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Market Wrap
(Briefing):

The major averages finished on a strong note, reaching milestones in the process, as an array of data confirmed the economy is in good shape and that inflation remains contained... For the second straight session, the Dow led the charge higher, as most of the day's buying interest again rested with larger-cap names, as evidenced by another decline on the Russell 2000 small-cap index... Such favoritism was also evident on the S&P, which closed at its best level in four years, while the Nasdaq recorded its best finish in 2005... Despite issuing downside Q4 guidance, the best quarter in Apple Computer's (AAPL 40.75 +2.40) history was enough to wet investors' appetites before the market even opened... Shares of Apple soared 6.3% after beating analysts' Q3 forecasts by $0.08 last night on strong iPod sales, increasing optimism that corporate profits will continue to come in better than expected... Another large-cap name providing a boost to stocks was Advanced Micro Devices (AMD 19.88 +0.63), which beat estimates by $0.09 after Wednesday's close, while seven of the eight S&P constituents out with results this morning also beat expectations... Aside from a strong start to earnings season raising fears of missing out on a rally in stocks, encouraging economic data also improved sentiment across the board and helped 8 out of 10 economic sectors close to the upside... Total CPI in June came in unchanged (consensus +0.3%) while core CPI rose just 0.1% (consensus +0.2%), as energy prices in June fell 0.5%... To that end, the largest drop (-3.7%) in crude oil prices ($57.80/bbl -$2.21) in over two weeks, as the threat of Hurricane Emily disrupting oil supplies dissipated, further placated inflation fears and stalled recent forecasts that two weeks ago had oil prices rebounding sharply in July following June's "temporary" decline... Providing additional support for stocks was a report that showed strength in consumer spending... June retail sales surged 1.7%, due in part to aggressive discounting by automakers like GM's "employee discount" pricing program, while sales excluding autos posted a very healthy 0.7% increase (consensus +0.5%), echoing strong momentum in the economy... With regard to sector leadership, Industrials paced the way to the upside... The sector was led by a 5.0% surge in airline stocks after Southwest Airlines (LUV 14.42 +0.44) posted its 57th straight quarterly profit, beating Q2 forecasts by $0.02... Technology was also an influential leader to finish higher, as AAPL and AMD's strong reports helped tech bellwether Intel (INTC 27.88 +0.29), which will become AAPL's new supplier of microprocessors, hit a new 52-week high... Despite another rise in bond yields and analyst downgrades on Prudential (PRU 66.13 -1.89) and Fifth Third Bancorp (FITB 42.30 -1.14), Financial also posted a respectable gain... Bonds closed near session lows, at the expense of broad-based buying efforts in equities and the sell-off in oil, as benchmark yields on the 10-year note (-5/32) rose to 4.17% - their highest level since mid May... Health Care also provided some leadership, as gains in biotech and drug overshadowed weakness in HMOs... Genzyme (GENZ 65.30 +3.97) - one of the day's best performing S&P components - beat analysts' Q2 forecasts and guided FY05 earnings above consensus, helping the AMEX Biotech Index hit a new 52-week high... UnitedHealth Group (UNH 50.35 -1.05) also reported better than expected Q2 results, issuing in-line Q3 and FY05 guidance, but the stock faltered, as investors pared some of the 27% advance already enjoyed by HMOs this year... Consumer Discretionary also traded higher, getting a boost from General Motors (GM 37.00 +1.13), which surged in response to strong retail sales figures and an upgrade from Lehman Brothers... Energy, however, plummeted in sympathy with the drubbing in oil prices, as investors used the commodity's weakness as a catalyst to consolidate huge gains that have helped the Energy sector outpace nearly every other sector combined with a 2005 gain of 24.5%... Profit-taking also weighed on the Utilities sector, which had surged almost 16% so far this year, as participants looked far and wide for bargains... Separately, initial claims rose 16K to a seasonally adjusted 336K (consensus 322K), but since the 4-week average remained consistent with an improving labor market, investors paid little attention to the report...NYSE Adv/Dec 1543/1735...NASDAQ Adv/Dec 1397/1616.

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

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Today's Picks - July 15, 2005

1.   OI - OWENS ILL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-15		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 26.60

2.   CELG - CELGENE

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-15		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 43.27

3.   VSEA - VARIAN SEMICONDUCTOR

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-15		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 41.46

4.   APA - APACHE CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-15		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 66.70

5.   NFX - NEWFIELD EXPL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-15		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 39.90

6.   PRU - PRUDENTIAL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-15		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 65.85

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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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