12:35pm (EST)

The market got a slight bid at the open as the bulls added some fluff to yesterday’s gains but the action has been choppy as we head into the second half of trading.  Economic news favored the bears this morning which slowed the 2-day momentum and tomorrow’s July option expiration day could be tricky. 

Initial Claims rose 34,000 to 386,000 following last week’s drop of 24,000 to 352,000 but this was expected as the auto plant retooling winds down.  Continuing Claims rose by 1,000 to 3.314 million.  Existing Home Sales were a disaster, dropping 5.4% in June and well below expectations. The Philly Fed came in at -12.9, up from June’s negative reading of -16.6.  And finally, Leading Indicators fell 0.3% to 95.6 in June following a May reading of 95.9. 

We have talked about the recent 2+ month trading range which has seen both the bulls and bears push support and resistance with some fluff.  We have given you the price targets to watch for on all of the indexes to confirm a breakout or breakdown and while we thought there might be a slim chance the blue-chips tested 13,000 today, they haven’t.

International Business Machines (IBM, $195.75, up $7.75) is up 4% and has accounted for 53 positive Dow points but American Express (AXP, $56.43, down $1.86) (-17 Dow points), Wal-Mart Stores (WMT, $71.62, down $1.23) and Verizon (VZ, $44.88, down $1.01) have snuffed out half those gains and the other 26 Dow stocks are mixed.  

eBay (EBAY, $44.17, up $3.71), which should be a Dow component, is zooming 9% after reporting another sweet quarter on the heels of its PayPal unit.  We talked about earnings this week in the video we did for our trading course members on Sunday night.  The only possible trade we really liked was eBay as we said shares could surge past $40 based on the strength PayPal continues to show.

We should have taken it a step further and profiled the August 40 calls (EBAY120818C00040000, $4.20, up $2.10) which are up 100% today.  The July 40 calls (EBAY120721C00040000, $3.90, up $2.30) would have been super risky as they expire tomorrow but they are up 145% and have traded to a high of $4.45


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