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Market Wrap
(Briefing):

Stocks overcame early nervousness and finished the day near session highs, as upbeat economic and earnings reports provided a floor of buying support for stocks across the board that continued to strengthen into the close of trading... While the absence of stronger sector leadership midday kept the major indices mired in relatively tight trading ranges, the 2:00 ET release of the Fed's Beige Book became the catalyst behind late-day buying efforts that helped the S&P finish the day at a new four-year high and all ten economic sectors close to the upside... The Fed's report to be used at the upcoming Aug 9 FOMC meeting noted continued economic expansion without sparking inflation concerns, lending further support behind an unexpected rise in June durable goods orders... As a leading indicator of manufacturing activity, durable goods orders rose a very strong 1.4% (consensus -1.0%), following an upwardly revised gain of 6.4% (from 5.5%) for May - the strongest monthly increase since July 2002... The fact that 29 of the 38 S&P 500 constituents reporting quarterly results this morning exceeded expectations, coupled with some afternoon short covering, as the bears again struggled to keep the markets nervous for long, also provided some additional support heading into the close... Pacing the day's gains was Telecom Services, benefiting from Sprint's (FON 26.37 +1.40) Q2 earnings surprise and raised FY05 EBITDA guidance... Providing the bulk of the leadership, however, was Health Care after upbeat analyst comments on Johnson & Johnson (JNJ 64.54 +1.87), coupled with strong reports from Biogen Idec (BIIB 39.48 +0.66), Allergan (AGN 90.40 +4.98) and Applera Corp. (ABI 21.15 +1.38), helped offset a quarterly disappointment from Wellpoint (WLP 67.10 -1.19)... The Industrials sector also closed on a positive note, benefiting from Boeing's (BA 66.70 +0.35) Q2 earnings of $0.79 per share, which beat forecasts by $0.18, and upside FY05 EPS outlook, as well as better than expected earnings from Norfolk Southern (NSC 36.10 +1.57) and CSX Corp (CSX 45.60 +0.15)... Technology, a weak spot for much of the day, turned the corner and also became an influential leader to the upside, as strong Q2 earnings from Sun Microsystems (SUNW 3.87 +0.02) and upside Q3 guidance from Corning (GLW 19.17 +0.97) helped offset a disappointing Q3 report from Sanmina-SCI (SANM 4.64 -0.62) and weakness in semiconductor... Even though Linear Tech (LLTC 39.31 -1.37) beat analysts' Q4 estimates by a penny last night, lighter than expected revenues and downside Q1 sales guidance, coupled with weakness in shares of STMicroelectronics (STM 17.47 -0.46), which missed estimates by a penny, and consolidation in Texas Instruments (TXN 31.80 -0.50) following Tuesday's earnings-related surge, weighed on ship stocks... Better than expected Q2 earnings and upside FY05 guidance from Amazon.com (AMZN 43.65 +5.91) also helped improved overall sentiment in tech stocks, helping the Nasdaq closed within a couple of points of its best finish for the year (2188.57)... Consumer Discretionary, benefiting from a reversal in Homebuilding, also traded higher... Initially, another new record in new home sales, which rose 4% in June to 1.374 mln (consensus 1.3 mln), merely provided investors with a reason to consolidate recent gains throughout the homebuilding group... That is until the Fed noted that, while residential real estate activity has shown "a few signs of cooling," the market overall remains robust... While weakness in the greenback made dollar-denominated commodities more attractive in the wake of Tuesday's 1.5% drubbing in Materials, strength in diversified chemicals, gold, specialty chemicals and paper, following better than expected Q2 reports from Praxair (PX 48.15 +0.73), Newmont Mining (NEM 37.87 +0.47), Sigma-Aldrich (SIAL 64.96 +7.27) and Louisiana-Pacific (LPX 26.49 +1.68), respectively, offset losses in steel... The group initially got a boost after Allegheny Technologies (ATI 28.08 -0.68) handily exceeded analysts' expectations with Q2 earnings of $0.91 per share, but the fact that ATI shares hit a new 52-week high prompted investors to lock in recent gains... Even though oil prices ($59.11/bbl -$0.09) snapped a three-day winning streak, following a modestly bullish oil inventories report, the Energy sector took advantage of strong Q2 reports from ConocoPhillips (COP 62.26 +0.84) and Kerr-McGee (KMG 80.35 +1.23)... Crude oil inventories fell 2.25 mln barrels (consensus -2.75 mln) and gasoline supplies fell 2.13 mln barrels (consensus -700K barrels) but distillates rose a stronger than expected 3.14 mln barrels (consensus +2.0 mln)... Even Financial, amid downbeat analyst comments about some market leaders and rising bond yields, eked out a slim gain... Merrill Lynch downgraded both Citigroup (C 44.39 -0.21) and Bank of America (BAC 44.15 -0.38) to Neutral while Prudential initiated Merrill Lynch (MER 59.10 -0.22) and Morgan Stanley (MWD 53.51 -0.20) with Underweight ratings... Benchmark yields on the 10-year note (-7/32) closing near two-month highs (4.25%), following upbeat reports on durable goods orders, new home sales and the Fed's Beige Book on economic conditions, also prevented the sector from enjoying a more noticeable performance...NYSE Adv/Dec 1928/1319...NASDAQ Adv/Dec 1628/1415.

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

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Today's Picks - July 28, 2005

1.   HP - HELMERICH & PAYNE

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		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 56.74

2.   OIH - OIL SVC HOLDRS TR

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		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 113.50

3.   NSC - NORFOLK SOUTHERN

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		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 36.10

4.   SFA - SCIENTIFIC ATLANTA

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		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 38.83

5.   RDC - ROWAN COS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		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 33.00

6.   QCOM - QUALCOMM

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		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 40.27

7.   FSH - FISHER SCIENTIFIC

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		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 66.80

8.   BYD - BOYD GAMING

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		Short	Below 15 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 50.25

Previous Trades

KG - KING PHARMACEUTICALS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Long	11.31	11.42	11.00

IRF - INTERNATIONAL RECTIFIER

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

JEC - JACOBS ENGR GROUP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

BER - BERKLEY W R

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Long	Above 15 high	Sell 1/2 once risk covered	Below LOD at time of setup
	* did not setup

BJS - BJ SVCS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Long	60.56	61.32	59.68	up to + 62 cents per share

CYBX - CYBERONICS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Short	Below 15 low	Cover 1/2 once risk covered	Above HOD at time of setup
	* did not setup.

ASN - ARCHSTONE SMITH

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-26	07-27	Long	42.17 (42.37)	Reached	Closed below 42.17	up to + 48 cents per share (42.65)

SWN - SOUTHWESTERN ENERGY

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-25		Long	53.90	Reached (55.00)	54.75	up to + 1.93 per share (55.83)

BR - BURLINGTON RES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-25		Long	62.58	Reached	63.00	up to + $1.88 per share (64.46)

PFE - PFIZER

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-21	07-27	Short	26.94	26.68 Reached	Closed above 26.42	up to + 74 cents per share (26.20)