Indices
Dow - 7.29  I   Nasdaq + 2.55  I  S&P 500 + 1.48 

Market Wrap
(Briefing):

Monday's market reflected investors' wait-and-see stance ahead of a busy week in terms of both earnings and economic news. The major indices spent the session in flat line vacillation mode, and trading volume was notably lower than last week's.

The Energy sector led the session. Ahead of Tuesday's OPEC meeting, that area of the market received added attention. According to the Associated Press, the cartel has ruled out any change in production at its meeting this week, but oil ministers from Venezuela and Saudi Arabia said Monday that it has a consensus to cut output in March. The price of crude futures ($68.40 per barrel) gained 1.1% Monday, and helped drive buyers to the sector. A record fourth quarter earnings report from Exxon Mobil (XOM 63.12 +1.83) was also behind the rise, and strong results from Smith International (SII 44.35 +1.62) added more momentum. Refiners fared particularly well ahead of reports from SUN and VLO due out this week.

Largely to the credit of the hardware industry, the Technology sector advanced 0.5%. After declining about 17% over the past two weeks, Apple (AAPL 75.17 +3.14) attracted bargain hunters and was the particular bright spot. Relative weakness in semiconductors, due to some profit taking, capped the sector's advance. Materials (+0.2%) also closed higher, and Industrials finished on the flat line.

While gains, outside of Energy's, remained contained, losses were similarly limited. Due to weakness in pharmaceuticals, following a disappointing earnings report from Schering-Plough (SGP 19.60 -0.48), Healthcare (-0.5%) levied the weightiest loss. The biotech industry was also a sore spot, and Boston Scientific's (BSX 20.80 -0.83) extended decline pressured the equipment group. Ahead of Tuesday's FOMC meeting and accompanying policy statement, the market's most rate-sensitive areas reflected traders' cautious sentiment. Banks kept the Financial sector (-0.2%) in the red, and wide-spread selling took Utilities (-0.6%) lower. Investors within the stock and bond markets alike fully expect a 25 basis point hike in the fed funds rate, but there is less certainty over the Fed's policy statement. The market expects just one more rate increase following Tuesday's, and will attempt to glean confirmation of such in the statement's wording. Our forecast calls for two more rate hikes over the course of the next two meetings, after which the tightening cycle will pause. With respect to financials, brokers helped limit the downside.

Some broad-based selling sent the Consumer Staples sector (-0.4%) south, but Wal-Mart (WMT 46.40 +0.56) shares offered support. This morning, the world's largest retailer announced a preliminary 4.7% gain in January same-store sales. That figure, which is at the high end of its forecast, follows its disappointing December same-store sales gain. The rise in January suggests there was an accelerator effect from gift card spending that is likely to show up in the same-store sales results from other retailers. After Wednesday's close, the industry will begin to announce its January data. An encouraging fiscal Q2 report from Sysco (SYY 32.48 +1.91) lent further upside within the Staples sector.

Along with upgraded Gap (GPS 18.07 0.69) shares, General Motors (GM 24.19 +0.39) was the Discretionary sector's (-0.2%) strongest crutch. Upon reports that Citigroup (C 46.83 -0.04) is working with Cerberus Capital in offering $11.5 billion for its GMAC business, the stock jumped. On a related note, Wachovia (WB 54.75 +0.35) is also reportedly interested in making a bid. Further to the M&A front, Arcelor rejected Mittal's (MT 35.69 +1.43) unsolicited $23 billion cash proposal, and Fairmont Hotels (FHR 44.24 +0.42) will be acquired by Kingdom Hotels and Colony Capital for $3.9 billion in cash.

The economic calendar featured two items. Personal income was up 0.4% (consensus 0.4%); personal spending rose 0.9% (consensus 0.8%). As the data generally matched expectations, and because the Q4 GDP figures have already been reported, the markets essentially overlooked the data. Investors remain focused upon Tuesday's FOMC and OPEC meetings and Friday's employment report.

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

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Today's Picks - January 30, 2006

1.   VLO - VALERO ENERGY

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-31-06		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 63.25

2.   GG - GOLDCORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-31-06		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 26.50

3.   GLG - GLAMIS GOLD

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-31-06		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 31.08

4.   NOV - NATIONAL OILWELL VARCO

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-31-06		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 77.11

Previous Trades

MON - MONSANTO

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-30-06		Long	84.12	Reached (85.02)	Below 84.06	up to + $1.79 per share (85.91)

ADBE - ADOBE SYS

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

HMT - HOST MARRIOTT

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-30-06		Long	19.97	Reached (20.07)	Below 19.97	up to + 10 cents per share (20.07)

PLL - PALL 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

LEH - LEHMAN BROS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
01-27-06	01-30-06	Long	139.36	Reached (140.24)	Closed Below 139.36	up to + $1.15 per share (140.51)

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 50.43
	* 01-27-06 - 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	01-30-06	Long	19.82	Reached (19.92)	Closed Below 21.02	up to + $2.30 per share (22.12)

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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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