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Market Wrap
(Briefing):

The market recovered nicely in the wake of Monday's weakness, as a flood of upbeat earnings reports provided a floor of buying support and offered investors further evidence that earnings do in fact remain robust, as virtually every sector close to the upside... Just as Citigroup's (C 44.44 -0.56) disappointment provided the impetus to lock in recent market gains Monday, a stronger than expected Q2 report from IBM (IBM 83.77 +1.96), due largely to increasing demand for its services, almost as quickly reversed Monday's negative bias that plagued stocks across the board and snapped a 7-day winning streak for the S&P a day earlier... With about two-thirds of this morning's earnings reports also beating analysts' expectations, the stage was set for stocks to rebound, as broad-based buying efforts more than erased Monday's pullback... Providing the bulk of the leadership was Technology, as IBM's encouraging report reinforced expectations of more upbeat reports after the bell from other tech leaders like Intel Corp (INTC 28.71 +0.48), which made a new 52-week high, Motorola (MOT 19.86 +0.40) and Yahoo (YHOO 37.73 +1.15)... Minimizing sector gains, however, was Hewlett-Packard (HPQ 24.53 -0.39), as a sell-the-news reaction to an already anticipated restructuring, as evidenced in the stock trading near 52-week highs, weighed on shares... To that end, a 1.3% surge on the tech-heavy Nasdaq helped the Composite nearly reach breakeven for the year... Energy also surged, get a boost from a late-day rebound in oil prices... Crude oil futures ($57.46/bbl +$0.14) were under pressure throughout most of the session heading into Wednesday's weekly oil inventories report... Even as the greenback climbed to a 14-month high against the yen (112.68), making dollar-denominated assets less attractive, an 5% surge in shares of International Paper (IP 32.22 +1.56) helped the Materials sector remove its label as this year's worst performing economic sector... International Paper announced plans to return $8-10 bln from a massive restructuring to shareholders... Financial eked out a small gain, as better than expected Q2 earnings from Merrill Lynch (MER 57.99 +1.32), amid strong 20% revenue growth, helped offset strong follow-through selling interest in Citigroup... Health Care, which was under modest pressure most of the day following downside FY06 guidance from Forest Labs (FRX 40.69 -0.96) and ongoing consolidation in HMOs, closed higher... Despite matching expectations, larger than expected Q2 revenues from Boston Scientific (BSX 28.30 +1.13) provided investors with an opportunity to buy shares at a 30% discount from its 52-week high, giving the sector just enough of a boost to finish in positive territory... Consumer Discretionary also showed relative strength, benefiting from continued momentum in retail and homebuilding... Aside from respectable housing data providing a boost to the latter - as June housing starts checked in at a strong 2.004 mln (consensus 2.050 mln) while building permits rose 2.4% to 2.111 mln (consensus 2.085 mln) - falling bond yields also provided some support for the interest-rate sensitive group... The benchmark 10-year note closed up 9 ticks to yield 4.18%, as traders covered short positions in anticipation of optimistic testimony from Fed Chairman Alan Greenspan over the next two days... Consumer Staples, however, closed just below the flat line, as a 14% drubbing in shares of Avon Products (AVP 31.44 -5.16), following downside Q3 and FY05 guidance, weighed heavily on the sector...NYSE Adv/Dec 2283/1009...NASDAQ Adv/Dec 2064/1006.

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

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Today's Picks - July 20, 2005

1.   AAPL - APPLE COMPUTER

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-20		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 43.23

2.   DHI - D R HORTON

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-20		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 41.90

3.   AMX - AMERICA MOVIL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-20		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 63.63

4.   COH - COACH INC

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-20		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 36.22

5.   LEH - LEHMAN BROS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-20		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 106.95

6.   GS - GOLDMAN SACHS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-20		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 109.88

7.   MO - ALTRIA GROUP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-20		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 65.26

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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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