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Market Wrap
(Briefing):

Historic highs in oil, downside guidance from GM and mixed economic data fueled broad-based weakness that closed the indices substantially lower and nearly every sector in negative territory... Crude oil was the focal point well before the market even opened, as prices fell below $55/bbl after OPEC raised output quotas by 500K barrels a day... But the release of disappointing oil inventories data at 10:30 ET was all traders needed to erase early weakness, as the king of commodities began its climb and quickly crowned a new all-time high of $56.46/bbl (+$1.41)... The Energy Dept. reported a 2.6 mln barrel increase in crude oil inventories (consensus +2.0 mln), but sharper than expected declines in weekly gasoline inventories and distillates, which fell 2.9 mln barrels (consensus -1.0 mln) and decreased 1.9 mln barrels (consensus -1.5 mln), respectively, reversed previously muted inflation concerns following mixed economic data... But before investors could sift through the week's largest batch of economic reports, the market was rattled by a warning from General Motors (GM 29.03 -4.69)... The world's largest automaker slashed Q1 forecasts to a loss of $1.50, versus prior forecasts of breakeven or better, due to sluggish sales in North America... More notably, while the larger than expected downward revision amounted to GM's largest quarterly loss since 1992, a sense of nervousness regarding further deterioration of GM's already poor credit rating (a notch above junk status) swept through the minds of both equity and bond traders, underpinning a firmly bearish bias for stocks... That said, corporate bond investors flocked to safer, more stable debt instruments like Treasurys, sending the 10-year note up 15 ticks to yield a more tolerable 4.48%... But unlike most other days, when falling bond yields provided a level of buying support for stocks, the damage had already been done as buyers remained on the sidelines throughout the rest of the session... The benchmark 10-year note finished up 8 ticks, pulling back slightly on technical trade into the close, to yield 4.51%... Meanwhile, the current account deficit in Q4 widened to a record $187.9 bln (consensus -$183.0 bln), from an upwardly revised $165.9 bln in Q3, news that only added to the overall negative tone, as the dollar weakened against every major currency, in particular, the euro (1.3417) and the yen (104.18)... Also, Feb. industrial production reached record levels with a rise of 0.3%, which were slightly below forecasts of 0.4% but above an upwardly revised Jan gain of 0.1%... Feb. capacity utilization checked in at a respectable 79.4%, a bit above expectations of 79.2%, but held below the 80% inflection point typically linked to bottlenecks and rising price pressures... The other two pieces of economic data were Feb. housing starts, which hit a 21-year high with a stronger than expected 2.195 mln annual rate (consensus 2.030 mln), and Feb. building permits, which declined to a 2.074 mln annual rate and down from 2.132 mln a month earlier, but were relatively in line with forecasts of 2.070 mln... With regards to sector strength and weakness, the latter won outright as decliners outpaced advancers by a 2 to 1 margin... Pacing the way lower was Materials (-1.9%), dragged lower by weakness in Steel (-3.2%), Diversified Chemicals (-2.9%) and Paper (-2.3%)... Auto Manufacturers (-7.8%) and Auto Parts & Equipment (-2.5%) were also very weak following GM's disappointment while weakness in Brokerage (-1.1%), despite strong Q1 earnings from Bear Stearns (BSC 102.18 -3.85), weighed heavily on Financial (-0.8%)... Bear Stearns handily beat analysts' Q1 (Feb) forecasts with earnings of $2.64 per share but the results failed to meet increased expectations following a much larger upside in earnings from Lehman Brothers (LEH 93.73 -2.46) yesterday... Biotech was also weak after FDA officials and Biogen Idec (BIIB 37.22 -0.85) warned that Biogen's MS drug Avonex can cause severe liver injury, including liver failure... Other influential leaders to the downside were Telecom Services, despite Qwest's (Q 3.82 -0.04) sweetened $8.45 bln offer for MCI (MCIP 23.85 -0.18), Utility, Transportation, and Consumer Discretionary... The only notable sector gaining ground was Energy (+0.2%) due to historic highs in oil...NYSE Adv/Dec 916/2423. ..NASDAQ Adv/Dec 1056/2028.

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

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Today's Picks - March 17, 2005

1.   HCA - HCA Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-17		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 49.21

2.   JWN - Nordstrom

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-17		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 55.02

3.   MAR - Marriott

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-17		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 66.65

4.   ADM - Archer-Daniels-Midland

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-17		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 24.11

5.   PX - Praxair

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-17		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 46.89

6.   KLAC - KLA-Tencor

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-17		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 45.26

7.   JCP - JC Penney

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
03-17		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 46.80

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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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