Indices
Dow + 129.91  I   Nasdaq + 38.42  I  S&P 500 + 20.51 

Market Wrap
(Briefing):

A bullish interpretation of minutes from the FOMC's most recent meeting helped the market's major averages breach the trading range that had left them encircling the flat line for most of the year's first session. While a lower than expected manufacturing read extinguished early buying action, investors chose to focus upon the Fed's assertion that the number of rate rises "probably would not be large" and that inflation remains contained.

From 2:00 ET (the time at which the minutes were released) until the bell, buying was broad-based and took all ten of the economic sectors higher. Alongside a 3.1% surge in the price of crude, Energy (+4.5%) occupied the leadership seat all day. While its gain had not been sufficient in countering selling pressure in the early going, a 1.7% jump in the Financial sector and a 2.0% rise in Technology lent muscle to the broader market's advance. Banks had exerted a market-dragging decline intra-day, but clues from the Fed that the end to its current monetary tightening cycle is nearing helped the industry fully erase its loss and rise to a market-leading gain. The Treasury market similarly took a bullish cue, and the yield curve's slight steepening, following last week's inversion, further helped to underpin a sense of bullishness from which rate-sensitive pockets of the market benefited.

Despite crude's run, the Consumer Discretionary sector managed to post a 1.0% gain. Retail had presented a particular challenge, but similarly rose with the afternoon rally. In particular, General Motors (GM 18.94 -0.48) and Wal-Mart (WMT 46.22 -0.58) challenged that industry. Bank of America's target price cut took the former issue south, while the world's largest retailer's assertion that December same-store sales should rise 2.2% -- the low end of its previously-forecasted +2-4% range for the vital holiday period -- sent it to a two-month low. While WMT's decline also weighed heavily upon the Consumer Staples sector (+0.6%), broad-based buying and earnings-induced strength in Walgreen's (WAG 45.41 +1.15) helped it climb. Such wide-spread buying action helped even transportation issues, which had languished on account of the energy price action, and enabled the Industrials (+0.6%) sector to clear the flat line.

Surges across the Technology board can be largely credited with Tuesday's advance, and, particularly, with the Nasdaq's outperformance. Healthcare, which spent the session on positive turf, further contributed to the indices' stances. The Dow's pharmaceutical trio - Johnson & Johnson (JNJ 61.51 +1.41), Merck (MRK 32.75 +0.94), and Pfizer (PFE 23.72 +0.40) - demonstrated relative strength on the heels of JNJ's analyst upgrade. That industry teamed with particular strength in biotechs and healthcare distributors in driving the sector's solid 1.3% rise.

With respect to the December ISM Index, the four-month low reading of 54.2 (consensus 57.5) still reflects growth, but at a decelerated rate that dampened the early bullishness with which 2006 launched. However, the extent to which the Fed hikes interest rates remains this year's stock market's biggest concern; hope gleaned from the FOMC's minutes that the tightening end is near stole the afternoon spotlight and eclipsed the effect of suggested economic slowing...NYSE Adv/Dec 2529/833...NASDAQ Adv/Dec 1906/1209.

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Trade system guidelines (edited):
Only available to Newsletter Subscribers.

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Today's Picks - January 04, 2006

1.   RIG - TRANSOCEAN

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-04-06		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 73.30

2.   AAUK - ANGLO AMERN

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-04-06		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 36.40

3.   ABC - AMERISOURCEBERGEN

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-04-06		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 42.32

4.   FLS - FLOWSERVE

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-04-06		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* Please Note: If the stock gaps down at the open do not enter the trade unless it trades above 40.97

Previous Trades

MDR - MCDERMOTT INTL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-03-06		Long	46.05	Reached (46.88)	Below 46.25	up to + $2.26 per share (48.31)

SBUX - STARBUCKS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Short	Below 15 low	Cover 1/2 once risk covered	Above HOD at time of setup
	* did not setup.

EBAY - EBAY

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-03-06	01-03-06	Short	43.17	Reached (42.66)	Closed Above 43.17	up to + 67 cents per share (42.50)
	* 01-03-06 - Stock gapped up.

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EOD = End of day.
LOD = Low of day.
PDC = Previous Day's Close.
S/R = Support/Resistance.
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