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Week in Review


See you on Monday!


Market Recap

The markets finished the week to the upside with the major indices climbing roughly 3%. Earnings season continues to provide specific stock reactions, however, geopolitics continues to remain front and center as traders follow the ongoing news flow of Israeli-Hezbollah fighting.

The transports (TRAN) spiraled nearly 4% lower on the week following weak results from United Postal Service (UPS). Shares of Boeing (BA) also stumbled 5% after the company lowered guidance while Continental Airlines (CAL) earnings added to the weak sentiment. As the Fed has suggested, economic growth seems to be moderating and that, along with rising energy prices, continues to put pressure on the outlook for the group. The TRAN broke the neckline of a large double top formation. We wonder about the possible signal of a potential slowdown that the group would appear to be sending.

As far as the Four Sisters this week, they have tested resistance 4-times intraday and failed to climb above. Therefore, expect a continuation of the recent volatility and unfortunately the massive whipsaws within the most recent range. If the message of the transports continues to result in further deterioration, we may again test the three year trend we have highlighted previously.

Top Headlines

Diplomatic talks between key Middle East representatives broke down after the U.S. rejected an immediate cease-fire without the disarmament of Hezbollah. (Wed 26th)

Hewlett-Packard (HPQ) will acquire business management software maker MercuryInteractive (MERQ) for $4.5 billion. (Tue 25th)

The Commerce Department reported better than expected durable goods orders for June driven by strong demand in commercial aircraft. In other news, the Labor Department reported a decrease in jobless claims signaling a stronger than expected labor market. (Thurs 27th)

The Commerce Department reported that GDP for the second quarter fell sharply to 2.5% below the consensus estimate of 3.0% as home building and consumer spending slowed. (Fri 28th)

Al-Qaeda's #2 leader called upon Muslims to join the fight against Israel as it promises retaliatory moves "everywhere." (Thurs 27th)

The nation's largest for-profit hospital operator HCA (HCA) agreed to a $21.3 billion dollar leveraged buyout taking the company private. (Mon 24th)

Earnings Snapshot

Troubled car maker General Motors (GM) easily beat Wall Street estimates after excluding $3.2 billion in restructuring costs. (Wed 26th)

Oil giant Exxon Mobil (XOM) reported staggering 2nd quarter profit as high oil prices continue to boost revenues. Investors were not as friendly to Chevron (CVX) as they did not meet analysts' expectations. (Thurs 27th & Fri 28th)

Shipping carrier United Postal Service (UPS) posted disappointing results and warned about future earnings. (Tue 25th)

Investors sent shares of cigarette maker Altria (MO) higher after the company beat Wall Street estimates and raised full year guidance. (Tue 25th)

AT&T (T) impressed investors with an 81% rise in quarterly profit helped by higher margins on cost cutting measures. (Tue 25th)

Drug maker Merck (MRK) more than doubled its 2nd quarter profit and raised its 2006 forecast as shares soared to a 52 week high. (Mon 24th)

In a blow to the HMO industry, Aetna (AET) posted disappointing results as investors focused on growing medical claims and competitive pricing. (Thurs 27th)

Investors sent shares of Boeing (BA) lower after the aerospace company reduced 2006 guidance on a $1 billion settlement charge to the Justice Department, but raised 2007 estimates driven by its strong commercial airplane business. (Wed 26th)

Market Movers: Winners and Sinners

No positions in stocks mentioned.

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