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Market Wrap
(Briefing):

Encouraging economic data eased inflation worries while an upgrade on the chip sector, strong industry leadership, lower oil prices and a benign interest-rate environment kept a bullish bias intact as the indices closed near their highs of the session... While the Feb ISM Index unexpectedly fell to 55.3 (consensus 57.0), checking in at its lowest level since Sept. 2003, the report still indicated healthy economic expansion as a deceleration in price increases mitigated inflation fears... Jan construction spending increased a better than expected 0.7% (consensus +0.5%) as private investment rose 0.6%, public spending rose 0.8% and the Dec figure was revised to a stronger 1.2% gain (from 1.1%)... Meanwhile, anticipation of new fund inflows on the first trading day of the month lifted the underlying sentiment early on as positive analyst comments spurred broad-based buying interest... Semiconductor (+2.3%) was the biggest standout after JP Morgan raised its rating on the chip sector to Bullish from Neutral, due to improving gross margins, utilization rates and EPS estimates, and upgraded Intel (INTC 24.64 +0.65) to Overweight... A Merrill Lynch upgrade on Johnson & Johnson (JNJ 66.59 +0.99), due to an improving FY05 EPS outlook, helped health care (+0.9%) attract buyers while a 4.8% surge in airline, after Continental Airlines (CAL 12.20 +1.49) reached a tentative union settlement, lifted transportation (+0.9%)... Financial got a boost amid reports JP Morgan (JPM 37.07 +0.52) will spin off of its private equity unit while upgrades on Federated Dept. Stores (FD 60.84 +4.39) from Deutsche Bank and Bear Stearns, due to synergies related to its confirmed $11.0 bln merger with May Dept. Stores (MAY 36.08 +1.57), helped retail (+0.9%) post solid gains... Also showing strength were telecom services, homebuilding and consumer staples... Energy (-2.1%), which gained 19.0% in February alone as seven of the ten best performing S&P stocks were oil-related companies, succumbed to widespread profit taking and lower oil prices... Crude oil futures ($51.68/bbl -$0.07) fell after OPEC said its does not plan to cut production before its upcoming meeting (Mar 16)... Steel (-3.4%), amid an 18% decline in prices since peaking in Sept., and gold (-2.1%), which became less attractive ($433.90/oz. -0.9%) as an inflation hedge, also sold off, minimizing gains in materials (+0.1%)... Auto makers were also a focal point following mixed Feb auto sales figures... General Motors (GM 35.95 +0.30) posted a larger than expected decline of 12.0% (consensus -4.9%) while Ford Motor (F 12.63 -0.02) reported a US sales decline of 3.0% (consensus -6.2%)... Treasuries, which inched higher after ISM Index data showed slower than expected expansion, closed relatively unchanged, as the benchmark 10-year note finished up just 1 tick to yield 4.37%...NYSE Adv/Dec 2112/1197...NASDAQ Adv/Dec 1847/1283.

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

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Today's Picks - March 02, 2005

1.   FPL - F P L Group

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-02		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 80.52

2.   SGTL - Sigmatel Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-02		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 45.23

3.   FSL - Freescale Semiconductor

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-02		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 19.67

4.   HSIC - Henry Schein

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-02		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 37.97

5.   MSO - Martha Stewart

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-02		Short	Below 15 min 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 33.61

6.   FRO - Frontline

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-02		Short	Below 15 min 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 53.47

7.   XTO - Xto Energy

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-02		Short	Below 15 min 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 43.17

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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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