9:00am (EST)

We didn’t expect much from Monday’s action as economic news was light and earnings are winding down to a trickle ahead of July’s big 2Q announcements.  As such, the market ended flat for the session but we expect the action will pick up starting this morning as we have a number of headlines to report.

The Dow traded to a high of 12,011 but could only manage a 1 point gain and finished at 11,953.  It was the Blue-Chips second-straight finish below 12,000 which has now become short-term resistance ahead of 12,200.  Caterpillar (CAT, $95.44, down $1.35) and Hewlett-Packard (HPQ, $34.65, down $0.48) weighed on the index and accounted for 14 negative points.  Short-term support remains 11,800-11,750. 

We profiled Caterpillar last Monday inside our Members Area when shares were at $101 and said a test to $95 was coming, quickly.  The July 95 puts (CAT110716P00095000, $3.20, up $0.45) were at $1.90 when we profiled the upcoming drop and the stock was at $101.  Although it wasn’t an “official trade” the puts are up nearly 70% in a week which is where we would have taken profits.

As far as Hewlett-Packard, it looks like a falling knife we aren’t about to catch after hitting a fresh 52-week low of $34.60.  We will have to check the chart but if further weakness is in store, we might have to add some put options to our Watch List.    

The S&P 500 also added a point and settled at 1,271 after reaching a high of 1,277.  The bulls were looking to hold 1,275 but still face pressure down to 1,250.  Resistance is at 1,300 and then 1,325.

The Nasdaq slipped 4 points and closed at 2,639 after trading to an intraday low of 2,629.  Short-term support is at 2,600-2,550 while resistance will come into play at 2,675-2,700.

Futures are soaring on a number of better-than-expected economic reports this morning and Best Buy (BBY, $28.82, up $0.39) is looking to open higher after beating Wall Street’s with their latest quarterly results.  We will cover these stories in our afternoon update. 

Dow futures are up 100 points to 11,985 while the S&P futures are showing are advancing by 14 points to 1,280.  The Nasdaq futures are up 20 points to 2,240.  We have a couple of MONSTER trades we are on the verge of closing which are up over 150% and 200%, respectively.  We also have a few other option trades that we are also expecting to do well this week.

If you haven’t signed up with us yet or are nervous due to the current market volatility then don’t be.  Remember, you can make just as much with put options in a lower trending market as you can with call options in a higher trending market so don’t be scared.  Come get some action!

Subscribers, check the Members Area for the updates.