Indices
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Market Wrap
(Briefing):

Another solid round of earnings reports catalyzed a pervasive bullish sentiment Friday. A lower than expected read on fourth quarter GDP growth did little to temper buying action, and appeared to take a back seat to the corporate front Friday.

Dow components Microsoft (MSFT 27.77 +1.27) and Proctor & Gamble (PG 59.75 +0.93) were the session's highlights. The former delivered strong profits and issued reassuring guidance that supported both the Tech sector (+1.0%) and the broader market. Surging Broadcom (BRCM 69.87 +11.15) shares, following its blowout Q4 results, lent significant upside and underpins our Overweight rating on the sector. On account of BRCM and KLA Tenecor (KLAC 54.17 +0.16), which also reported better than expected earnings, semiconductors soared.

Up 1.9%, the Energy sector led. Amid continued geopolitical tensions, (i.e., Iran and Nigeria) supply concerns drove the price of crude 2.3% higher. Along with that factor, further indications of oil companies' profitability drove buyers to the Energy sector. Last night, Haliburton (HAL 78.95 +3.80)delivered strong earnings, followed by Chevron (CVX 60.77 +0.55) this morning. Health Care (+1.2%) also contributed to the market's advance. The health care equipment industry ran following Styker's (SYK 50.55 +6.22) earnings news, as did healthcare suppliers after Milipor (MIL 71.34 +5.90) reported. Pfizer (PFE 25.99 +0.94) was the muscle behind the rise; the company announced approval for its Exubera drug, and was also featured in Barron's Friday. Boston Scientific (BSX 21.55 -1.60) was the sector's weakest link - following its receipt of an FDA warning letter and on account of disappointing earnings from Guidant (GDT 73.73 1.53).

Homebuilders fared well after this morning's housing data, and a subsequent rise in the home furnishing industry took the Consumer Discretionary sector to a 0.4% gain. New home sales rose a surprising 2.9% last month; declines are still expected in the months ahead, but the report nonetheless served as another bullish factor for equities Friday. Proctor & Gamble's fiscal Q2 results stirred buying across the Consumer Staples (+0.8%) sector, and surging steel stocks were behind a 0.9% rise in Materials. On a related note, Mittal Steel (MT 34.13 +1.83) made a $2.27 billion cash bid for Arcelor SA this morning.

With respect to the GDP data, the economy grew 1.1% during Q4; economists had expected a 2.8% increase. Stock investors shrugged off the report, though. A sharp drop in auto sales was largely responsible for the miss relative to the consensus estimate, and we expect to see a rebound in Q1. Also, the fact that the data is dated helped investors get over the surprise. Anecdotally, the "soft" Q4 GDP report could actually serve as a source of support as it feeds the argument the Fed, after its Jan. 31 FOMC meeting, will have reason to pause its tightening activities. Ultimately, the market's attention rested upon the solid earnings front.

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

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Today's Picks - January 30, 2006

1.   MON - MONSANTO

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-30-06		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 82.90

2.   ADBE - ADOBE SYS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-30-06		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 40.13

3.   HMT - HOST MARRIOTT

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-30-06		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 20.00

4.   PLL - PALL CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-30-06		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 29.12

Previous Trades

NSM - NATIONAL SEMICONDUCTOR

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

LEH - LEHMAN BROS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-27-06		Long	139.36	140.24	Below 138.36	up to + 79 cents per share (140.15)

OVTI - OMNIVISION TECHNOLOGIES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-27-06	01-27-06	Long	24.87	Reached (24.96)	Closed Below 24.87	up to + 71 cents per share (25.58)

MDG - MERIDIAN GOLD

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

VSEA - VARIAN SEMICONDUCTOR

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-26-06		Long	53.07	54.58	Below 50.14	up to + 8 cents per share (53.15)
	* The stock gapped down at the open forcing us to place an emergency stop just below the first 15min low of 50.14. This emergency stop held and the stock traded as high as 51.95.

GGB - GERDAU S A SPONSORED ADR

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-25-06		Long	19.82	Reached (19.92)	Below 21.02	up to + $2.30 per share (22.12)

ROH - ROHM & HAAS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-25-06		Long	50.71	Reached (51.15)	Below 50.50	up to + $1.43 per share (52.14)

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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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