1:30pm (EST)

The market has been fluctuating throughout the morning after starting off in positive territory for the most part.  The Nasdaq is showing a little strength as the Semiconductor stocks are rallying but the Telecom sector is weighing down the Dow.

Futures were pointing towards a slightly higher open but lost a little fluff after the jobless claims were announced.  For the week ending January 1, jobless claims came in at 409,000 versus estimates for 412,000, but above the previous week’s print of 391,000.  Although there was a jump of 18,000 initial claims, the four-week average came in at 410,750, down from 414,250 in the prior week.  

As for continuing claims, they fell week-over-week to 4.1 million from 4.15 million.  We get December non-farm payrolls numbers tomorrow before the bell which includes the unemployment rate.

Turning to Telecom, MetroPCS (PCS, $13.29, down $0.97) is down nearly 7% after giving an update on its subscriber growth.   The company said its net subscribers for the quarter were just below 300,000 which was under last year’s figures of +317,000 and blamed it on the bad weather.   

AT&T (T, $28.85, down $0.70) and Verizon (VZ, $36.12, down $1.06) are trading lower in sympathy. 

Nvidia (NVDA, $18.29, up $1.31) is up nearly 8% and is having a strong week after starting off Monday at $15.82.  The company announced plans to team with ARM to get into the personal computer business and has a fancy new mobile chip.  With PC’s moving more and more to a mobile platform, Nvidia could be a stock to watch for the next 6-12 months.

Coal stocks are getting a huge boost today following an upgrade for Patriot Coal (PCX, $23.29, up $1.29) from “Hold” to “Buy”.  Of course, the analyst who upgraded the stock was a little late to the game because we told our subscribers that it looked cheap at $17.50 on December 5, 2010.  In fact, we did a big write-up in our Weekly Wrap on the stock and here were some of our comments:

“We like all three companies but Patriot Coal (spun off from BTU in November 2007) is a cheaper way to play coal for the future and a great prospect for our covered call portfolio.  

The case with coal comes down to three things, increasing production, increasing coal prices, and rally participation.  As we said earlier, Patriot Coal is increasing production of the best coal, and it appears to be ahead of analyst’s estimates. This gives room for analyst upgrades. Combine that with what we see as a continued higher price for metallurgical coals in particular, and you get a nice one-two punch for increase sales and profits.” (END)

Patriot Coal was our first covered call trade for the Weekly Wrap and we made the trade available for free as it was our last issue before becoming a premium publication.  We suggested selling the January 19 calls (PCX110122C00019000, $4.15, up $1.05) at $1 and collecting the premium to reduce your cost to under $17.

The plan was to write covered calls as the stock stayed in a trading range but we underestimated the strength and momentum.  Obviously, we are going to get “called away” unless the stocks tanks in two weeks and the trade will bank our subscribers 13% in 6 weeks.  Not bad, but we also should have added the call options to our Daily as a straight-up play because the return would have been over 300%.  

Still, it’s hard to argue with either return but Patriot Coal looks strong and could be a $30 stock this year.

As we head to press, the Dow is off 44 points to 11,679 while the S&P 500 is lower by 4 points to 1,272.  The Nasdaq is up 3 points to 2,705.  

We have a couple of trades approaching triple-digit status and one of our other current trades has now hit a 250% return.  Subscribers, check the Members Area for the updates.