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Market Wrap
(Briefing):

Strong follow-through buying efforts - fueled by falling oil prices, new M&A activity and increasing confidence that upcoming earnings reports may exceed expectations - extended Friday's rally and closed virtually every sector to the upside... The Dow ended the session above 10500 for the first time this month, the S&P inched back into positive territory for the year, the Nasdaq inked its fifth finish above 2100 in 2005 and the Russell 2000 hit another historic high... Crude oil futures ($58.92/bbl -$0.71) closed down (-1.2%) for the third consecutive session amid reports that Hurricane Dennis missed key oil rigs and platforms in the Gulf of Mexico... The news eased concerns of further supply disruptions and provided investors with some relief about high energy prices weighing on corporate profit margins, as the first full week of earnings began in earnest... Analysts are currently forecasting Q2 aggregate EPS growth for the S&P of about 7.5%, below 8.8% growth estimated at the start of the quarter; but based on the growing understanding that final EPS growth rates every quarter come in about 2-5% above initial forecasts, Q2 earnings could check in closer to 9-12%... Several corporate deals, from VNU's $7 bln bid for IMS Health (RX 26.60 +0.71 and Pogo Producing's (PPP 53.99 -0.79) $1.8 bln bid for Unocal's (UCL 65.84 +0.10) Northrock Resources to a potential $2.5 bln offer for Agilent Technologies' (A 25.85 +1.51) chip products unit from KKR and Silver Lake Partners, also helped improve sentiment across the board... Perhaps also playing a role behind Monday's broad-based moves to the upside was intraday rotation out of bonds into stocks, as the benchmark 10-year note closed lower to yield 4.09%... The absence of notable economic data, which may have set a more positive tone to trading in the Treasury market, placed even more emphasis on equities, as an 18.8 P/E multiple for the S&P - representing an earnings yield of 5.3% compared to benchmark yields of about 4.1% - has made stocks more attractive relative to bonds... With regard to sector strength and weakness, the Materials sector paced the way higher, surging after Deutsche Bank reiterated their Buy rating on DuPont (DD 44..10 +0.60), CSFB upgraded the Metals/Mining industry on valuation and the dollar declined against major currencies... Technology - the most influential leader to trade higher - enjoyed gains across the board... Chip stocks, as evidenced by the PHLX Semi Index closing at seven-month highs after Goldman Sachs upgraded at Maxim Integrated Products (MXIM 41.27 +1.64) and Bear Stearns made some upbeat comments about Micron Technology (MU 11.74 +0.32) and DRAM pricing... Consumer Discretionary traded higher, getting a boost from a 2.0% surge in homebuilding continued momentum in the retail group... General Motors' (GM 35.81 +1.13) GMAC division reaffirming net income guidance and reports that Ford Motor (F 10.71 +0.29) began selling its second hybrid vehicle Monday also helped the sector post a respectable gain... Strength in brokerage, banks and insurance, with the latter finding relief after Hurricane Dennis caused less damage than anticipated, while Utilities - another interest-rate sensitive group - closed at four-year highs... Consumer Staples posted a modest gain, led by an analyst upgrade on Proctor & Gamble (PG 53.76 +0.80), while an upbeat article in Barron's over the weekend about Norfolk Southern (NSC 32.68 +0.53) has helped the Industrials sector finished on an upbeat note... Health Care also closed higher, getting a boost from an analyst upgrade on Schering-Plough (SGP 19.28 +0.31) and upside Q1 earnings guidance from Mylan Labs (MYL 19.74 +0.33)... Even Energy, which opened lower amid falling oil prices, provided some leadership, as analysts' expectations of Q2 EPS growth for the sector have been raised to about 33% (from 27% last week)...NYSE Adv/Dec 2373/942...NASDAQ Adv/Dec 2143/922.

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

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Today's Picks - July 12, 2005

1.   LOW - LOWES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 60.85

2.   RTN - RAYTHEON

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 39.80

3.   STI - SUNTRUST

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 74.74

4.   GS - GOLDMAN SACHS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 107.46

5.   BOOM - DYNAMIC MATLS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 44.22

6.   WLDA - WORLD AIR HLDGS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 13.84

7.   URBN - URBAN OUTFITTERS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 60.70

8.   GT - GOODYEAR TIRE

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 15.74

9.   AFFX - AFFYMETRIX

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-12		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 56.18

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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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