Dow + 12.81    I  Nasdaq + 11.11    I  S&P 500 + 2.79    

Market Wrap
(Briefing):

After logging a third consecutive week of solid gains, blue chips looked tired throughout most of the session Friday, as investors armed with an adequate Q3 report from the oldest Dow component (GE) struggled with mixed economic data, a rebound in oil and rising bond yields. Nonetheless, the underlying bullish tone that has lifted the three major indices 2.4% on average just two weeks into the fourth quarter eventually sidelined enough of the intraday inquiries about the sustainability of a three-month rally in stocks to get the Dow within reach of its next milestone -- 12,000.

Only a day after a handful of large-cap names helped paint a more optimistic picture of the Q3 earnings season, bellwether General Electric (GE 35.94 -0.28) was front and center Friday. Even though the Dow component turned in a solid performance overall, Q3 earnings that merely matched Wall Street expectations failed to impress investors and left the market looking elsewhere for better growth opportunities. To wit, the Dow still managed to close at another new all-time high but that was largely due to strength among the Dow's tech components (e.g. IBM +1.7% and HPQ +1.2%).

Technology was one of only four sectors to close higher. Fortunately for the bulls, leadership from the profit engine that is Energy (+1.4%) eventually helped investors look past a 1.4% rise in oil prices and the commodity's inflationary characteristics. While the energy sector isn't expected to grow Q3 earnings as impressively as it did in Q2 (+44%), anticipated profit growth of 23% should keep the S&P 500 on pace for a 13th consecutive quarter of double-digit profit growth.

An afternoon turnaround in Financials provided some added leadership that eventually carried a positive underlying tone into the close. Led by continued momentum in brokerage stocks, the rate-sensitive sector was also able to shrug off a rise in bond yields after Regions Financial (RF 38.79 +0.79) posting a 37% year/year rise in Q3 earnings provided more evidence that the S&P 500 will keep its streak of at least 10% operating EPS growth intact.

Treasuries sold off, lifting the yield on the 10-year note to a three-week high (4.80%) after economic data showed a stronger than expected rise in consumer sentiment and what eventually turned out to be decent retail sales report. Before the bell, the Commerce Dept. showed that September retail sales unexpectedly fell 0.4% while sales, excluding autos, fell 0.5%, the biggest drop in three years. That initially raised some concerns about the health of the consumer. However, further analysis showed that the drop in total retail sales was caused by a record 9.3% plunge in gasoline sales, which is actually good for the economy and not a sign of consumer weakness.

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Today's Picks - October 16, 2006

1.   RTN - RAYTHEON CO

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-16-06		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 50.76

2.   EQR - EQUITY RESIDENTIAL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-16-06		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 53.19

3.   CMX - CAREMARK RX

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-16-06		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 50.15