Indices
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Market Wrap
(Briefing):

The market finished on a downbeat note, as surging bond yields in the wake of China's yuan revaluation overshadowed otherwise upbeat earnings and economic data, closing stocks lower across the board... Initially, China's decision to revalue the yuan, linking it to a basket of currencies and ending its 10-year peg to the dollar, provided a floor of buying support in pre-market trading... Soon thereafter, however, preliminary reports of new explosions in London muted the makings of a would-be rally in stocks, underpinning a sense of nervousness... Unlike the resilience seen among both stocks and bonds a couple of weeks ago, following a series of coordinated bomb blasts that rocked London the first time around, speculation that the yuan's revaluation may reduce future bond purchases from China - the second largest holder of U.S. Treasurys with about $243 bln worth - weighed on the Treasury market... The absence of anything new in the FOMC minutes, coupled with mixed views from Fed members on inflation and needed future tightening, also left bond traders with little incentive to stay long Treasurys, as benchmark yields on the 10-year note (-29/32) surged to 4.27%, pushing up borrowing costs for both consumers and corporations... Further analysis of the yuan's potential impact on U.S. companies like Wal-Mart (WMT 49.44 -0.56) and the $18 bln (10% of the U.S. trade deficit with China) it generated in sales from China last year also prevented investors from focusing on the bottom line - the fact that 30 out of the 38 S&P companies reporting results this morning (i.e. CAT, KO, DHI, NXTL, SBC, UPS and WY) beat analysts' expectations... With regard to the lack of industry leadership, the Utilities sector paced the day's losses, taking a bearish cue from increasing bond yields - action that also weighed on the interest-rate sensitive Financial sector... Energy was also off more than 1.0%, as crude oil prices ($57.13/bbl -$0.89) extended Wednesday's losses, while broad exposure to Asia by a number of tech companies (i.e. chip stocks) prompted widespread consolidation throughout the Technology sector... Two of the sector's 88 components shrugging off any yuan-related uncertainty, however, were Qualcomm (QCOM 39.01 +2.92), after posting better than expected Q3 earnings and upside FY05 guidance, and Microsoft (MSFT 26.44 +0.25), which climbed ahead of its Q4 report... Despite strong earnings reports from SGP, BAX and ABC, as well as a relief rally in shares of Guidant (GDT 69.63 +1.93), Health care also closed lower... Consumer Staples was also under pressure, as a 1.2% decline in Wal-Mart offset Coca-Cola's (KO 44.13 +0.80) strong Q2 report... Consumer Discretionary also lost ground, but losses were minimized by strength in retail, led by an 11.5% surge in shares of Office Depot (ODP 27.65 +2.85) following strong Q2 earnings... Even Materials, which had showed relative strength early on as a weakening greenback, as the dollar lost more than 2.0% against yen, finished in the red... Transportation, however, showed relative strength after Union Pacific (UNP 67.99 +2.06) handily beat analysts' Q2 forecasts and issued encouraging guidance; but UNP's 3.1% surge, coupled with strong gains from DHR (+3.9%), BNI (+1.8%) and NOC (+1.6%) still were not enough to lift the Industrials sector into the green... Separately, initial claims fell 34K to 303K (consensus 326K) - the lowest level since mid April - providing further evidence of improving labor conditions... The Philadelphia Fed Index rebounded in July, rising to 9.6 (consensus 10.0) versus a decline of 2.2 a month earlier, showing a pick up in regional manufacturing activity... June leading economic indicators rose 0.9% (consensus +0.5%), following five consecutive monthly declines... However, the day's economic reports took a bock seat to the combination of world events (i.e. yuan revaluation and London explosions) and a plethora of earnings data...NYSE Adv/Dec 1031/2254...NASDAQ Adv/Dec 1123/1905.

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

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Today's Picks - July 22, 2005

1.   CAM - COOPER CAMERON

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-22		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 67.41

2.   SFA - SCIENTIFIC ATLANTA

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-22		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 38.44

3.   PMI - PMI GROUP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-22		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 41.01

4.   DHI - D R HORTON

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-22		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 40.54

5.   PHM - PULTE HOMES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-22		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 91.20

6.   CTX- CENTEX CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-22		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 76.32

Previous Trades

1.   MOGN - MGI PHARMA

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
did not setup		Long
	* Stock gapped down and failed to trade above previous day's high.

2.   SHLD - SEARS HLDGS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
did not setup		Long
	* Stock gapped down and failed to trade above previous day's high.

3.   GENZ - GENZYME

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
did not setup		Long
	* Stock gapped down and failed to trade above previous day's high.

4.   LEN - LENNAR

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
did not setup		Long
	* Stock gapped down and failed to trade above previous day's high.

5.   UNM - UNUMPROVIDENT

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
did not setup		Long
	* Stock failed to trade above 19.66.

6.   BAX - BAXTER

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-21		Long	38.65	39.21 Reached	38.65	up to + 93 cents per share

7.   LLTC - LINEAR TECHNOLOGY

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
did not setup		Long
	* Stock gapped down and failed to trade above previous day's high.

8.   DTV - DIRECTV

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
did not setup		Short
	* Stock failed to trade below it's 15min low.

9.   PFE - PFIZER

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-21		Short	26.94	26.68 Reached	26.94	up to + 40 cents per share