Dow + 85.76    I  Nasdaq + 27.30    I  S&P 500 + 9.94    

Market Wrap
(Briefing):

Stocks put together another strong performance Friday as investors rallied around a tame inflation read that pushed interest rates lower, a resurgence in M&A activity, and an upgrade of a Dow component.

Another day of broad-based buying enabled the major averages to string together their best three-day performance since the third week of March. Since Tuesday's sell-off, the Dow, S&P 500 and Nasdaq posted respective gains of up 2.6%, 2.7%, and 3.0%. From March 19 through 21, they surged 2.8%, 3.5%, and 3.5% respectively.

With the Fed still exhibiting a hawkish stance on inflation, and given the monthly CPI report's influence on monetary policy, core CPI rising just 0.1% in May was the springboard behind Friday's strong follow-through efforts. The year/year rate fell to 2.2%, which is now at levels the Fed should be comfortable with heading into the next FOMC meeting in two weeks.

With stocks moving in lockstep with the action in Treasuries of late, bond traders also embracing further evidence of easing inflationary pressures pushed yields lower across the curve and gave stock market the bulls the green light to keep buying.

Regarding the M&A activity, Penn National Gaming (PENN 62.12 +10.98) confirmed it will be taken private for $8.6 bln (including debt). Speculation that Nymex (NMX 141.98 +2.18) is exploring a possible sale, and reports late in the day that Financial Times parent Pearson plc (PSO 17.21 +0.21) is seeking partners for a possible bid for Dow Jones (DJ 59.01 +1.11), provided further evidence that a recent surge in borrowing costs has not derailed this year's record pace of deal making.

Of the nine sectors posting gains, Utilities (+1.6%) led the charge; but that wasn't surprising since the rate-sensitive sector has increasingly become attractive to income-oriented investors alongside the recent reversal in bond yields. The 10-year yield fell five basis points to 5.16%, well off its overnight high earlier in the week of 5.32%.

Energy turned in the next best performance as oil prices eclipsed $68/bbl for the first time since late March. Materials, which got a boost after Monsanto (MON 64.90 +1.59) raised its full-year profit outlook, was the only other sector up at least 1.0%.

Strong leadership from Technology (+0.9%) also helped lift the S&P 500 intraday to within one point of its historic closing high. The heavily weighted sector got a big lift after Goldman Sachs upgraded Intel (INTC 24.24 +1.01) to Buy from Neutral. Intel surged 4.4% to a new 52-week high and led the way among the 25 Dow components finishing in positive territory.

Friday's volume was heavier than usual, which was a function of the increased trading that took place with the expiration of stock options, index options, index futures and single stock futures.

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

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Today's Picks - June 18, 2007

1.   MA - MasterCard

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-18-07		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 158.24

2.   WRNC - Warnaco Group

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-18-07		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 37.00

3.   NVDA - Nvidia

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-18-07		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 39.85

Previous Trades

CBEY - Cbeyond

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

MRO - Marathon Oil

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-15-07		Long	131.27	132.99	Below 129.41	up to + $1.39 per share (132.66)

SPWR - SunPower

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-15-07		Long	57.77	58.80	Below 56.60	up to + 33 cents per share (58.10)

GS - Goldman Sachs Group

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Short	Below 15 low	Cover 1/2 once risk covered	Above HOD at time of setup
	* did not setup

BBBB - Blackboard

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
		Short	Below 15 low	Cover 1/2 once risk covered	Above HOD at time of setup
	* did not setup

OMTR - Omniture Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-14-07		Long	19.58	Reached (19.85)	Below 19.61	up to + 61 cents per share (20.19)

AOI - Alliance One

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-14-07	06-15-07	Long	11.16	Reached (11.34)	Closed Below 11.16	up to + $1.03 per share (12.19)

IMMR - Immersion

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
06-13-07	06-15-07	Long	12.91	13.18	Closed Below 12.91	up to + 34 cents per share (13.25)