Dow - 9.36    I  Nasdaq + 1.36    I  S&P 500 + 1.64    

Market Wrap
(Briefing):

With the Dow closing at a new record for the ninth time in two weeks, it wasn't surprising to see blue chips look fatigued throughout most of the session Friday.

What did surprise Wall Street, though, was an earnings miss from one of the average's best performers. Caterpillar (CAT 59.40 -9.62) had its worst day since the market crash on October 19, 1987, plunging 14% after taking its Q3 misfortune a step further by reducing its full-year EPS guidance and providing 2007 forecasts significantly lower than analysts' estimates.

While IBM (IBM 90.51 +0.65) was largely responsible for lifting the Dow past 12,000 two days ago, Caterpillar was largely responsible for erecting a wall of worry that left the Dow struggling to close above its latest milestone. Caterpillar's sell-off had a 77-point negative impact on the index. Fortunately for the bulls still confident that the S&P index will rise at an even faster pace than earnings growth, Google (GOOG 459.70 +33.64) handily beat expectations for the eighth time in nine tries since going public.

As the fourth most influential component on the Nasdaq, Google's 8% advance eventually overshadowed declines in SanDisk (SNDK 49.14 -12.58) and Broadcom (BRCM 27.51 -1.46) and helped the tech-heavy Composite eke out a gain. SanDisk was the day's worst performing S&P 500 component, tumbling 20% after a larger than expected drop in average selling prices for its flash chips contributed to a 4% year/year decline in Q3 profits. Broadcom sold off after it lowered Q4 sales forecasts.

When it was all said and done, Google's report, coupled with better than expected Q3 earnings from Dow components 3M Co. (MMM 78.33 +1.93) and Merck (MRK 45.54 +1.05), lent some additional validation to the market's underlying bullish tone that has let stocks run virtually unabated since bottoming out in mid July.

Oil prices closing at their lowest levels of the year provided some additional reassurance. Crude for November delivery closed down 2.9% at $56.82/bbl as traders priced in some uncertainty as to whether OPEC members will abide by their plans to cut production by 1.2 mln barrels a day. However, with the November contract expiring Friday, there was more open interest in the December contract, which was off 1.9% at $59.35/bbl.

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Trade system guidelines only available to newsletter subscribers

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Today's Picks - October 23, 2006

1.   SHLD - SEARS HLDGS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-23-06		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 174.99

2.   LH - LABORATORY CORP AMER HLDGS

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-23-06		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 68.24

Previous Trades

HC - HANOVER COMPRESSOR

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

ATW - ATWOOD OCEANICS

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

CNI - CANADIAN NATL

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-19-06		Long	45.21	Reached (45.70)	Below 46.32	up to + $1.44 per share (47.14)

ETR - ENTERGY CORP

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-18-06	10-20-06	Long	84.81	Reached (85.05)	Closed below 84.94	up to + $1.03 per share (85.84)

ICE - INTERCONTINENTAL EXCHANGE

Entry Date	Exit Date	Position	Entry Price	Target Price	Stop Price	Max P/L
10-17-06		Long	82.66	84.00	Below 80.80	up to + 46 cents per share (83.12)