Dow + 91.12    I  Nasdaq + 33.88    I  S&P 500 + 15.43    

Market Wrap
(Briefing):

After initially taking a breather, as investors returned from the Labor Day weekend reassessing the sustainability of recent market gains, it didn't take long for the major averages to regain momentum and extend Friday's relief rally.

It is worth noting, though, that with September slated as the worst month of the year for all three of the major averages, according to The Stock Traders Almanac, another light volume day left stocks vulnerable to some late-day profit taking that closed stocks off their best levels.

With hopes of a Fed easing contributing to last Friday's gains, today's weak economic data gave investors another reason to price in an increased likelihood that policy makers will cut the Fed Funds rate at their September 18 FOMC meeting.

At 10:00 ET, the ISM Index for August dipped to 52.9 from 53.8 in July. That was slightly below expectations and marked the slowest pace in five months. However, since any reading above 50 signals growth, the report helped alleviate Wall Street concerns that the liquidity problems in the credit markets are having an impact on the broader economy. While Briefing.com believes the Fed has the rationale to cut rates if they choose to do so, since inflation has eased and economic growth is sluggish, we do not believe the macro-economic data necessitate a rate cut.

Of the 10 economic sectors trading higher, Energy (+2.1%) led the charge as a 1.4% gain in oil prices improved the sector's earnings potential. Crude for October closed above $75/bbl for the first time in a month following updated hurricane forecasts.

As evidenced by the Nasdaq outperforming its blue-chip counterparts and logging its best four-day advance since November 2003, a 1.6% surge in the more heavily weighted Tech sector was the day's biggest source of support.

The sector's biggest winners were Yahoo! (YHOO 23.98 +1.25), after Bear Stearns named it a top pick, and Apple (AAPL 144.16 +5.68), after Piper Jaffray raised their price target to $211 citing strong iPhones and Macs. Albeit not an S&P 500 constituent, Kulicke & Soffa (KLIC 9.04 +0.50) raising its Q4 revenue guidance also helped restore confidence about the sector's growth prospects.

The fact that so many areas of weakness this year rallied today on few catalysts to justify their solid gains offered further evidence that today's follow-through momentum was also attributed to more short covering. Investment Banks (+2.6%), which ranks as the eighth worst performer this year (-13.8%) was among today's biggest winners.

Early on, the absence of the heavily weighted Financial sector's (+1.2%) leadership acted as a drag on the blue-chip averages, as it has all year. However, renewed enthusiasm for the beaten-down sector, after the Fed and other banking regulators asked lenders to pursue "loss mitigation" strategies for borrowers at risk of defaulting on their home mortgages, provided a significant leg of support.

Even the Consumer Discretionary sector was able to turn the corner late in the day and finish in positive territory. A 5.3% plunge in shares of Home Depot (HD 36.28 -2.03), after HD priced its modified "Dutch Auction" tender offer at the low end of its $37-42 range, weighed on the sector all day. That is until fellow Dow component General Motors (GM 31.87 +1.13) spiked to session highs after reporting surprisingly strong August sales and then saying it sees no evidence of tighter auto lending standards crimping auto demand.

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

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Today's Picks - September 05 2007

1.   VDSI -Vasco Data Security International

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-05-07		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 34.33

2.   TEX - Terex Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-05-07		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 83.13

3.   MFE - McAfee Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-05-07		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 37.19

Previous Trades

HES - Hess Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-04-07		Long	61.67	Reached (62.76)	Below 61.67	up to + $1.29 per share (62.96)
	* 09-04-07 - stock gapped down

HRS - Harris Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-04-07		Long	61.07	Reached (62.00)	Below 61.07
	* 09-04-07 - stock gapped down

EXM - Excel Maritime Carriers

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

GRP - Grant Prideco

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-04-07		Long	56.17	Reached (56.86)	Below 56.17	up to + $1.53 per share (57.70)

FST - Forest Oil Corp

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

SII - Smith International Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
08-31-07		Long	66.49	Reached (67.33)	Below 66.55	up to + $2.40 per share (68.89)

INTC - Intel Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
08-30-07		Long	25.27	Reached (25.21)	Below 25.75	up to + $1.16 per share (26.43)
	* 08-30-07 - stock gapped down

NOV - National Oilwell Varco Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
08-30-07		Long	123.69	Reached (125.79)	Below 127.35	up to + $10.28 per share (133.97)
	* 08-30-07 - stock gapped down

MDR - McDermott International

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
08-30-07		Long	91.24	Reached (92.28)	Below 94.50	up to + $6.09 per share (97.33)
	* 08-30-07 - stock gapped down

RL - Polo Ralph Lauren

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
08-29-07		Long	73.29	Reached (74.64)	Below 74.83	up to + $3.62 per share (76.91)
	* 08-29-07 - stock gapped down