buy on NSM, target $24. Citi reiterated Buy on LLTC, target $45. Citi reiterated Buy on MXIM, target $56. Citi reiterated Buy on LOW, target $67. Citi reiterated Buy on MATK, target $90. LDG rated Overweight at JP Morgan. THQI raised to Buy at UBS, target $26. SOTR rated Buy at Deutsche Bank, target $36. RF rated Buy at Deutsche Bank, target $39. CTSH raised to Buy at Legg Mason, target $53. SRX raised to Buy at Legg Mason, target $44. CNO rated Outperform at CSFB, target $24.
Mid-day News
U.S. stocks are higher mid-day as strong earnings reports and a fall in oil prompted bargain hunting by investors. Stephen Cutler, director of enforcement for the SEC told CNBC that the pace of new cases has slowed since the WorldCom and Enron scandals. Sales of low-carbohydrate products have declined at health-food and specialty stores, leading some food industry analysts to say the dieting trend may be waning, the Washington Post reported. New York Attorney General Eliot Spitzer's office has issued subpoenas to several major insurance companies in his probe of fees received by insurance brokers, the NY Times said. Four people were arrested in connection with the beheading of Nick Berg, an American seeking work in Iraq, Agence France-Presse reported. UTStarcom and Sina say power failures in China are disrupting business, Bloomberg reported. OPEC said it's ready to make more oil available to meet demand as it forecast oil consumption in 04 will rise by the biggest rate since 97 because of the vigorous world economy, Bloomberg reported. Home Depot reported a sales gain of 16% for the first quarter, its best in 2 years, as strong demand for John Deere lawn tractors and remodeled stores boosted customer traffic. Time Warner will consider buying bankrupt cable operator Adelphia Communications, Bloomberg reported. Sentiment among global money mangers this month dropped the most in three years on concerns about slowing growth in China and rising U.S. interest rates, a Merrill Lynch survey showed. The SEC should move slowly in extending its oversight to the $800 billion hedge fund industry, said Representative Michael Oxley, Chairman of the House Financial Services Committee. The Fed's Broaddus said the risk of accelerating inflation is manageable because increased global competition and considerable excess capacity in many areas are also likely to discourage aggressive price increases. Broaddus also said the Fed won't have to act as aggressively as it did in 1994, Bloomberg reported. President Bush said he plans to re-nominate Alan Greenspan as chairman of the Fed, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a good day today as a few of my China ADRs and Biotech longs are rising substantially. I added a few new tech longs this morning, bringing the Portfolio's market exposure to 100% net long. One of my new longs is VECO and I have a $23.00 stop-loss on the position. I expect US stocks to remain neutral to higher into the close as bonds rally and oil weakens.
NASDAQ 1,897.31 +1.10%
Leading Sectors
Iron/Steel +2.50%
Retail +2.24%
Gaming +2.21%
Lagging Sectors
Restaurants -.01%
Energy -1.94%
Oil Service -1.95%
Other
Crude Oil 40.70 -2.05%
Natural Gas 6.20 -3.49%
Gold 377.00 -.68%
Base Metals 100.69 +.77%
U.S. Dollar 91.14 +.15%
10-Yr. Long-Bond Yield 4.72% +.76%
VIX 19.34 -3.11%
Put/Call .82 -32.79%
NYSE Arms .90 -66.29%
Market Movers
GILD +8.5% after saying regulators will decide on the company's application to sell a two-drug combination pill for HIV by 9/12, earlier than expected.
MLNM +9.07% after saying its Velcade medicine helped people with a blood cancer called multiple myeloma live longer.
HD +3.53% after beating 1Q estimates and raising 04 guidance.
TXU +10.5% after saying Cap Gemini will run its customer services for 10 years, reducing operating costs by $175M.
CSC +8.76% after beating 4Q estimates and raising 1Q/04 forecast.
ENDP -7.57%after saying it had decided to launch it oxycodone extended-release tablets after an appellate court decision.
TNP -5.83% after selling 2.5M shares at $28.75.
Economic Data
Housing Starts for April 1969K versus estimates of 1985K and 2011K in March.
Building Permits for April 1999K versus estimates of 1960K and 1975K in March.
Recommendations
Goldman Sachs upgraded integrated oil/E&P/R&M sector to Attractive. Goldman upgraded ETN and IR to Outperform. NAV cut to underperform at Goldman. Goldman reiterated Outperform on BSX, GILD, AGN and HD. Citi SmithBarney said to Sell SUP, target $29. Citi reiterated Buy on CI, target $75. Citi reiterated Sell on AMD, target $12. Citi reiterated Sell on MU, target $12. Citi reiterated Buy on INTC, target $33. Citi reiterated Buy on CY, target $21. Citi reiterated Buy on NSM, target $24. Citi reiterated Buy on LLTC, target $45. Citi reiterated Buy on MXIM, target $56. Citi reiterated Buy on LOW, target $67. Citi reiterated Buy on MATK, target $90. LDG rated Overweight at JP Morgan. THQI raised to Buy at UBS, target $26. SOTR rated Buy at Deutsche Bank, target $36. RF rated Buy at Deutsche Bank, target $39. CTSH raised to Buy at Legg Mason, target $53. SRX raised to Buy at Legg Mason, target $44. CNO rated Outperform at CSFB, target $24.
Mid-day News
U.S. stocks are higher mid-day as strong earnings reports and a fall in oil prompted bargain hunting by investors. Stephen Cutler, director of enforcement for the SEC told CNBC that the pace of new cases has slowed since the WorldCom and Enron scandals. Sales of low-carbohydrate products have declined at health-food and specialty stores, leading some food industry analysts to say the dieting trend may be waning, the Washington Post reported. New York Attorney General Eliot Spitzer's office has issued subpoenas to several major insurance companies in his probe of fees received by insurance brokers, the NY Times said. Four people were arrested in connection with the beheading of Nick Berg, an American seeking work in Iraq, Agence France-Presse reported. UTStarcom and Sina say power failures in China are disrupting business, Bloomberg reported. OPEC said it's ready to make more oil available to meet demand as it forecast oil consumption in 04 will rise by the biggest rate since 97 because of the vigorous world economy, Bloomberg reported. Home Depot reported a sales gain of 16% for the first quarter, its best in 2 years, as strong demand for John Deere lawn tractors and remodeled stores boosted customer traffic. Time Warner will consider buying bankrupt cable operator Adelphia Communications, Bloomberg reported. Sentiment among global money mangers this month dropped the most in three years on concerns about slowing growth in China and rising U.S. interest rates, a Merrill Lynch survey showed. The SEC should move slowly in extending its oversight to the $800 billion hedge fund industry, said Representative Michael Oxley, Chairman of the House Financial Services Committee. The Fed's Broaddus said the risk of accelerating inflation is manageable because increased global competition and considerable excess capacity in many areas are also likely to discourage aggressive price increases. Broaddus also said the Fed won't have to act as aggressively as it did in 1994, Bloomberg reported. President Bush said he plans to re-nominate Alan Greenspan as chairman of the Fed, Bloomberg reported.
BOTTOM LINE: The Portfolio is having a good day today as a few of my China ADRs and Biotech longs are rising substantially. I added a few new tech longs this morning, bringing the Portfolio's market exposure to 100% net long. One of my new longs is VECO and I have a $23.00 stop-loss on the position. I expect US stocks to remain neutral to higher into the close as bonds rally and oil weakens.
Tuesday Watch
Earnings of Note
Company/Estimate
AMAT/.19
ADSK/.30
BKS/.12
BGP/.02
BJ/.22
HPQ/.34
DKS/.18
HD/.43
JCP/.34
NTAP/.12
SKS/.17
SPLS/.32
WIND/-.03
ZLC/.43
Splits
BWA 2-for-1
TK 2-for-1
Economic Data
Housing Starts in April estimated at 1985K versus 2007K in March.
Building Permits in April estimated at 1960K versus 1976K in March.
Recommendations
Goldman Sachs reiterated Attractive View on Paper sector, favorites are IP, DTC and SPP. GS reiterated Outperform on A and AFL. GS reiterated Underperform on TWMC and JDSU.
Late-Night News
Asian indices are higher on a very strong Japanese economic report and a rebounding stock market in India. Pakistan is committed to peace with India and will work with the new government of Sonia Gandhi, who will be sworn in as prime minister tomorrow, Agence France-Presse reported. BHP Billiton, U.S. Steel and six Chinese companies agreed to form a venture to raise as much as $725M by selling shares to fund the production of coke, a raw material used in steelmaking, the China Daily reported. The U.S. criticized China's announcement that the mainland may use force on Taiwan should the island press for independence, saying the statement was "unhelpful," Bloomberg reported. Japan's economy grew at a 5.6% annual pace in the first three months of the year, better than economists' forecasts of 3.8% growth, Bloomberg said.
Late-Night Trading
Asian Indices -.50% to 2.0%.
S&P 500 indicated +.35%.
NASDAQ indicated +.61%.
BOTTOM LINE: I expect U.S. stocks to rally tomorrow as much-better-than-expected growth in Japan should calm investors' fears of collapsing Asian economies. Many earnings reports should provide further evidence of the strength of the U.S. economy as well. The Portfolio is 75% long and I will look to add market exposure into any unexpected weakness in the morning.
Company/Estimate
AMAT/.19
ADSK/.30
BKS/.12
BGP/.02
BJ/.22
HPQ/.34
DKS/.18
HD/.43
JCP/.34
NTAP/.12
SKS/.17
SPLS/.32
WIND/-.03
ZLC/.43
Splits
BWA 2-for-1
TK 2-for-1
Economic Data
Housing Starts in April estimated at 1985K versus 2007K in March.
Building Permits in April estimated at 1960K versus 1976K in March.
Recommendations
Goldman Sachs reiterated Attractive View on Paper sector, favorites are IP, DTC and SPP. GS reiterated Outperform on A and AFL. GS reiterated Underperform on TWMC and JDSU.
Late-Night News
Asian indices are higher on a very strong Japanese economic report and a rebounding stock market in India. Pakistan is committed to peace with India and will work with the new government of Sonia Gandhi, who will be sworn in as prime minister tomorrow, Agence France-Presse reported. BHP Billiton, U.S. Steel and six Chinese companies agreed to form a venture to raise as much as $725M by selling shares to fund the production of coke, a raw material used in steelmaking, the China Daily reported. The U.S. criticized China's announcement that the mainland may use force on Taiwan should the island press for independence, saying the statement was "unhelpful," Bloomberg reported. Japan's economy grew at a 5.6% annual pace in the first three months of the year, better than economists' forecasts of 3.8% growth, Bloomberg said.
Late-Night Trading
Asian Indices -.50% to 2.0%.
S&P 500 indicated +.35%.
NASDAQ indicated +.61%.
BOTTOM LINE: I expect U.S. stocks to rally tomorrow as much-better-than-expected growth in Japan should calm investors' fears of collapsing Asian economies. Many earnings reports should provide further evidence of the strength of the U.S. economy as well. The Portfolio is 75% long and I will look to add market exposure into any unexpected weakness in the morning.
Monday, May 17, 2004
Monday Close
S&P 500 1,084.10 -1.06%
NASDAQ 1,876.64 -1.45%
Leading Sectors
Oil Service +.40%
Energy -.22%
Drugs -.26%
Lagging Sectors
Iron/Steel -2.46%
Networking -2.83%
Nanotechnology -3.37%
Other
Crude Oil 41.53 -.05%
Natural Gas 6.42 unch.
Gold 379.80 +.05%
Base Metals 99.92 -2.06%
U.S. Dollar 90.95 -.77%
10-Yr. Long-Bond Yield 4.69% -1.66%
VIX 19.96 +8.07%
Put/Call 1.22 +27.08%
NYSE Arms .99 +85.42%
After-hours Movers
MLNM +16.52% after saying its Velcade medicine helped people with a blood cancer called multiple myeloma live longer.
CSC +5.16% after beating 4Q estimates, raising 1Q and 04 guidance.
ENDP -11.09% after saying it had decided to launch it oxycodone extended-release tablets after an appellate court decision.
Recommendations
Goldman reiterated Outperform on CLX, SRE, KMI, EQT, ATG, PFE, GS reiterated Underperform on SGP and BMY. Jim Cramer, of TheStreet.com, said long-term investors should look at buying CMLS.
After-hours News
U.S. stocks finished lower Monday as violence in Iraq and concerns over slowing Asian economies continued to worry investors. After the close, the UK government said it may send another 3,000 troops to Iraq before coalition forces hand over power to Iraq's interim government on June 30, the London-based Times said. U.S. government bonds rallied after a report showed international investors increased their holdings of the securities by a record $61.5 billion in March, Bloomberg reported. Agilent Technologies, the world's largest maker of scientific test gear, reported that sales rose 25% to the highest level since 2001 and above analysts' estimates, Bloomberg reported. SBC Communications tomorrow will receive notice that 100,000 employees represented by the Communications Workers of America may go on strike. The Pentagon said it suspended payment of $159.5M to Halliburton for meals served at 64 Army dining facilities in Iraq because the documentation submitted by the company is incomplete, Bloomberg said.
BOTTOM LINE: The Portfolio fell today as my tech and basic material longs dropped. Some of my long positions hit stop-loss points in the afternoon. The Portfolio is 75% net long after exiting these positions. The rally I expected in the afternoon materialized, but failed. However, the 1-1.5% losses for the major U.S. indices today came on light volume and could have been much worse considering the news. As well, bonds rallied strongly, the ARMS, Put/Call, VIX all spiked and oil stabilized. I continue to expect a decent rally beginning at any time.
NASDAQ 1,876.64 -1.45%
Leading Sectors
Oil Service +.40%
Energy -.22%
Drugs -.26%
Lagging Sectors
Iron/Steel -2.46%
Networking -2.83%
Nanotechnology -3.37%
Other
Crude Oil 41.53 -.05%
Natural Gas 6.42 unch.
Gold 379.80 +.05%
Base Metals 99.92 -2.06%
U.S. Dollar 90.95 -.77%
10-Yr. Long-Bond Yield 4.69% -1.66%
VIX 19.96 +8.07%
Put/Call 1.22 +27.08%
NYSE Arms .99 +85.42%
After-hours Movers
MLNM +16.52% after saying its Velcade medicine helped people with a blood cancer called multiple myeloma live longer.
CSC +5.16% after beating 4Q estimates, raising 1Q and 04 guidance.
ENDP -11.09% after saying it had decided to launch it oxycodone extended-release tablets after an appellate court decision.
Recommendations
Goldman reiterated Outperform on CLX, SRE, KMI, EQT, ATG, PFE, GS reiterated Underperform on SGP and BMY. Jim Cramer, of TheStreet.com, said long-term investors should look at buying CMLS.
After-hours News
U.S. stocks finished lower Monday as violence in Iraq and concerns over slowing Asian economies continued to worry investors. After the close, the UK government said it may send another 3,000 troops to Iraq before coalition forces hand over power to Iraq's interim government on June 30, the London-based Times said. U.S. government bonds rallied after a report showed international investors increased their holdings of the securities by a record $61.5 billion in March, Bloomberg reported. Agilent Technologies, the world's largest maker of scientific test gear, reported that sales rose 25% to the highest level since 2001 and above analysts' estimates, Bloomberg reported. SBC Communications tomorrow will receive notice that 100,000 employees represented by the Communications Workers of America may go on strike. The Pentagon said it suspended payment of $159.5M to Halliburton for meals served at 64 Army dining facilities in Iraq because the documentation submitted by the company is incomplete, Bloomberg said.
BOTTOM LINE: The Portfolio fell today as my tech and basic material longs dropped. Some of my long positions hit stop-loss points in the afternoon. The Portfolio is 75% net long after exiting these positions. The rally I expected in the afternoon materialized, but failed. However, the 1-1.5% losses for the major U.S. indices today came on light volume and could have been much worse considering the news. As well, bonds rallied strongly, the ARMS, Put/Call, VIX all spiked and oil stabilized. I continue to expect a decent rally beginning at any time.
Mid-day Update
S&P 500 1,084.61 -1.01%
NASDAQ 1,876.35 -1.47%
Leading Sectors
Oil Service +.57%
Energy -.14%
Drugs -.19%
Lagging Sectors
Iron/Steel -2.20%
Networking -2.56%
Nanotechnology -2.65%
Other
Crude Oil 41.15 -.58%
Natural Gas 6.42 +.30%
Gold 380.10 +.80%
Base Metals 99.92 -2.06%
U.S. Dollar 90.81 -.93%
10-Yr. Long-Bond Yield 4.70% -1.29%
VIX 19.88 +7.63%
Put/Call .73 -23.96%
NYSE Arms 2.48 +75.69%
Market Movers
NEB +31.2% after saying Deluxe Corp. would acquire it for $586.8M.
FFHH +21.24% after saying it will be acquired by MidCountry Financial for $83.4M.
SJH +7.82% after saying it is in merger discussions with OMI Corp.
KMRT +6.48% after substantially beating 1Q estimates by selling assets.
ESMC -12.15% after reporting 3Q that disappointed some.
Economic Data
Empire Manufacturing for May came in at 30.21 versus expectations of 34.0 and 34.03 in April.
Recommendations
NE raised to Overweight at JP Morgan. CNO rated Buy at Deutsche Bank, target $22. IBPI rated Buy at Deutsche Bank, target $18. MBG rated Outperform at CSFB, target $62. MERX cut to Underperform at CSFB, target $12. BJS raised to Strong Buy at Raymond James, target $55. Goldman Sachs reiterated Outperform on CAH and GILD. GS reiterated Outperform on IBM, target $106. Goldman said tech stocks now more attractively valued relative to market than in March 03, favorites are MSFT, CSCO and DELL. GS said Consumer Discretionary stocks are most overvalued. GS thinks HPQ report will be positive for SANM on commercial PC strength. GS raised AMD to Outperform. GS reiterated Outperform on MRVL ahead of quarter. Citi SmithBarney upgraded CTSH to Buy, target $56. Citi said results of its affluent investor survey indicate that 80% of affluent investors plan to allocate new money to stocks over the next year, reiterated Buy on MER and MWD. Citi reiterated bullish stance on security software stocks, favorite is RSAS. Citi reiterated Buy on FNM, target $86. Citi reiterated Buy on BJ, target $30. Citi reiterated Sell on EK, target $23. Goldman reiterated Outperform on ACS, STZ and KRB.
Mid-day News
U.S. stocks are lower mid-day on violence in Iraq and concerns over slowing growth in Asia. Shares of Lucent are dropping after the Wall Street Journal reported the SEC will file civil fraud charges against the company. Paul Allen may buy more cable assets to expand Charter Communications, the LA Times reported. Iraqi Council members want to supervise an investigation into the UN oil-for-food scandal and asked accounting firm KPMG to gather evidence of kickbacks and bribes paid under the program, the New York Times reported. Vonage will announce today that it will cut the price for unlimited Internet calling by 14%, the Wall Street Journal reported. The Arab Resistance Movement claimed responsibility today for killing Izzedine Salim, president of the Iraqi Governing Council, the AP reported. Fluor, the largest U.S. engineering and construction company, wants a long-term presence in Iraq, Reuters reported. Tennessee Governor Bredesen signed a law last week that makes that state the nation's first to give incentives to businesses that don't send data-entry and call-center jobs overseas, AP reported. An older shell containing Sarin nerve gas was discovered and partly detonated in Iraq today, Bloomberg reported. Saddam Hussein's regime declared all its Sarin nerve gas rounds destroyed before the 1991 Gulf War, Bloomberg said.
BOTTOM LINE: The Portfolio is down today as my tech and basic materials longs are falling. I added a new short and long, leaving the Portfolio 100% net long. I took a long position in YZC this morning. I am using a $34.75 stop-loss on the position. Volume in the major averages is light today, interest rates are falling, the ARMs and VIX are spiking and the selling is much less than I expected, considering recent news. This is a very good for the Bulls and I still believe last Wednesday marked at least a short-term bottom for most U.S. stocks. I expect a rally to materialize at some point this afternoon.
NASDAQ 1,876.35 -1.47%
Leading Sectors
Oil Service +.57%
Energy -.14%
Drugs -.19%
Lagging Sectors
Iron/Steel -2.20%
Networking -2.56%
Nanotechnology -2.65%
Other
Crude Oil 41.15 -.58%
Natural Gas 6.42 +.30%
Gold 380.10 +.80%
Base Metals 99.92 -2.06%
U.S. Dollar 90.81 -.93%
10-Yr. Long-Bond Yield 4.70% -1.29%
VIX 19.88 +7.63%
Put/Call .73 -23.96%
NYSE Arms 2.48 +75.69%
Market Movers
NEB +31.2% after saying Deluxe Corp. would acquire it for $586.8M.
FFHH +21.24% after saying it will be acquired by MidCountry Financial for $83.4M.
SJH +7.82% after saying it is in merger discussions with OMI Corp.
KMRT +6.48% after substantially beating 1Q estimates by selling assets.
ESMC -12.15% after reporting 3Q that disappointed some.
Economic Data
Empire Manufacturing for May came in at 30.21 versus expectations of 34.0 and 34.03 in April.
Recommendations
NE raised to Overweight at JP Morgan. CNO rated Buy at Deutsche Bank, target $22. IBPI rated Buy at Deutsche Bank, target $18. MBG rated Outperform at CSFB, target $62. MERX cut to Underperform at CSFB, target $12. BJS raised to Strong Buy at Raymond James, target $55. Goldman Sachs reiterated Outperform on CAH and GILD. GS reiterated Outperform on IBM, target $106. Goldman said tech stocks now more attractively valued relative to market than in March 03, favorites are MSFT, CSCO and DELL. GS said Consumer Discretionary stocks are most overvalued. GS thinks HPQ report will be positive for SANM on commercial PC strength. GS raised AMD to Outperform. GS reiterated Outperform on MRVL ahead of quarter. Citi SmithBarney upgraded CTSH to Buy, target $56. Citi said results of its affluent investor survey indicate that 80% of affluent investors plan to allocate new money to stocks over the next year, reiterated Buy on MER and MWD. Citi reiterated bullish stance on security software stocks, favorite is RSAS. Citi reiterated Buy on FNM, target $86. Citi reiterated Buy on BJ, target $30. Citi reiterated Sell on EK, target $23. Goldman reiterated Outperform on ACS, STZ and KRB.
Mid-day News
U.S. stocks are lower mid-day on violence in Iraq and concerns over slowing growth in Asia. Shares of Lucent are dropping after the Wall Street Journal reported the SEC will file civil fraud charges against the company. Paul Allen may buy more cable assets to expand Charter Communications, the LA Times reported. Iraqi Council members want to supervise an investigation into the UN oil-for-food scandal and asked accounting firm KPMG to gather evidence of kickbacks and bribes paid under the program, the New York Times reported. Vonage will announce today that it will cut the price for unlimited Internet calling by 14%, the Wall Street Journal reported. The Arab Resistance Movement claimed responsibility today for killing Izzedine Salim, president of the Iraqi Governing Council, the AP reported. Fluor, the largest U.S. engineering and construction company, wants a long-term presence in Iraq, Reuters reported. Tennessee Governor Bredesen signed a law last week that makes that state the nation's first to give incentives to businesses that don't send data-entry and call-center jobs overseas, AP reported. An older shell containing Sarin nerve gas was discovered and partly detonated in Iraq today, Bloomberg reported. Saddam Hussein's regime declared all its Sarin nerve gas rounds destroyed before the 1991 Gulf War, Bloomberg said.
BOTTOM LINE: The Portfolio is down today as my tech and basic materials longs are falling. I added a new short and long, leaving the Portfolio 100% net long. I took a long position in YZC this morning. I am using a $34.75 stop-loss on the position. Volume in the major averages is light today, interest rates are falling, the ARMs and VIX are spiking and the selling is much less than I expected, considering recent news. This is a very good for the Bulls and I still believe last Wednesday marked at least a short-term bottom for most U.S. stocks. I expect a rally to materialize at some point this afternoon.
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