Indices
Dow - 2.49  I   Nasdaq + 0.35  I  S&P 500 + 1.55 

Market Wrap
(Briefing):

Although they staged several recovery attempts, the equity market's major indices spent Friday's session locked within a narrow range that encircled the flat line. Reassuring data on the inflation front catalyzed some early optimism, but trade was altogether lackluster and reflective of investors' vigilant stance ahead of the looming Q4 earnings season, set to begin in full force following the long holiday weekend, as well as Wednesday's CPI report. The convictionless tone to trade is further evidenced by the fact that Friday was 2006's thinnest volume trading day.

A lower than expected 0.1% rise in December core PPI, which excludes volatile food and energy prices, fed the argument that the light at the end of the Fed's monetary tightening campaign is drawing nearer. While the data was positive news for the stock market, the Treasury market took much more of a bullish cue. A slightly softer than expected rise in retail sales did not much affect equity trade - as the holiday spending season has been deemed a reasonably good one, and as November's upside adjustment served as an offsetting factor - but the data underpinned the bullish bias within bonds. Although it's not directly correlated, the data relates to consumer spending, which accounts for over 70% of real GDP.

Treasuries' session-long strength was a plus for the rate-sensitive Utilities (+0.6%) and Financial (unchanged) sectors, but the latter faced considerable pressure from Dow component American International Group (AIG 70.05 -0.21) following reports that the insurer will pay $1 billion in accounting fraud settlements. General Motors (GM 20.37 -0.59) and Home Depot (HD 41.91 -0.64) accompanied AIG in dragging the blue chip average lower. Investors appeared uninspired by the automaker's latest turnaround plan commentary, and HD suffered selling as traders attempted to secure profits registered during its recent run. Despite those lagging heavyweights, the Discretionary sector (+0.1%) managed to climb back to gaining ground just before the bell. The publishing and printing, internet retail, and distribution industries were behind the rise.

Energy (+1.4%) led the session. While buying interest was directed toward that sector all day, crude's recovery to unchanged territory, or $63.92 per barrel, fostered an uptick that pulled the indices from their lows. After CSFB raised its price targets on PD, NEM, and Dow constituent AA, the Materials sector (+0.2%) received some added attention. The firm's upgrade of U.S. Steel (X 50.12 +0.58) lent some further support.

Healthcare (-0.2%), sitting center stage as the bidding war over Guidant (GDT 70.87 +0.47) continued, led the laggards. It was relative weakness in HMOs, however, that had been primarily responsible for the sector's decline. Following its top of the market performance in 2005, Goldman Sachs downgraded the industry to Cautious and spurred selling. Technology was also a significant sore spot. Downgraded Advanced Micro (AMD 34.13 -1.22) shares gave investors further reason to consolidate the semiconductor industry's 10% year-to-date gain; though it partially erased its intra-day loss, that group sunk the sector. News that IBM (IBM 83.17 -0.40) is under SEC investigation did not help, but upgraded HPQ shares helped limit Tech's, and the Dow's, decline.

While Q4 earnings are expected to reflect 13% aggregate growth, investors' attention is focused upon guidance that may reflect deceleration in the quarters ahead. To that end, Tyco's (TYC 27.12 -3.19) profit warning, which accompanied its confirmed break-up plan, dragged the Industrials sector 0.4% south.

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

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Today's Picks - January 17, 2006

1.   GG - GOLDCORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-17-06		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 not enter the trade unless it trades above 25.39

2.   AU - ANGLOGOLD

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-17-06		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 not enter the trade unless it trades above 55.54

3.   HPQ - HEWLETT PACKARD

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-17-06		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 not enter the trade unless it trades above 31.90

4.   NCR - NCR CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-17-06		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 not enter the trade unless it trades above 37.06

Previous Trades

CAT - CATERPILLAR

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

FD - FEDERATED DEPT STORES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-13-06		Long	73.56	Reached (74.04)	Below 74.00	up to + $1.40 per share (74.96)

OS - OREGON STL MLS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

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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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