Dow - 8.72    I  Nasdaq - 20.83    I  S&P 500 - 4.53    

Market Wrap
(Briefing):

For the third straight session, the Dow momentarily surpassed its all-time closing high of 11,722.98 only to reignite a feeling of nervousness following such an impressive market rally last month that capped off the best third quarter performance for the blue-chip index since 1995.

Add to that some mixed economic data that kept investors pre-occupied with the pace of economic growth, coupled with the absence of influential sector leadership and Wal-Mart (WMT 48.44 -0.88) guiding below the midpoint of its September same-store sales guidance range, and the bulls were unable to embrace two of the catalysts responsible for the Q3 rally -- another sell-off in oil and falling bond yields. Evidence of a large program trade knocking the bottom out of stocks across the board, as thin volumes due in part to the Yom Kippur holiday that exacerbated the market's mid-afternoon pullback, also left it difficult for investors to get into buying mode.

Even with oil prices closing at session lows near $61/bbl and the Q3 earnings picture still largely intact, the lack of leadership from the profit engine that is Energy took a toll on blue chips. Crude oil futures fell 3.0%, the largest decline in nearly two weeks, as traders thought the decision by Venezuela and Nigeria to cut output will not have much of an impact on an already well-supplied market.

Failure by the rate-sensitive Financials sector to benefit from falling bond yields was also worth noting. Just after the market opened, the September national ISM survey on manufacturing conditions checked in with a lower than expected reading of 52.9, the lowest level since May 2005, renewing enthusiasm for Treasuries that pushed the yield on the 10-year note (+06/32) back to 4.60%. Even though any number above 50 still indicates expansion and the data did not reflect the degree of weakness shown in the September Philly Fed survey, the fact that four of the report's components fell to sub-50 levels, not exactly eliminating concerns that the manufacturing sector is about to enter a downturn, stalled early recovery efforts. Specialized Financials and Consumer Finance were two of Monday's worst performing S&P industry groups.

Profit taking in Health Care -- the best performing sector in Q3 -- also weighed on equities. The sector was in focus after Gilead Sciences (GILD 64.20 -4.57) agreed to acquire Myogen (MYOG 51.43 +16.35) for $2.5 billion and a 50% premium to Friday's closing stock price.

With regard to the three majors, the tech-heavy Composite (-0.9%) was hit the hardest, which wasn't all that surprising since it led the majors last month with a 3.4% advance fueled by an impressive 8.2% gain in the Tech sector. A 4.7% sell-off in the Nasdaq's third most influential component -- Qualcomm (QCOM 34.66 -1.69), amid renewed uncertainty about the impact of an ongoing patent dispute with Broadcom (BRCM 30.85 +0.51) -- and an analyst downgrade on Apple Computer (AAPL 74.86 -2.12), which ranks second on the Nasdaq in terms of weighting and was the sixth best performing S&P 500 component last quarter (+33%), accounted for the brunt of weakness in Tech.

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Trade system guidelines only available to newsletter subscribers

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Today's Picks - October 03, 2006

1.   AMP - AMERIPRISE FINL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-03-06		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 47.53

2.   DLTR - DOLLAR TREE STORES

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-03-06		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 31.44

Previous Trades

SGP - SCHERING PLOUGH

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

MRX - MEDICIS PHARMACEUTICAL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-02-06	10-02-06	Long	32.52	Reached (32.84)	Closed Below 32.52	up to + 28 cents per share (32.80)
	* 10-02-06 - stock gapped own

MA - MASTERCARD

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-29-06		Long	68.97	Reached (70.26)	Below 69.65	up to + $1.47 per share (70.45)
	* 09-29-06 - stock gapped down

CSE - CAPITALSOURCE

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-29-06		Long	25.58	Reached (25.67)	Below 25.66	up to + 47 cents per share (26.05)

GIS - GENERAL MLS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-28-06	10-02-06	Long	56.54	Reached (56.94)	Closed below 56.58	up to + 45 cents per share (56.99)

OMG - OM GROUP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
09-27-06		Long	40.70	Reached (40.88)	Below 45.41	up to + $ 5.90 per share (46.60)