12:40pm (EST)

The bulls were struggling to keep losses in check this morning but have gathered some momentum heading into the second half of trading as they try to make up for lost ground over the past few sessions.  There has been strong support at the 50-day moving averages for the major indexes and these levels appear to be holding at the moment.

Economic news has been light with the U.S Trade Balance coming in at $50 billion versus estimates for a deficit of $44 billion.  The surge in the trade deficit can be blamed on higher oil imports (and prices) but comes as no surprise.  Although this number should improve in the coming months, chalk it up as a disappointment.

Later today, the FOMC’s minutes could provide a catalyst for either the bull or bears, depending on the wording, and will be released at 2pm (right coast time).

Turning to earnings, Fastenal (FAST, $34.92, down $1.08) is trading lower despite beating Wall Street’s expectations.  The company reported earnings of $94 million, or $0.32 a share, on revenue of $702 million. The suit-and-ties were expecting profits of $0.30 a share on revenue of $688 million. 

After Monday’s close, Fastenal announced a quarterly cash dividend of $0.13 a share and is on track to pay $0.51 a share for 2011 giving the stock a 1.4% yield based on current prices.

We listed Fastenal as a possible earnings trade in our Weekly Wrap but the company had missed in four of the last eight quarter so we weren’t sure on the direction.  We did a big write-up on the company in our July 4 issue and said shares could fall to $34 which is where we would consider it a “Buy” as far as a quick trade.  However, we still don’t like the options on the stock with resistance at $38.

As we head to press, the Dow is up 10 points to 12,516 while the S&P is higher by a point to 1,320.  The Nasdaq is trying to join the party but is 9 steps back at 2,793.     

It is still a coin toss on if the market remains in a trading range or breaks to new highs (or new lows).  The Dow futures were down triple-digits this morning but turned on a dime on less-than-stellar headlines.  Perhaps the market is thinking the same thing we are thinking which we talk more about in our Members Area.

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