Indices
Dow - 41.46  I   Nasdaq - 23.05  I  S&P 500 - 5.00 

Market Wrap
(Briefing):

From start to finish, Wednesday's stock market languished in negative territory. Despite several recovery attempts, the indices were unable to survive the effects of disappointing Q4 reports - and Q1 guidance - from tech titans Intel (INTC 22.54 -2.98) and Yahoo (YHOO 35.19 -4.92). A 3% drop in Japan's Nikkei exacerbated the early bearish sentiment that pervaded Wednesday's session, and a pullback in crude catalyzed a sharp, market-dragging drop in the Energy sector.

Leadership failed to emerge, and seven of the ten economic sectors levied losses. Twelve percent declines in both Intel and Yahoo shoved the Tech sector nearly 2% lower in the early going and fostered the Nasdaq's underperformance. With respect to their reports, the former checked in below Wall Street's profit and revenue expectations and simultaneously issued downside revenue guidance for the current quarter. Yahoo also fell short of analysts' estimates, and its in-line outlook proved a disappointment. While those reports will not determine the outcome of the current earnings season, the disappointing results and accompanying outlooks feed concerns over the earnings growth rate deceleration that will likely occur during 2006.

IBM (IBM 83.83 +0.83) offered some countering support following its better than expected earnings, gross margin, and bookings results. Optimism ahead of Intel rival Advanced Micro's (AMD 34.34 +1.48) report helped send semiconductors back toward the unchanged mark. Just when the Tech sector started to improve, though, an 0.8% reversal in the price of crude futures incited aggressive selling across the Energy sector. Commodities in general experienced consolidation: Gold futures lost 1.8%. Respective declines of 3.4% in diversified metals and 2.8% in steel left the Materials sector 1.1% lower. The crude action did benefit one area of the market, though. Underpinning the effect of Southwest Airlines' (LUV 16.77 +0.90) solid earnings report upon the airlines industry, lower oil prices helped send the Dow Jones Transportation Average 1.0% higher.

The influential Financial sector lent muscle to the challenges posed by Energy and Tech. With earnings season in focus, some uninspiring reports from banks weighed heavily. In particular, J.P. Morgan's (JPM 39.28 -0.43) light revenues bogged down the sector as well as the Dow; Northern Trust's (NTRS 51.14 -1.40) lower than expected earnings contributed to weakness in the space. With the narrowing interest rate spread drawing increased attention, Wednesday's yield curve, which vacillated between flat and slightly inverted, served as a further overhang. Separately, Charles Schwab's (SCHW 14.68 -0.30) disappointing results and some nervousness ahead of Merrill Lynch's (MER 69.50 -0.64) report left brokers as an additional sore spot.

On the economic front, this morning's CPI report garnered the most attention. With the 0.2% rise in December's core rate expected, there was little impact on either the stock or bond markets. Further, the up-tick is essentially ambiguous in terms of its implication on the Fed's tightening proclivities. In one sense, the increase signifies a firming trend because December marked the third consecutive 0.2% rise following five straight 0.1% increases. That increase is not substantial enough, though, to cause alarm and is in-line with 2005's year-over-year gain. The market also received November net foreign purchases data (which checked in at $89.1 billion) and the Fed's Beige Book, but both went largely overlooked by equity and Treasury traders alike.

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

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Today's Picks - January 19, 2006

1.   KOMG - KOMAG INC

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-19-06		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 42.80

2.   MDT - MEDTRONIC

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-19-06		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 59.78

3.   NUE - NUCOR CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-19-06		Short	Below 15 low	Cover 1/2 once risk covered	Above HOD at time of setup
	* Please Note: If the stock gaps up at the open do not enter the trade unless it trades below 68.45

4.   LSTR - LANDSTAR SYS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-19-06		Short	Below 15 low	Cover 1/2 once risk covered	Above HOD at time of setup
	* Please Note: If the stock gaps up at the open do not enter the trade unless it trades below 39.56

Previous Trades

SYNA - SYNAPTICS

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

EOG - EOG RES

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

CVX - CHEVRON CORP

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

TSG - SABRE HLDGS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-17-06		Short	Below 15 low	Cover 1/2 once risk covered	Above HOD at time of setup
	* did not setup

AU - ANGLOGOLD

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-17-06	01-18-06	Long	55.60	56.37	Closed Below 54.30	up to - 1.36 per share
	* 01-17-06 - stock gapped down. * 01-18-06 - stock gapped down, emergency stop hit below 54.30

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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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