Tuesday, June 29, 2004

Mid-day Update

S&P 500 1,136.38 +.27%
NASDAQ 2,031.00 +.55%

Leading Sectors
Broadband +2.0%
Iron/Steel +1.75%
Disk Drives +1.74%

Lagging Sectors
Homebuilders -.51%
Utilities -.69%
Retail -2.17%

Crude Oil 36.01 -.63%
Natural Gas 6.12 -1.14%
Gold 392.60 -2.14%
Base Metals 108.90 -.47%
U.S. Dollar 89.23 +.56%
10-Yr. T-note Yield 4.70% -.63%
VIX 15.63 -2.74%
Put/Call .92 +53.33%
NYSE Arms .82 -25.45%

Market Movers
WM -7.07% after lowering 04 earnings forecast substantially on rising mortgage rates.
TGT -4.2% after saying June sales will be "well below" its estimates.
QCOM +4.2% on technical break-out.
AIRT +16.99% after reporting strong 4Q earnings reports.
TZOO +15.0% after saying that its recently launched Newsflash e-mail alert service has proven to be a resounding success with travel providers.
JEC -13.6% after warning of lower-than-expected third-quarter and full-year profits.

Economic Data
Consumer Confidence for June came in at 101.9 versus estimates of 95.0 and a reading of 93.1 in May.

AJG cut to Underweight at JP Morgan. AHC raised to Buy at Deutsche Bank, target $90. PWAV rated Underperform at CSFB, target $7.50. WFII rated Outperform at CSFB, target $11. ATI raised to Sector Outperform at CIBC, target $22. Nile rated Outperform at Thomas Weisel. Goldman Sachs reiterated Outperform on MER, ACS, IP, CAN, AMT, IGT, PG and WFC. Goldman downgraded WM to Underperform. Goldman reiterated Underperform on F. Goldman reiterated Outperform on AV, saying it should be $18 now after NT news. Citi SmithBarney said it is cautious on AAPL near-term, would be buyers under $30.

Mid-day News
U.S. stocks are higher mid-day on a strong consumer sentiment report, declining interest rates and falling oil prices. Consumer confidence in the U.S. economy surged in June to the highest level in 2 years, spurred by the addition of 1.2 million new jobs this year, rising incomes and falling gasoline prices, Bloomberg reported. Microsoft will offer a streamlined version of its database and developer tools in a bid to attract nonprofessional software developers, the NY Times reported. Repairing botched cosmetic dentistry is a $10 billion industry in the U.S. the Wall Street Journal reported. New York City education officials said they removed 45 school principals for poor performance during the past academic year, the NY Times reported. Frontier Air and Northwest Air are ending intrusions into each other's flight routes, the Rocky Mountain News reported. Democratic Governor McGreevey yesterday signed into law a bill that imposes a 41% tax increase on income exceeding $500,000, affecting about 35,000 residents, the Star-Ledger reported. California Governor Schwarzenegger is expected to announce a contract agreement with the prison guards' union that would save the state $100 million during the next 2 years, the San Jose Mercury News reported. Bonds of Tyson Foods and other U.S. beef processors are weakening after the U.S. said yesterday a mad-cow screening test was positive and may indicate the second case since December, Bloomberg said. Crude oil futures tumbles to a nine-week low in London on indications supplies from OPEC are growing as Iraq takes control of its oil, easing concern pipelines there will be attacked, Bloomberg reported. Iraq's new government said it will get legal custody of Saddam Hussein tomorrow, Bloomberg said. Nortel said Flextronics agreed to buy its factories in Canada and Brazil for about $675 million to $725 million in cash, Bloomberg reported. The U.S. Supreme Court suspended enforcement of a federal criminal law that would bar commercial Web sites from making pornography available to children, Bloomberg reported. Siebel Systems faces a lawsuit by the SEC who says executives violated Red FD, Bloomberg reported.

BOTTOM LINE: The Portfolio is having a good day today as my internet and telecom equipment longs are rising substantially. I added a few new gaming, semi equipment, manufacturing and machinery longs this morning, leaving the Portfolio with 125% net long market exposure. One of my new longs is FLEX and I am using a stop-loss of $15.25 on the position. It is good to see that the very good news on the U.S. economy is finally starting to gain recognition with consumers, notwithstanding the media's intense focus on negativity. As well, it is positive that the Put/Call ratio is rising substantially today ahead of tomorrow's rate-hike. I expect U.S. stocks to rise modestly into the close on short-covering, falling interest rates and quarter-end repositioning.

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