Tuesday, June 08, 2004

Mid-day Update

S&P 500 1,138.89 -.13%
NASDAQ 2,015.54 -.25%

Leading Sectors
Broadcasting +1.15%
Restaurants +1.02%
Oil Service +.47%

Lagging Sectors
Biotech -1.16%
Gaming -1.28%
Homebuilders -3.02%

Crude Oil 38.35 -.80%
Natural Gas 6.19 -.19%
Gold 392.30 -.56%
Base Metals 107.10 -.94%
U.S. Dollar 88.52 +.33%
10-Yr. T-note Yield 4.78% +.46%
VIX 15.33 -.39%
Put/Call .86 +6.17%
NYSE Arms .94 +176.47%

Market Movers
L -17.0% after LMI spin-off.
AGI -22.5% after cutting 04/05 forecast and JP Morgan downgrade to Underperform.
TTWO -5.22% after missing 2Q estimates substantially and cutting 3Q and 04 forecast.
CMTL +12.51% after beating 3Q earnings estimate substantially.
S +8.64% on optimism over same-store-sales.
OLG +6.98% after beating 4Q estimates substantially.
BRL -8.7% on worries over increasing competition.
DHM -15.8% after lowering 2Q estimates due to rising interest rates.

Economic Data
None of note.

Goldman Sachs reiterated Outperform on GE, SAP, STZ, VZ and KRI. Goldman would Buy TRB on weakness, target $55. Goldman reiterated Underperform on CL and NSM. Goldman thinks problems at AGI are company-specific. Citi SmithBarney said field checks indicate networking sales up 8-10% quarter-over-quarter in June, resulting in most companies meeting or beating expectations, favorite is CSCO. Citi reiterated Buy on WMT, target $64. Citi reiterated Sell on BMY, target $25. Citi reiterated Buy on TGT, target $50.00. Citi reiterated Buy on LLY, target $82.00. Citi reiterated Buy on MAT, target $22.00. GDT raised to Buy at Deutsche Bank, target $62. ARTC rated Buy at UBS, target $30. ANSI rated Reduce at UBS, target $29. NIHD cut to Reduce at UBS. AA raised to Outperform at Bear Stearns. IACI rated Buy at Bank of America, target $43.

Mid-day News
U.S. stocks are mixed mid-day as comments from Alan Greenspan with respect to increasing inflation are offsetting falling energy prices. Harrah's Entertainment won't bid for Mandalay Resort Group, CEO Loveman told CNBC. The Massachusetts Bay Transit Authority will become the first transit agency in the U.S. to begin randomly searching commuter rail and subway passengers' bags to combat potential terrorism, the Boston Globe reported. Afghanistan President Karzai said bringing stability to the nation as it transitions to democracy in his first priority, the Washington Post reported. Russian may have its credit rating raised to investment grade this year as higher oil revenue boost the government's ability to pay its debt, S&P said. Nokia's market share fell in the first quarter to the lowest in about five years as clients picked clamshell and camera phones made by Motorola and Samsung, researcher Gartner reported. Airbus won an order from JetBlue for 30 additional planes worth $1.8 billion, Bloomberg reported. The dollar is rising against the euro after Fed Chairman Greenspan said the central bank is "prepared to do what is required" to stem inflationary pressure in the U.S. economy. The chairman of Israel's National Religious Party said he intends to resign as housing minister, a move that may lead to the breakup of Prime Minister Sharon's ruling coalition, Haaretz reported. Ford may need to step up investment in China after GM announced plans to spend $3 billion and more than double production, Bloomberg reported. Europe Union regulators reopened an investigation into Intel following complaints by AMD that the company was breaking antitrust rules, Bloomberg said. Microsoft appealed an European Commission ruling that orders it to change its business practices, Bloomberg reported. The G-8 are close to accord designed to make it harder for terrorist groups and rogue nations to gain nuclear weapons, Bloomberg reported. Crude oil futures are falling for the fourth time in five sessions on expectations that an Energy Department report tomorrow will show rising U.S. inventories.

BOTTOM LINE: The Portfolio is down modestly today as my internet and gaming longs positions are hurting performance. I took profits in a telecom equipment long this morning and added TASR long, thus leaving the Portfolio with 125% net long market exposure. I am using a $26.50 stop-loss on the position. I expect U.S. stocks to rally modestly later this afternoon on short-covering ahead of tomorrow's crude oil inventory numbers. Put/Call and ARMs readings are at relatively high levels as well. Finally, it is a psychological positive that the NASDAQ is holding recent gains above the 2000 level.

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