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Brokerage firm upgrades have futures higher

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Stock futures have done an about-face after last night's plethora of earnings that had stock futures looking lower. Today's a new day though and futures have turned higher with S&P futures trading up 3.5 points at 1,226.50. NASDAQ futures are higher by 21.5 points at 1,409 and Dow futures are gaining 50 points at 10,225.

Fair value for the S&P 500 today is $1.40. That price will not change during the day. HL Camp & Company has their computers set for program buying at $2.52 and set for selling at $0.34. Fair value for the NASDAQ-100 today is $5.88

Microsoft upgrades

After last night's confusion regarding Microsoft's (NASDAQ:MSFT) $56.37 earnings report, the stock is getting a lift in today's pre-market action at $57.00 after Merrill Lynch and First Albany upgraded the stock.

Merrill told clients "we believe money flows will favor MSFT in sector recovery, as other large caps struggle" and set a $65 price target on the stock, the top of the stock's recent trading range. Merrill did cut MSFT's fiscal 2002 earnings per share estimate to $1.84 from $1.88 and lowered fiscal 2003 to $1.92 from $1.95 amid Xbox weakness.

I (Jeff Bailey) would caution any investor/trader from reading too much into Merrill's call based on "stock is a good investment because money will rotate to it." I was looking at past broker upgrades on MSFT and saw where Pacific Crest downgraded MSFT back on January 18th (good call by the way at/near $67), but then made a bullish comment on MSFT on March 4th at/near $62 with the thought that MSFT could benefit from rotation out of Oracle (ORCL). Shares of MSFT then proceeded to fall to the recent mid- $50 levels.

Xilinx upgrades

Shares of Xilinx (NASDAQ:XLNX) $42.94 are bid higher in pre- market action at $43.50 after Morgan Stanley termed XLNX's 20% growth in sales over the December quarter "a blow-out quarter.... We expect a stronger economy, a resumption of sequential revenue growth for the semiconductor industry in the second quarter, and increasing margins to drive the average semiconductor stock higher," said Morgan's Mark Edelstone.

Jeff Bailey
Senior Market Technician
Option Investor

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