Stocks, Lies And Videotape

Stocks are lower, with the Dow trading at new lows
for 2005.  Concern about a slowing economy is being reflected in
weakness in Caterpillar
(
CAT |
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PowerRating), General Motors
(
GM |
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PowerRating) and
Dupont
(
DD |
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PowerRating). Several technical areas were broken, including the
transports, which broke below their 200-day moving average–last week it was the
truckers; today the rails are weak. The CRB broke its 50-day MA. The Nasdaq is
trading below its 200-day moving average. The DJIA has near-term support at
10300 and major support at 10200.

Jobless claims fell 10K to 330K. Business inventories rose +0.5%. Both were
in-line. The 4-week moving average of jobless claims rose for a sixth straight
week, now at 338,000.

Oil dipped briefly below $50. The last time oil fell below $50 was Feb 22;
last time closed below $50 was Feb 18.

Advanced Micro
Devices (AMD)
missed by 0.06 but beat on revenues. Gross margins were below expectations. The
company sees Q2 processor sales flat to down. AMD plans to spin off its flash
memory unit in an IPO. Piper Jaffray upped the stock to ‘outperform’ from
‘market perform.’

Apple (AAPL)
beat by 0.10 at 0.34, beat on revenues, beat iPod expectations and guided Q3
higher. Revenue, though, lagged some analysts expectations.

Kerr McGee
(
KMG |
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PowerRating) announced a $4 billion stock buyback.

Pepsi
(
PEP |
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PowerRating) beat estimates by 0.03 and guided higher.

An FDA panel recommended that Mentor’s
(
MNT |
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PowerRating) silicon breast
implants be approved.

United Health
(
UNH |
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PowerRating) beat by 0.03; quarterly profits rose 41%.

Southwest
(
LUV |
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News |
PowerRating) reported earnings that tripled; revenues rose 12%.
The company aggresively hedges its fuel costs, It was the 59th consecutive
quarterly profit for LUV.

Fifteen NYSE traders were indicted on charges they cheated investors.
If convicted, they face 10 to 20 years in prison. The NYSE said it will
videotape some traders to ensure no more cheating takes place. Video and audio
surveillance systems are expected to be put in place next year, focusing on the
most widely traded stocks.

This afternoon after the close, a judge is expected to rule on Eli Lilly’s
(
LLY |
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PowerRating) Zyprexa patent, which is being challenged by generic drugmakers.

Tomorrow, look for earnings from Citigroup [C|C], 1.02
estimate, and General Electric
(
GE |
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Chart |
News |
PowerRating), 0.37 estimate.

Strong sectors are:  Oil
(
$XOI.X |
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Chart |
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PowerRating) +1.04%  
Oil Services
(
$OSX.X |
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Chart |
News |
PowerRating) +0.99%  

Weak sectors are:   Healthcare Providers
(
$HMO.X |
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Chart |
News |
PowerRating)
-3.18%    Gold
(
$XAU.X$ |
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Chart |
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PowerRating) -1.96%  
Airlines
(
$XAL.X |
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Chart |
News |
PowerRating) -1.92%    

Stocks in the News

JDA Software
(
JDAS |
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PowerRating) cut its Q1 sales outlook.

Storage Tech
(
STK |
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Chart |
News |
PowerRating) warned of weaker-than-expected earnings.

Unisys
(
UIS |
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Chart |
News |
PowerRating) reported a loss of (0.13).

Infosys
(
INY |
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Chart |
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PowerRating) guided lower. The company said software sales fell
30%.

JP Morgan cut its rating on Best Buy
(
BBY |
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PowerRating).

UBS cut Northwest and Delta
(
DAL |
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PowerRating) to reduce from neutral.