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Market Wrap
(Briefing):

The market closed near session highs, basically mirroring Wednesday's performance, as another batch of better than expected earnings lent further proof that Wall Street may in fact see a 9th consecutive quarter of double-digit EPS growth... With more than two-thirds of the S&P having now reported results, and more than 70% of them beating expectations, investors jumped into the market for a second consecutive session to buy stocks across the board, as nine out of ten economic sectors closed higher... Of the 20 (out of 33) S&P companies beating estimates this morning, the headliner was Dow component ExxonMobil (XOM 60.00 +0.40), which beat analysts' forecasts by a penny on record Q2 net income of $7.6 bln and revenues of $88.6 bln, keeping the Energy sector in focus... But higher expectations for the oil giant kept gains in check as even a 1.4% surge in oil prices ($59.94//bbl +$0.83) could not help Energy keep pace with almost every other sector... Turning in the day's best performance was Materials, as investors looked past Dow Chemical's (DOW 48.43 +0.82) Q2 earnings miss and instead focused on favorable price and volume trends, which should benefit Q3 results... Strong quarters from Phelps Dodge (PD 108.21 +0.21) and a new 52-week high on Praxair (PX 49.98 +1.83), following Wednesday's solid results, provided additional support... Telecom Services also surged more than 1.0% on the day, getting a lift from new legislation that could help telecom carriers like SBC (+1.7%) and VZ (+1.1%) coupled with strong Q2 earnings and upside FY05 guidance from CenturyTel (CTL 34.50 +0.90)... Health Care, however, was the most influential leader to the upside, benefiting from a rebound in HMOs, amid an encouraging Q2 report from Aetna (AET 78.40 +3.78), and strength from Bristol-Myers (BMY 25.17 +0.07), which beat Q2 estimates by $0.11 and raised its FY05 outlook... While not included in the S&P, Europe-based AZN (+4.8%) and GSK (+1.5%) were two other drug companies that had strong quarters... Industrials got a huge boost from Caterpillar (CAT 54.45 +1.66), which hit an all-time high, and Honeywell (HON 38.99 +0.97), which surged 2.6% as ongoing margin expansion prompted Merrill Lynch to upgrade the stock to Buy from Neutral... The Consumer Discretionary sector was also an influential leader to the upside, taking advantage of strong earnings reports from SBUX, PHM, AN, NWL and SNA (which averaged gains of 5.1% Thursday), as well as a Merrill Lynch upgrade on LTD (+2.4%)... Also providing some support for stocks, especially interest-rate sensitive areas like Financial and Utilities, was a decline in benchmark yields... The 10-year note closed at its best levels of the day, up 16 ticks to yield 4.18%, getting a boost upon further analysis of Wednesday's Beige Book (tame inflation) and month-end buying from money managers trying to match their portfolios to benchmark indices... Technology - the month's best performing economic sector (+6.5%) so far and the main driver behind the Nasdaq (+6.4%) outperforming the Dow (+4.0%) and S&P (+4.2%) in July - however, closed slightly lower... Components losing the most ground included HPQ, AAPL, YHOO and GLW, all of which have recently traded at or near 52-week highs... Separately, initial claims rose 5K to 310K (consensus 320K), leaving a 4-week average of 318K - the lowest since early March; but the report was largely ignored in favor of the quarter's largest day of earnings reports and ahead of more influential economic data (i.e. GDP, Q2 Employment Cost Index, Chicago PMI and Michigan Sentiment) out Friday morning...NYSE Adv/Dec 2442/875...NASDAQ Adv/Dec 1945/1109.

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

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Today's Picks - July 29, 2005

1.   MTH - MERITAGE HOMES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-29		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 95.49

2.   CLF - CLEVELAND CLIFFS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-29		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 72.92

3.   ACI - ARCH COAL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-29		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 58.27

4.   GENZ - GENZYME

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-29		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 75.26

5.   EQR - EQUITY RESIDENTIAL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-29		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 40.74

6.   UNP - UNION PAC

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-29		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 70.50

7.   NCC - NATIONAL CITY

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-29		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 37.75

Previous Trades

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
	* did not setup

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
	* did not setup

NSC - NORFOLK SOUTHERN

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-28		Long	36.28	Reached (36.40)	36.95	up to + $1.12 per share (37.40)

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
	* did not setup

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
	* did not setup

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
	* did not setup

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
	* did not setup

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
	* did not setup

KG - KING PHARMACEUTICALS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Long	11.31	11.42	11.17

BJS - BJ SVCS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-27		Long	60.56	Reached (61.32)	60.42	up to + $1.03 per share (61.59)

SWN - SOUTHWESTERN ENERGY

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
07-25	07-28	Long	53.90	Reached (55.00)	Closed below 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	63.15	up to + $2.37 per share (64.95)