12:35pm (EST)

The bulls are making some headway as futures were pointing towards a strong open this morning which has carried over into today’s session.  Most of the gains were made at the open and have held but the important question will be if they hold into the close. 

There were a number of economic reports that were bad, but not as fearful as analysts were expecting.  Retail Sales for May fell by 0.2%, which was better than the expected forecast for a decline of 0.7%.  Excluding autos, retail sales increased by 0.3% in May.

Elsewhere, the Producer Price Index (PPI) increased by 0.2% during May which was slightly higher than the 0.1% pop that had been expected.  Core PPI also increased by 0.2%, which matched expectations.

Turning to earnings, Best Buy (BBY, $29.93, up $0.11) is up nearly 4% after beating Wall Street’s lowered forecast.  The company reported a profit of $136 million, or $0.35 a share, versus $155 million, or $0.36 a share, in the year-ago quarter.  Revenue came in at $10.94 billion.

Analysts were looking for a profit of $0.33 a share on revenue of $10.7 billion.  In March, Best Buy said 2012 numbers would come in at $3.30-$3.55 a share versus estimates of $3.46 on revenue $51-$52.5 billion.  They reaffirmed those numbers this morning but at the higher end of the range.

Beating a lowered bar is easy but Best Buy did a great job of focusing on some of their key markets which helped bring in new customers.  The stock traded up to $31.32 at the open and the June 30 calls (BBY110618C00030000, $0.60, up $0.05) reached a high of $1.42 after opening at $1.20.

We profiled Best Buy for our Weekly Wrap in 2010 when shares were in the low $30’s and before they made a run to $45.  The downfall since has shares at an attractive level but today’s pop shouldn’t be trusted.  Due to the increased competition and depressed earnings, we would wait another quarter or two to see if the company has regained its footing before thinking of going long again.  

As we head to press, the Dow is up 139 points to 12,091 while the S&P 500 is higher by 17 points to 1,289.  The Nasdaq is advancing 40 points and is at 2,680. 

We are releasing a NEW TRADE today and lately we have been hot.  Our latest trade could make upwards of 400% if we are right.  Shares are right at 52-week highs and we are expecting a breakout.  Subscribers, check the Members Area for the latest updates and our newest recommendation!