12:15pm (EST)

The market got a slight pop at the open despite disappointing jobless claims numbers as the bulls try to clear the last few hurdles before a jailbreak.  The bears were waiting for the economic news after the start of trading to confirm if this is a good entry point to start attacking the market and they may have got it.

Initial Claims fell 2,000 to 387,000 versus expectations for a drop to 385,000.  Claims from two weeks ago were revised up to 389,000 from 386,000 so the drop was offset and shows we are heading back above 400,000 over the next month or two.  The 4-week average climbed 3,500 to 386,000which is the highest level in 7 months.  Continuing Claims were flat at 3.3 million.

There was a flurry of news at 10am and it was mostly negative.  May Existing Home Sales fell 1.5% while Leading Indicators gained 0.3% versus expectation for a rise of 0.1%.

We were more focused on the Philly Fed numbers which were atrocious and showed no growth for the second straight month.  The reading of -16.6 was much worse than last month’s reading of -5.8.  Anything below zero shows contraction.

It’s too early to say if the bears are mounting a comeback because the bulls are still pushing resistance but we believe the top could be in following the bounce off the June 4 lows. 

One stock bucking the trend and one we have been reporting on all week is Arena Pharmaceuticals (ARNA, $ ARNA, $11.28, up $0.78) which continues to surge.  Shares have tripped $11 and have traded to a high of $11.37 today as we continue to enjoy strong gains on our call options. 

Shares were near $2 when we issued the alert to back the truck up and we said they could hit $10 based on positive reviews for its obesity drug, Lorcaserin.  The company will meet with the FDA next week to gain possible approval and we have upped our target to $15 if all goes well.

We are approaching a 500% return with our current call option trade and we have said we will be closing a quarter of the trade to lock in profits but we may wait until next week.

As we head to press, the Dow is down 86 points, or 0.7%, to 12,738 and is back below the 12,800 level which is bearish. 

The S&P 500 is lower by a dozen points to 1,344 and has fallen below 1,350.  If the 1,335 level triggers, the selling pressure will pick up.   

The Nasdaq is showing the biggest loss and is off 32 points, or 1%, to 2,898.  The drop below 2,900 was also bearish and could lead to a quick test to 2,850 by the weekend.

We have a NEW TRADE we are getting into so we have to cut it short.  Subscribers, check the Members Area for the updates and use limit orders to get the best fills.