Mid-day Update

S&P 500 1,177.41 +.33%
NASDAQ 2,068.62 +.36%

Leading Sectors
Homebuilders +2.86%
Iron/Steel +2.34%
Oil Service +1.85%

Lagging Sectors
Broadcasting -.51%
Restaurants -.55%
Biotech -.72%

Other
Crude Oil 47.42 unch.
Natural Gas 7.19 -.64%
Gold 438.90 +.80%
Base Metals 118.30 +1.47%
U.S. Dollar 83.74 -.64%
10-Yr. T-note Yield 4.18% -1.63%
VIX 13.10 +.54%
Put/Call .78 +9.86%
NYSE Arms .85 -8.60%

Market Movers
DELL +7.2% after meeting 3Q estimates and reiterating 4Q outlook.
A -13.7% after missing 4Q estimates, lowering 1Q guidance and multiple downgrades.
PSS +16.3% after beating 3Q estimates and raising 4Q outlook.
PIXR +4.5% after substantially beating 3Q estimates and boosting 04 outlook.
DRIV +10.5% on no news.
VRSN +6.8% on continued optimism over VOIP security product.
CPO +5.4% on Citi upgrade to Buy.
GTIV -15.4% on negative WSJ article and Fulcrum downgrade to Neutral.
MATK -9.8% after saying the European Patent Office revoked its European DHA/ARA Oil Blends patent.
ZBRA -4.0% after denying rumors that it lost a significant client.

Economic Data
Advance Retail Sales for October rose .2% versus estimates of a .1% gain and a 1.6% rise in September.
Retail Sales Less Autos for October rose .9% versus estimates of a .6% rise and a .8% gain in September.
Preliminary Univ. of Mich. Consumer Confidence for November was 95.5 versus estimates of 93.1 and a reading of 91.7 in October.
Business Inventories for September rose .1% versus estimates of a .5% increase and a .7% rise in August.

Recommendations
-Goldman Sachs reiterated Outperform on KSS, SBC, GCI, DEX, AGN and DELL. Goldman reiterated Underperform on BVF and FRX. Goldman reiterated Attractive view of Metals, favorites are AL, N, FCX and NEM.
-Citi SmithBarney upgraded CPO to Buy, target $57. Citi reiterated Buy on GE, target $38. Citi reiterated Buy on TPX, target $24. Citi reiterated Buy on DHI, target $55. Citi reiterated Buy on DELL, target $43. Citi reiterated Sell on PGR, target $79. Citi reiterated Sell on ABT, target $39. Citi reiterated Buy on JNJ, target $71. Citi reiterated Buy on NT, target $5. Citi reiterated Buy on HD, target $46.50. Citi reiterated Buy on LOW, target $70. Citi reiterated Buy on BEAS, target $11.50. Citi rated JNJ Buy, target $71.
-JP Morgan added DOW to Focus List, target $60. CEY cut to Underweight at JP Morgan.
-UBS rated WPSC Reduce, target $29.
-Bank of America cut A to Sell, target $16.75. BofA cut CEC to Sell, target $33. BofA raised TEN to Buy, target $19.
-CSFB cut JNY to Underperform, target $30.

Mid-day News
U.S. stocks are higher mid-day on better-than-expected economic reports and another decline in energy prices. Connecticut Attorney General Blumenthal has subpoenaed 42 insurance companies and brokerages seeking information about fraudulent activity, the Wall Street Journal reported. AOL has started telling customers in nine U.S. Southern sates that they must find a new high-speed Internet access provider by Jan. 17, the AP reported. The Coca-Cola Co. increased its annual spending on advertising by as much as $400 million yesterday, joining several large companies that are spending more to stimulate growth, the NY Times reported. U.S. election officials and a report by two universities said electronic voting machines used on Election Day performed well and didn't produce inaccurate outcomes, the NY Times reported. AOL plans to buy a minority stake in Kayak Software to add online travel services, the AP reported. NY Democratic Attorney General Spitzer will sue Universal Life Resources, a health-benefits consultant based in California, CNBC reported. Palestinian leader Arafat's widow will receive $22 million/year from Palestinian Authority funds while the people live in poverty, the Italian paper Corriere della Sera reported. Junk bond prices are expensive with yields at their lowest in seven years and may be poised to drop as appetite for high-risk, high-yield debt wanes, according to Moody's Investors Service. Dell shares rose after CEO Rollins said demand for computers and printers is "quite healthy," keeping the company ahead of schedule on a plan to reach $60 billion in sales by 2007, Bloomberg reported. FedEx said it will have $48 million in costs in its fiscal second quarter to account for repaying the federal government for payments made after the 2001 terrorist attacks, Bloomberg reported. Sales at U.S. retailers rose .9% in October, excluding auto purchases, the biggest increase in five months, Bloomberg said. U.S. consumer confidence rose more-than-expected in November as President Bush won re-election, stocks rose, energy prices fell and job creation surged, Bloomberg reported.

Bottom Line: The Portfolio is substantially higher mid-day on strength in my steel, homebuilding and internet longs. I have not traded today and the Portfolio is still 125% net long. The underlying tone of the market remains very healthy as many leaders are rising substantially on good volume, notwithstanding small gains in the major indices. I continue to believe oil will fall to around $35-40/bbl. within the next few months, providing further stimulus to the global economy. I also anticipate GDP growth to approach 5% during 4Q, making for a better-than-expected holiday season. I expect U.S. stocks to rise modestly into the close on short-covering, bargain-hunting, falling energy prices and accelerating U.S. economic growth.

Friday Watch

Earnings of Note
Company/Estimate
LBTYA/-.13
STI/1.31

Splits
None of note.

Economic Data
Advance Retail Sales for October estimated up .1% versus a 1.5% increase in September.
Retail Sales Less Autos for October estimated up .6% versus a .6% gain in September.
Preliminary Univ. of Mich. Consumer Confidence for November estimated at 93.1 versus a reading of 91.7 in October.

Recommendations
Goldman Sachs reiterated Outperform on A. STMicroelectronics NV(STM), Europe's biggest semiconductor maker, is expected to see its shares climb as demand for its chips grows, Business Week reported. Diomed Holdings(DIO) shares are expected to climb as demand for the medical-device maker's varicose-vein treatment grows, Business Week reported.

Late-Night News
Asian indices are mostly higher on optimism over a possible acceleration in exports from the region. Kmart Holding Chairman Lampert may use his controlling stake in the discount retailer to finance future investments, Business Week reported. More financial companies are purchasing power plants amid sluggish growth in their other units, Business Week reported. China is drafting rules that will slow investment in the nation's steel industry, Wen Wei Po reported. AOL will announce next week that it has partnered with an Irish company to boost its add-on premium services, Business Week said. Shanghai may become the world's busiest port this year, surpassing Rotterdam in the Netherlands, the Chinanews Web site said. Retailers Toys "R" Us, Fortunoff and Casual Corner are attracting private equity and venture capital firms as potential buyers, the NY Times reported. GlaxoSmithKline Plc's experimental vaccine was effective against a virus that causes cervical cancer in a study, the first to show the treatment may provide protection against the No. 2 cause of cancer death among women, Bloomberg reported. China's consumer prices rose last month at their slowest pace in six months as government lending curbs cooled demand and improved harvests helped damp gains in food prices, Bloomberg said. The yen rose for a second day in Asia after the Nikkei Financial Daily newspaper said the U.S. will tolerate a weaker dollar and that it may fall 15% against Japan's currency, Bloomberg reported.

Late-Night Trading
Asian Indices are unch. to +2.0% on average.
S&P 500 indicated +.08%.
NASDAQ 100 indicated +.32%

BOTTOM LINE: I expect U.S. equities to open higher in the morning on a better-than-expected Consumer Confidence report, gains in Asia and optimism over Dell's earnings release. The Portfolio is 125% net long heading into tomorrow.

Thursday Close

S&P 500 1,173.48 +.91
NASDAQ 2,061.27 +1.31%

Leading Sectors
Airlines +2.48%
Networking +2.47%
Semis +2.09%

Lagging Sectors
Homebuilders -.20%
Broadcasting -.23%
Oil Service -.44%

Other
Crude Oil 47.47 +.11%
Natural Gas 7.24 +.06%
Gold 434.70 -.16%
Base Metals 116.59 +.09%
U.S. Dollar 84.32 -.13%
10-Yr. T-note Yield 4.25% -.05%
VIX 13.04 -.31%
Put/Call .71 +1.43%
NYSE Arms .93 -13.89%

After-hours Movers
DAL +6.2% after pilots voted to approve a contract that provides $5 billion in concessions in the next five years to help the company avoid a bankruptcy filing.
MSO +4.8% after saying it would name former ABC Entertainment President Susan Lyne as its CEO.
BEAS +3.5% after beating 3Q estimates and raising 4Q outlook.

Recommendations
Goldman Sachs reiterated Outperform on KO.

After-hours News
U.S. stocks finished higher today on optimism over future economic growth. After the close, Verizon Communications may sell as much as $15 billion of real estate to help finance the construction of a fiber-optic network, a Lehman Brothers analyst said in a research note. China began an investigation into possible corruption in the nation's telecommunications industry, the Wall Street Journal reported. Prime Minister Manmohan Singh said India will reduce its forces in the disputed territory of Kashmir in the coming months, a move welcomed by Pakistan's government, Agence France-Presse reported. Merck CEO Gilmartin is confronting growing pressure to defend his handling of Vioxx, the biggest drug recall ever, after a top Senate fraud fighter demanded he appear at a hearing next week, Bloomberg reported. The United Nations asked for $1.7 billion in humanitarian air for impoverished people in Africa and Asia, including $303 million for the Palestinian territories, Bloomberg reported. Dell said third-quarter profit rose 25%, driven by demand for PCs and printers during the back-to-school season, Bloomberg said. Kohl's, a low-priced department store chain, said third-quarter earnings rose after sales had the biggest gain in five quarters, Bloomberg reported. Pixar Animation Studios said third-quarter profit rose 70% as the company sold more home-video copies of earlier films from its library, Bloomberg said. Micron Technology said a U.S. Justice Dept. investigation found evidence of price fixing by employees, Bloomberg reported.

BOTTOM LINE: The Portfolio finished substantially higher today, trading at its highs for the year, on strength in my security, internet, wireless and restaurant longs. I did not trade in the afternoon, thus leaving the Portfolio 125% net long. The S&P 500 is now trading at a new high for the year and an imminent assault by the Dow and Nasdaq on their highs appears likely. Considering the Veteran's Day holiday, the tone of the market was very healthy. A positive response to Dell's earnings after the close and a better-than-expected Consumer Confidence reading tomorrow should send U.S. stocks still higher.

Mid-day Update

S&P 500 1,169.77 +.59%
NASDAQ 2,047.56 +.64%

Leading Sectors
Networking +1.78%
Airlines +1.41%
Semis +1.32%

Lagging Sectors
Energy -.27%
Iron/Steel -.46%
Oil Service -.46%

Other
Crude Oil 47.63 -2.58%
Natural Gas 7.22 -5.90%
Gold 435.10 +.14%
Base Metals 116.59 +.09%
U.S. Dollar 84.27 -.19%
10-Yr. T-note Yield 4.25% -.05%
VIX 12.78 -2.29%
Put/Call .74 +5.71%
NYSE Arms .92 -14.81%

Market Movers
TASR +5.0% after saying it is selling a version of its stun gun that shoots 25 feet.
GY +22.1% after Steel Partners II LP, GenCorp's second-biggest institutional shareholder, said it offered to buy the aerospace components maker for about $697 million in cash.
TEVA +4.9% on Arafat's death.
PRVD +28.2% after beating 1Q estimates and raising 2Q/05 outlooks.
WFMI +5.4% after beating 4Q estimates and raising dividend.
MKTX +15.1% on continuing strong demand for IPO.
PLMO +6.0% on continuing optimism over sales of the Treo 650.
SINA +8.7% on very successful Chinese launch of Linage II, an online 3D RPG game.
ROV +10.9% after beating 4Q estimates and raising 05 forecast.
ALDN +10.6% after saying that live demonstrations of its eSafe solution will be featured during the Crossbeam System's "Securing America Tour 2005."
MDCO -12.9% after lowering 05 guidance.
CTRP -6.7% after beating 3Q estimates, slightly lowering 4Q forecast and WR Hambrecht upgrade to Buy, target $55.
WGII -5.8% after meeting 3Q estimates and lowering 04 outlook.
TIF -7.0% after missing 3Q estimates and lowering 4Q estimates.
CATT -8.0% after saying the company's CEO and a director plan to sell 950,000 shares.
VCI -7.6% after saying FTC conducting preliminary investigation into pricing policy.
AMED -7.7% on Legg Mason downgrade to Hold.
NTY -9.2% on Adams Harkness downgrade to Market Perform.

Economic Data
None of note.

Recommendations
-Goldman Sachs reiterated Outperform on GDT, MDT, BSX, CSCO, JNPR, CVD, DELL and KO.
-Citi SmithBarney said to Buy brokers, favorite is GS. Citi said to Buy CELG ahead of the annual ASH meeting Dec. 4-7, target $37.50. Citi said to Buy PXLW, target $13. Citi reiterated Buy on MSFT, target $33. Citi reiterated Buy on SANM, target $12. Citi reiterated Buy on SBUX, target $65. Citi reiterated Buy on INTC, target $25.50. Citi reiterated Sell on AMD, target $12. Citi reiterated Buy on PHM, target $86. Citi reiterated Buy on UNH, target $86. Citi reiterated Buy on MO, target $68. Citi reiterated Buy on FD, target $62.
-UBS rated NEW Buy, target $70.
-Merrill Lynch raised AMD to Buy, target $22.
-Bank of America rated AES Buy, target $15. BofA raised SPLS to Buy, target $35.
-Prudential raised GG to Overweight, target $18.
-Morgan Stanley raised KOF to Overweight, target $25. Morgan rated SWK Underweight.
-CSFB raised CNP to Outperform, target $12.

Mid-day News
U.S. stocks are higher mid-day on optimism over falling energy prices, short-covering and economic growth. Symantec CEO Thompson said the largest maker of computer security software detects about 100 new viruses in its labs every week, the Wall Street Journal reported. Canadian Health Minister Dosanjh said he may cut drug sales by companies over the Internet to U.S. buyers to "ensure the safety of the Canadian drug supply," the Globe and Mail reported. U.S. Steel Corp. will raise its book prices on tin mill products by 8 percent and boost its surcharge by $85 a ton to $155 a ton on Jan. 2 to cover rising freight costs, American Metal Market reported. Service Employees Intl. Union President Stern threatened to withdraw his organization from the AFL-CIO if proposals for union consolidation and returning dues aren't adopted, the LA Times reported. SAC Capital Advisors LLC is betting on teen retail with its recent investment in money-losing Wet Seal, the LA Times reported. Nintendo has received 2 million advance orders in Japan for its Nintendo DS portable video game system, more than double the company's expected amount, Nikkei English News reported. Coca-Cola lowered its earnings and sales goals for the foreseeable future because of slumping soft-drink sales in the U.S. and increased competition from PepsiCo, Bloomberg said. Blockbuster said it wants to buy Hollywood Entertainment for about $1 billion, Bloomberg reported. Crude oil is falling for the third session in four on speculation that U.S. inventories are sufficient to meet demand from refineries making heating oil for winter, Bloomberg said. OAO Yukos Oil is unlikely to survive government demands for more than $14 billion in back taxes, said an economic adviser to Russian President Putin.

Bottom Line: The Portfolio is higher mid-day on strength in my security, restaurant and wireless longs. I added a few new longs this morning in various sectors, bringing the Portfolio's market exposure to 125% net long. One of my new longs is GS and I am using a $97 stop-loss on this position. The tone of the market is pretty good today and improving as volume is increasing and the advance/decline line is at its highs for the day. However, measures of investor anxiety are falling near levels normally associated with short-term tops. I expect U.S. stocks to rise modestly into the close on short-covering ahead of tomorrow's economic data.

Thursday Watch

Earnings of Note
Company/Estimate
A/.31
AEOS/.77
BEAS/.08
DELL/.33
ISLE/.02
KSS/.42
PIXR/.24
TIF/.19
TGT/.38
URBN/.30

Splits
None of note.

Economic Data
None of note.

Recommendations
Goldman Sachs reiterated Attractive View of Lodging sector.

Late-Night News
Asian indices are mixed as strength in China is offset by weakness in Japan. China isn't likely to revalue the yuan in the short-term because the country's trade is relatively balanced this year, the official Xinhua news agency reported. China's jet fighters approached Taiwan President Chen Shui-bian's plane on Sept. 27 on his way to the Penghu island, delaying the trip by 15 minutes, the United Daily News said. International Paper of the U.S. teamed up with Beijing Sanyuan Foods to expand sales of pasteurized milk in China's capital, the China Daily reported. News Corp.'s board could meet next week to approve its proposed shareholder rights plan and thwart a potential takeover from John Malone's Liberty Media, the Financial Times reported. Singapore's trade with the U.S. rose 10% between January and July following a free trade agreement signed between the two countries, the Straits Times reported. TJX Cos. and PC Connection are among Internet retailers that are switching to a streamlined checkout process to boost sales, the Wall Street Journal reported. Oracle said PeopleSoft plans to reject its $8.8 billion takeover bid, Bloomberg reported. UPS, American Airlines and other air-cargo carriers would have to expand background checks and screening under a U.S. plan that would cost the companies an estimated $75.8 million a year, Bloomberg said. The U.S. government lowered the terrorism alert level for financial sites in NY City, Washington and northern New Jersey, because those buildings are now "hardened," or sufficiently protected, Bloomberg said. BearingPoint said Chairman and CEO Blazer resigned, effective today, Bloomberg reported. President Bush named White House counsel Alberto Gonzales to be U.S. attorney general and help lead the war on terrorism. Gonzales would be the first Hispanic to serve as the nation's top law enforcement official, Bloomberg said. Australia's economy added twice as many jobs in October as economists expected, pushing the unemployment rate to 5.3%, the lowest since 1978, as increased profits prompted companies to hire workers to meet rising demand, Bloomberg reported. Jones Apparel Group is near an agreement to buy Barneys New York, the NY Times reported. Palestinian leader Yasser Arafat has died in a military hospital in Paris at age 75, Fox News reported. China's stock indices gained for a third day after the China Securities Journal reported the country may allow banks to set up fund management units this year. Microsoft's new search engine, designed to grab market share from Google, will include a "near me" button that helps users find sites for a given location and a feature that answers questions such as "What is the capital of Turkey?", Bloomberg reported.

Late-Night Trading
Asian Indices are -.75% to +.75% on average.
S&P 500 indicated -.09%.
NASDAQ 100 indicated -.07%

BOTTOM LINE: I expect U.S. equities to open mixed in the morning as the major indices continue to consolidate recent gains. A follow-through move higher in energy prices and apprehension over Dell's earnings report could send shares modestly lower by day's end. The Portfolio is 100% net long heading into tomorrow.

Mid-day Update

S&P 500 1,164.54 -.03%
NASDAQ 2,040.51 +.06%

Leading Sectors
HMOs +3.22%
Iron/Steel +1.40%
Homebuilders +1.36%

Lagging Sectors
Networking -.39%
Retail -.50%
Semis -.83%

Other
Crude Oil 48.10 -2.02%
Natural Gas 7.50 -1.32%
Gold 436.20 +.62%
Base Metals 116.76 -.49%
U.S. Dollar 84.12 +.04%
10-Yr. T-note Yield 4.20% -.33%
VIX 13.49 -2.25%
Put/Call .71 +9.23%
NYSE Arms .95 +25.00%

Market Movers

Economic Data
Wholesale Inventories for September rose .5% versus estimates of a .7% increase and a 1.1% gain in August.

Recommendations

Mid-day News

Bottom Line: The Portfolio is modestly lower mid-day on weakness in my internet and security longs. I exited a few longs as they hit stop-losses this morning and added to several existing technology longs, thus leaving the Portfolio 100% net long. I added to my BRCM long and I am using a $26.5 stop-loss on the entire position. Overall, the tone of the market is pretty good today as the major indices continue a healthy consolidation. I expect U.S. stocks to move modestly higher into the close on short-covering, optimism over improving economic growth and lower energy prices.