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Market Wrap
(Briefing):

Bomb blasts rocked London's financial district, hammering markets worldwide, but U.S. markets showed their toughness in the face of tragedy, as stocks rebounded across the board and eight out of ten economic sectors recovered to finish higher...Stocks opened noticeably lower after investors got wind of several explosions that crippled London's transit system, claiming at least 33 lives... Within minutes, investors rotated out of stocks in favor of safer investments like bonds and gold, sparking a rally in the Treasury market that knocked benchmark yields on the 10-year note as low as 3.93% and lifted gold (+1.3%) to around $430/ounce, before lack of follow-through buying interest actually closed the 10-year note up just 7 ticks to yield 4.03% and gold lower at $424.20/ounce (-0.1%), as stability returned to the markets...Reflecting on the market's resilience following the last major terrorist attack - bomb blasts that killed 191 people on commuter trains in Madrid, Spain (March 11, 2004) - investors were reminded that, while tragic no matter where terrorism strikes, such troubles occurring overseas typically have less of a lasting impact on financial markets than those taking place on U.S. soil...Meanwhile, investors also had to contend with volatile oil prices... Prior to the explosions crude oil futures had touched another new record high ($62.10/bbl), amid concern of further supply disruptions in the Gulf since Dennis was upgraded to a hurricane; but immediately following the blasts, crude oil futures fell more than 7.5% to $57.20/bbl, before closing at $60.73/bbl (-$0.55) following a larger than expected build in distillates of 4.1 mln barrels (consensus +1.5 mln)... Crude supplies fell 3.61 mln barrels (consensus -1.63 mln) while gasoline stockpiles fell 974K barrels, which economists expected to be unchanged... The demand side of the equation also weighed on the commodity, as many feared the explosions, which targeted London's subway and bus system, might discourage travel... Despite consolidation in crude oil, however, the Energy sector paced the way higher... Expected to record aggregate EPS growth of about +27% from its 29 S&P components, energy stocks provided some timely support heading into earnings season... Consumer Discretionary, which in contrast is estimated to turn in the worst Q2 earnings performance (-4%) also traded higher... Providing the bulk of the sector's strength were gains throughout the retail group following June same-store sales growth of 5.3% (consensus +4.5%) - the best showing since May 2004... Better than expected June comps, due to warmer weather and a recent boost in consumer confidence, came from TGT, GPS, JCP, COST, KSS, LTD, JWN, AEOS and ANF while MAY, FD, DG and TJX have missed forecasts... Interest-rate sensitive areas like Financial, Utilities and Homebuilding also showed relative strength... Financial got a boost from Charles Schwab (SCH 12.68 +0.70), which surged as much as 13% earlier in the session amid renewed takeover talks (possibly by HSBC), while homebuilders climbed after Pulte Homes (PHM 88.43 +4.02) and MDC Holdings (MDC 85.28 +2.80) reported quarterly order increases of 26% and 14%, respectively... Technology found most of its strength from market leaders like IBM (+2.1%), YHOO (+1.5%) and AMAT (+1.4%), as hardware and semiconductor reversed course late in the day... Industrials also provided some leadership as investors pared losses in transportation (i.e. airline) while strength in biotech (i.e. AMGN, GILD) helped Health Care eke out a modest gain... Consumer Staples and Telecom Services, however, were the only two economic sectors that failed to fully recover... Separately, initial claims rose 7K to 319K (consensus 320K), checking in below 320K for the third straight week to leave a 4-week average of 321K - the lowest since early March; however, the data was overshadowed by Friday's more influential monthly jobs report...NYSE Adv/Dec 1753/1467...NASDAQ Adv/Dec 1527/1482.

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

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Today's Picks - July 08, 2005

1.   MUR - MURPHY OIL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-08		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 55.30

2.   INTU - INTUIT

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-08		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 46.78

3.   BZH - BEAZER HOMES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-08		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 60.11

4.   ANF - ABERCROMBIE & FITCH

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-08		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 74.10

5.   CTX - CENTEX CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-08		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 73.34

6.   GYI - GETTY IMAGES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-08		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 71.00

7.   KCI - KINETIC CONCEPTS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-08		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 57.05

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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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