Focus Letter

May 2, 2006

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	Daily Editorial:

		Slow Session Ends With Bernanke-led Collapse Good morning! Monday was one of the slowest sessions as of late, although there were a few notable standouts. GBN from yesterday's column posted very strong gains. In addition to gold, the oil services sector rose 2.2%, energy closed up 1.5% and retailers managed small gains at +0.2%. This opened the door for some decent trend moves intraday. I focused primarily on NUE, ARO, STLD, X, and MSTR throughout the day. The market overall, however, was less appealing. After some scalpish pivot setups in the indices in the morning, the market range began to narrow as volume continued to decline into the afternoon. The last main pivot on the 5 minute charts before Bernanke's exciting news hit with the lows of 12:30 ET when the Nasdaq ran into support from Friday's low of the day and the Dow came into its 15 minute 20 sma support. From there the indices pretty much flat-lined until 15:15 ET. With only 45 minutes left of the day Fed chairman, Ben Bernanke, threw the market a curve ball. He feared that market participants had read too much into the prior statements of the Fed regarding the odds for an end to continued rate increases. Suggesting that more rate hikes may still be coming, this dealt a hefty blow to the bulls. An initial downside reaction on this unexpected news was followed by an equally steep continuation on the 5 minute charts around 15:30 ET, leaving the indices to close only slightly off the session's lows. The homebuilders, airline stocks, internet stocks, semiconductors and biotechs all took a pounding on Monday. They continue to look weak into Tuesday, while the oil services, gold and energy still look to have more upside potential. Also likely to continue to correct from recent highs is the banking sector. It saw sharp upside last week and now just needs a chance to catch its breath. Longer term, however, these are still very bullish. In the market as a whole, we are still getting that correction we have been following for the past week from April highs and I would still like to see a little more downside, but preferable more sideways action, to allow for an upside continuation. Right now the pace into Monday afternoon is going to make that more difficult unless we see some rounded lows and a return to a more bullish intraday pace over the next several days.


		Economic Reports and Events:

		May 02: Auto Sales for Apr (12:00 am), Truck Sales for Apr (12:00 am) May 03: Factory Orders for Mar (10:00 am), ISM Services for Apr (10:00 am), Crude Inventories 04/28 (10:30 am) May 04: Initial Claims 04/29 (8:30 am), Productivity-Prel for Q1 (8:30 am) May 05: Average Workweek for Apr (8:30 am), Hourly Earnings for Apr (8:30 am), Nonfarm Payrolls for Apr (8:30 am), Unemployment Rate for Apr (8:30 am), Consumer Credit for Mar (15:00 pm)

		Earnings Announcements of Interest:

		Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stock's earnings date before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing May 02: LEND (B), AL (?), AW (a), ACAS (B), AEL (A), ADM (B), ARTG (B), BDN (A), BWNG (B), CLZR (A), CMX (B), CENX (A), CEPH (A), CHTR (08:00 am ET), CBB (B), DNR (?), DUK (B), EXP (A), ECLP (B), EDS (?), EMR (B), ETR (B), EOP (B), FPL (?), GNSS (?), GFI (?), GW (?), HELX (A), HLT (B), HOMS (?), IACI (B), ICE (B), KSU (B), LNC (A), LTR (B), MAS (?), MDG (4:00 pm ET), NBL (?), OKE (A), PDLI (?), PPC (B), PNM (A), PWAV (A), PCP (?), KWK (A), RRD (B), SAFC (B), SIRI (?), SPC (B), STA (B), SBL (?), TGEN (B), THOR (?), TXU (?), VZ (?), VSH (B), VC (B), VNO (B) May 03: TFSM (A), AGN (B), LNT (B), AT (?), WTR (?), ABX (A), CBJ (A), CI (B), CZN (B), CCU (B), CLX (?), CMS (B), CTSH (B), ED (?), CTB (?), CEI (B), DVA (B), DVN (B), D (B), EMKR (?), EQR (?), FBN (?), GRMN (B), GGB (?), GLG (B), GSF (A), HL (08:00 am ET), MMC (B), NLS (?), NI (B), PAAS (A), PKD (?), PTEN (B), PCG (?), POL (A), PRTL (?), PG (?), PRU (A), QLGC (A), Q (B), RHD (A), RA (A), SKYW (?), SBUX (?), SUN (A), TDW (B), TWX (B), TRN (A), TRX (B), UNTD (A), UNM (A), WFMI (A), WSH (A) May 04: ATVI (A), ANR (B), AEE (B), AU (?), AIV (?), AVID (?), ACLS (5:00 pm ET), BRL (B), BKHM (A), CNQ (?), CSE (B), CNP (B), CEM (A), CQB (A), CNO (A), CVS (B), EK (B), ELN (B), EGO (A), HLTH (A), GMST (A), ICOS (?), INCY (B), IDCC (B), IIP (A), IP (B), ITG (B), JAH (B), KMG (?), KSE (B), LVS (A), MVL (B), MCK (A), NEW (?), NXL (B), OIS (B), PXP (B), PXP (B), QSFT (A), RGLD (B), TSG (?), STN (?), SU (?), TSO (?), DTV (B), EL (B), PMI (?), THE (B), TOT (02:00 am ET), RIG (B), TRZ (B), TYC (B), UBS (B), UVN (A), VRX (?), WMB (B) May 05: AGU (?), CRK (?), EP (B), EOG (?), GSX (?), HMY (?), MHS (B), NSR (B), SNY (?), THQI (B) Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.

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