1:25pm (EST)

Futures were showing a nice start to the week but the recent trend has seen strong opens weaken shortly after the opening bell.  Today is no different as the market is mixed heading into the second half of trading.

These types of patterns often occur within trading ranges with support and resistance getting stretched and can be frustrating to trade – if you aren’t prepared for them.  We have been talking about a range bound market for a couple of weeks and while there is temptation to take trades ahead of the next possible trend, it is best to wait them out.

For our new subscribers, we stress the importance of studying our chart work every Sunday night/ Monday morning to learn where the indexes could be headed over the near-term. We usually do a great job in determining market direction so it is imperative you start your research for the week by checking the charts.

We were expecting a “flat” session for today as Wall Street awaits International Business Machines (IBM, $188.30, down $1.79) earnings results due out after the close.  The company has been a super solid blue-chip component of the Dow for decades and we did a big story on IBM this week’s Weekly Wrap.

There are 22 analysts that follow the stock and earnings estimates range from a low of $5.73 a share with a high of $6.09 a share.  The average estimate is $5.99 a share so there is a chance for a big earnings miss, or beat.

The past few quarters for IBM have been supported by share buybacks as earnings have come in higher than the suit-and-ties expectations.  However, we have been mentioning the quarter-over-quarter and yearly revenue declines so this will be an important quarter.

The stock has been on our Watch List for several weeks as we have been following its movement for a possible trade.  We could have been played a recent call option trade on the break back above $185 but we are bearish on the stock until we see revenues start to INCREASE quarter-over-quarter.

The current volatility is carrying over into this week as the indexes are mixed heading into the second half of trading.  The Dow is down 78 points to 16,380 while the S&P 500 is higher by a point to 1,839.  The Nasdaq is up 17 points to 4,214 and the Russell 2000 is advancing 3 points to 1,171.  The S&P 500 Volatility Index (VIX, 12.94, up 0.50) is jumping 4% and is back above 12.50 after trading up to 13.42.  Resistance at 13.50 held for now but needs to be watched.  The action is similar to last Monday’s and as long as support holds, we are staying long.

Despite the current trading range and volatility, we are in a great position to play the next breakout or breakdown out of the current trading ranges.  The easiest trades will be to use index call or put options on the next major move but we also have a bevy of possible stock option trades that could trigger based on support and resistance levels.

We have updated our current trades along with the Stop Limits as our goal will be to protect profits.  While we are looking for further gains in the names we are trading, our trading account will be reloading as we cash out profits to take advantage of possible new trades.  On that note, we do have another Profit Alert on a trade that has made our subscribers 108% as our Stop Limits were triggered so let’s go check out the action!  We have another trade that is up 164% and we have raised the Stop Limit to protect profits.

Subscribers, hit the Members Area for the updates and stay locked-and-loaded into the close as we could have action in the afternoon.  We also have a Profit Alert coming for our Weekly Wrap and some adjustments to those trades as well.