Dow - 143.39    I  Nasdaq - 24.29    I  S&P 500 - 17.13    

Market Wrap
(Briefing):

Stocks closed off their lows Wednesday but still finished with widespread losses. Renewed worries about credit markets and data that failed to fuel rate cut hopes left the major indices looking overbought on a short-term basis, especially after averaging gains of more than 4.0% over the prior four sessions.

Weakness began overseas after a senior Japanese government official reignited worries that losses from U.S. subprime mortgages will spread. That sparked further unwinding in the yen carry trade and contributed to a 1.6% decline on Japan's Nikkei 225.

The major European bourses plunged 1.8% on average as the London interbank offered rate (Libor) climbed for a 10th straight session to 5.72%. That's the highest since the aftermath of the 9/11 terrorist attacks and now stands 47 basis points above the Fed Funds target, more than double the 21 basis-point average over the last five years and lending further evidence of the contagion effect from the U.S. subprime fallout that prompted Lehman to downgrade two European banks (e.g. CS -1.8%, DB -2.1%).

The Wall Street Journal reporting that Citigroup (C 45.99 -1.22) may be vulnerable to SIV losses, since it owns about 25% of the market, also left valuations of financial stocks susceptible to further interpretation. A 2.6% decline in the Dow component, which also ranks among the five most influential names on the S&P 500, is partly why the broader market turned in the worst performance among the majors. The heavily weighted Financial sector tumbled 1.3% right out of the gate, which removed a significant source of market support, and closed down 2.1% to pace all 10 sectors finishing lower.

Not even Technology (-0.9%) was able to shrug off lingering credit concerns. The belief that Tech is the most immune among all economic sectors to subprime woes has helped it surge more than 12% this year, which ranks it second only to Energy. However, two of the influential sector's bellwethers -- Microsoft (MSFT 28.48 -0.33) and Apple (AAPL 136.76 -7.40) -- slashing the prices of their digital music players put margins under the microscope and tempted investors to take some money off the table.

The Energy sector's inability to finish in positive territory, even as oil prices closed at a fresh one-month high, further underscored the broad-based nature of Wednesday's sell-off. Its more than 20% year-to-date advance, though, made it ripe for a pullback.

Meanwhile, after initially shrugging off a disappointing monthly ADP report, the National Association of Realtors reporting at 10:00 ET that pending home sales plunged 12.2% in July, the largest drop since the index began tracking the data in 2001, pushed the S&P 500 through its 50-day moving average. It was never able to recover and now stands more than 5.0% below its July 19 record close.

Wednesday also marked the release of the Fed's Beige Book, which will be used at the September 18 FOMC meeting to help policy makers formulate their views on business conditions compiled from the 12 regional Federal Reserve banks. However, the report offered little insight as to how the Fed will respond to the current mortgage-related credit crunch and failed to increase the argument for a rate cut at the next FOMC meeting.

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

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Today's Picks - September 06 2007

1.   ICE - IntercontinentalExchange Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-06-07		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 140.17

2.   TXT - Textron

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-06-07		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 56.70

Previous Trades

VDSI -Vasco Data Security International

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-05-07		Long	34.87	35.71	Below 33.89	up to + 44 cents per share (35.31)

TEX - Terex Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-05-07	09-05-07	Long	83.70	84.77	Closed Below 82.42	up to -$1.28 per share (84.54)

MFE - McAfee Inc

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-05-07	09-05-07	Long	37.49	Reached (37.97)	Closed Below 37.49	up to + 48 cents per share (37.97)

HES - Hess Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-04-07	09-05-07	Long	61.67	Reached (62.76)	Closed Below 60.82	up to + $1.29 per share (62.96)
	* 09-04-07 - stock gapped down * 09-05-07 - the stock gapped down past our stop at the open forcing us to set an emergency stop just below 60.82 (15min low). The emergency stop was then hit, closing the trade.

HRS - Harris Corp

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-04-07	09-05-07	Long	61.07	Reached (62.00)	Closed Below 60.44	up to + $1.36 per share (62.43)
	* 09-04-07 - stock gapped down * 09-05-07 - the stock gapped down past our stop at the open forcing us to set an emergency stop just below 60.44 (15min low). The emergency stop was then hit, closing the trade.

GRP - Grant Prideco

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-04-07	09-05-07	Long	56.17	Reached (56.86)	Closed Below 55.58	up to + $1.53 per share (57.70)
	* 09-05-07 - the stock gapped down past our stop at the open forcing us to set an emergency stop just below 55.58 (15min low). The emergency stop was then hit, closing the trade.

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 67.26	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 25.79	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 129.06	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 94.53	up to + $6.45 per share (97.69)
	* 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 + $6.38 per share (79.67)
	* 08-29-07 - stock gapped down