9:00am (EST) 

The market ended mixed on Thursday despite a day of good economic news and better-than expected earnings.  We mentioned in our Weekly Wrap on Sunday that we would be entering the heart of 3Q earnings season this week and so far nearly 75% of the companies reporting have matched or beat expectations.  Although the results haven’t provided the bulls with the momentum they were hoping for, there is some strength in the numbers which have helped the bulls hold support.

The major averages are showing a slight loss for the week as the bears try to snap the current 2-week winning streak the bulls’ are working on.  Today is expiration day for the October options and it is usually a down session for the bulls.  However, we continue to believe there will be a break higher out of the current trading range if Wall Street could just stop worrying about Europe.  Then again, this is the 6th time since August the market has tried to break on through to the other side.  (Yes, we wanted to remind you of a Doors song today – which is currently playing on the office jukebox as we type.  How ironic, huh?).

The Dow added 37 points, or 0.3%, to finish at 11,541.  The index traded to a low of 11,391 while the high was 11,581.  Short-term support is at 11,350 while resistance remains 11,600.

The S&P gained 6 points, or 0.5%, and closed at 1,215.  The index slipped below the 1,200 level after kissing a low of 1,197 but easily held the second wave of support which comes in at 1,175.  We would like to see a close above 1,225 today – but as long as 1,200 sticks like glue, we will be happy going into the weekend.

The Nasdaq gave back 5 points, or 0.2%, to settle at 2,598.  Tech touched a low of 2,557 which was just above the second wave of support at 2,550 and finished just below the 2,600 level.  We aren’t too worried because it appears to us the Nasdaq is on the verge of testing 2,700 if it can clear resistance at 2,650. 

After the close last night, Microsoft (MSFT, $27.04, down $0.09) matched earnings and beat sales expectations while SanDisk (SNDK, $45.50, up $0.32) absolutely smashed estimates.

Microsoft reported a profit of $5.74 billion, or $0.68 a share, versus $5.74 billion, or $0.62 a share, from the year earlier period.  Revenue checked-in at $17.4 billion versus $17.2 billion a year ago while Wall Street had $0.68 as share on sales of $17.2 billion penciled-in.  We knew Mister Softee would report a good quarter and we went long some call options that booked our subscribers 56% earlier this month.  We have thought of making the stock a member of our Covered Call portfolio but we may be getting another great entry point to play this name again.

Elsewhere, SanDisk announced earnings of $1.20 a share versus a forecast of $1.06, on average, by most analysts.  We said inside our Members Area yesterday that the company could surprise the Street and report a number north of $1.15.   Shares are at $48 in pre-market action, up $2+.

Today is light as far as economic news and we wouldn’t be surprised to see a “flat” trading day as neither the bulls, or bears, will want to bet the ranch ahead of this weekend’s events concerning Europe.  We were looking for another positive week but the bulls have some work to do.  The Dow needs a triple-digit pop just to break even for the week so a 1% move is a must.

Subscribers, check the Members Area for the updates and the Watch List for some new ideas.  There is one trade we like today but we are undecided on if we will get in this morning or wait until next week.  If we do, look for a Trade Alert by 11am (sharp).

As we head towards the opening bell, futures look like this:  Dow +110; S&P 500 +13; Nasdaq 100 futures are up 22 points.