Dow - 129.95    I  Nasdaq - 22.38    I  S&P 500 - 16.12    

Market Wrap
(Briefing):

Stocks tumbled Tuesday as a market increasingly sensitive to rising interest rates used the latest uptick in bond yields as an excuse to take some more money off the table. The S&P 500 paced the way lower among the majors as all 10 of its sectors closed sharply lower. Only four of the 147 S&P industry groups finished higher.

China's inflation rising at the fastest pace in more than two years exacerbated concerns about global tightening and was the initial spark behind the exodus out of Treasuries.

More unwinding of mortgage hedges and concerns that upcoming inflation data (e.g. PPI, CPI) may validate last week's sell-off in Treasuries also contributed to the rise in yields. In turn, that stirred concerns for equity investors that bonds will soon be seen as a more attractive alternative to stocks and that a continued rise in borrowing costs will slow down M&A activity.

The jump in bond yields undercut income-oriented sectors like Telecom (-1.8%) and Utilities (-1.5%) which were the day's biggest laggards. The rate-sensitive Financial sector (-1.1%), which held up rather well throughout most of the session, also got hit as the yield on the benchmark 10-year note closed at 5.24%, its highest level since May 2002.

Lehman Brothers (LEH 76.12 +0.44) kicked off the earnings season for Wall Street brokers on a positive note, handily topping expectations with record net revenues in all business segments. However, Tuesday's only notable earnings report was by no means enough to get overall buying efforts back on track.

The inability of the transportation stocks to take advantage of a nearly 1.0% decline in oil prices was also noteworthy. Railroads turning in one of the day's worst performances contributed to the 1.1% decline in the Industrials sector. The absence of leadership in Technology (-0.8%) also weighed on sentiment.

Semiconductors were in focus and actually turned positive intraday as Intel (INTC 22.20 +0.27) shareholders applauded a Bloomberg.com report that the Dow component plans to slash chip prices for its high-end processors by 50% as it works to regain market share lost to rival Advanced Micro Devices (AMD 13.80 -0.11).

An Intel spokesman wouldn't verify the accuracy of the article, citing company policy on pricing.

Separately, Texas Instruments (TXN 35.07 -0.72) merely narrowing its Q2 outlook last night failed to impress investors who are growing ever more skeptical about the Tech sector's potential to be a significant contributor this year to aggregate earnings growth on the S&P 500.

It is worth noting that the major averages briefly moved into positive territory a little after 2:00 ET when bonds showed some semblance of stabilizing after former Fed Chairman Greenspan said that he's not worried about China selling U.S. treasuries. However, the recovery in Treasuries was short lived and the higher rates climbed, the further stocks fell.

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

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Today's Picks - June 13, 2007

1.   IMMR - Immersion

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-13-07		Long	Above 15min 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 12.49

2.   SSRI - Silver Standard Resources

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-13-07		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 35.03

3.   CELG - Celgene Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-13-07		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 57.85

4.   MHP - McGraw-Hill Companies

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-13-07		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 68.08

Previous Trades

CROX - Crocs

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-12-07		Long	93.22	95.89	Below 90.37	up to + 36 cents per share (93.58)

SKS - Saks

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Long	Above 15min high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

PKX - POSCO

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-12-07	06-12-07	Short	120.64	Reached (119.73)	Closed Above 120.64	up to + $1.14 per share (119.50)