Schaeffer's Daily Market Blog Features: United Parcel Service, General Motors, AMEX Semiconductor HOLDRs Trust, Alcoa, and Midway Games.

CINCINNATI -- Among the stocks featured in the July 3 edition of Schaeffer's Market Blog are United Parcel Service (NYSE:UPS), General Motors (NYSE:GM), AMEX Semiconductor HOLDRs Trust (AMEX:SMH), Alcoa (NYSE:AA), and Midway Games (NYSE:MWY). Schaeffer's Market Blog is just one of the many free market commentaries written every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. The Market Blog is written throughout every trading day by Schaeffer's financial analysts and traders. They are quick insights to the day's most notable market activity from an options perspective. For additional information about this report or to have it delivered to you free via email every day click on the following link. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB12M&PAGE=1

Schaeffer's Market Blog for Monday, July 3, 2006:

Below are just a few of today's Market Blog entries. Click here to read all of today's Market Blog. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1

9:45 AM UPS Reaches Temporary Agreement With Union

Friday evening, The Wall Street Journal reported that United Parcel Service (NYSE:UPS) and its pilots' union came to a tentative labor agreement after four years of negotiations and the threat of a pilot strike. Both parties declined to report the precise terms of the deal until the 2,700 UPS pilots affected have a chance to vote on the agreement. This process is expected to be completed in September.

UPS shares stepped higher out of the gate, rising nearly one percent within the first 15 minutes of trading. Along with the broader market, UPS reached a short-term bottom in mid-June and has been in recovery mode during the past two weeks. The stock has now moved above a key short-term 50-percent correction mode and has forced its 10-day and 20-day moving averages into a bullish crossover.

Should the stock continue to push higher, it could spark a short-covering rally as the bears move toward the exits. Currently, UPS boasts a short-interest ratio of 6.6 days to cover, providing a nice blanket of short-covering support.

10:50 AM General Motors Upgraded

General Motors (NYSE:GM) is hovering near the breakeven point this morning, after trading as much as two percent higher in pre-open trading. This morning, Banc of America Securities upgraded GM to "neutral" from "sell" in anticipation of a potential transaction with Renault and Nissan. The brokerage also upped its price target on GM to $30 from $15. Banc of America believes that an alliance with Renault-Nissan is more than likely gong to happen, and would "equate to a positive management infusion that could yield short- to medium-term benefits."

Remember, last week, GM investor Kirk Kerkorian sent a letter requesting the automaker to join forces with Renault and Nissan. Kerkorian's Tracinda investment company owns 9.9 percent of GM's shares. June saw the automaker finish above its 20-month moving average for the first time since July 2004, let's see if the trend can hold.

10:58 AM Checking on Semiconductor Stocks

In this morning's Opening View (www.schaeffersresearch.com/commentary/observations.aspx?ID=16348), Mark Fightmaster advised to "watch for a bit of action from the chip sector, as the Semiconductor Industry Association announced that total chip sales in May increased 9.4 percent over a year ago to $19.7 billion." With only about two hours left in the trading session thanks to today's early scheduled close, I thought it an opportune time to check on the day's activity in the five top-weighted holdings in the AMEX Semiconductor HOLDRs Trust (AMEX:SMH) exchange-traded fund:

--Applied Materials (AMAT) : up 0.49 percent

--Atmel (ATML) : up 2.1 percent

--Intel (INTC) : up 1.5 percent

--Micron Technology (MU) : up 0.40 percent

--Texas Instruments (TXN) : up 1.16 percent

The SMH itself, meanwhile, is currently higher by about 0.80 percent. The ETF's 10-day and 20-day moving averages are forging a bullish crossover, suggesting possible short-term strength.

11:38 AM Alcoa Zooms Higher on Takeover Speculation

Alcoa (NYSE:AA) has gapped higher today amid takeover rumors. Last week, JP Morgan said that foreign rivals Rio Tinto (RTP) and BHP Billiton (BHP) both have the available funds to make an acquisition bid of the prominent aluminum producer. AA shares have gained more than two percent in today's trading and are now perched back above their 10-week and 20-week moving averages.

On the Expectational Analysis (R) front, it is a fairly neutral picture for AA, RTP, and BHP, as all three issues have garnered a Schaeffer's Equity Scorecard rating of 5.0 (on a scale of zero to 10). Analysts' ratings are fairly bullish on AA, which has earned six "buy" ratings, four "holds," and zero "sells" at the present time. Options players are in the bullish camp as well, as the equity's Schaeffer's put/call open interest ratio (SOIR) stands at 0.43, in the 10th annual percentile. This backdrop could suggest that expectations are building for a takeover bid.

11:45 AM Midway Games Soars

Midway Games (NYSE:MWY) has surged sharply higher this morning, gaining more than 11 percent on no news that I can locate for the shares. The stock is currently hovering around the nine level, which is not only the site of former support, but it is also home to the stock's declining 20-week moving average. The stock has not notched a weekly close above both its 10-week and 20-week trendlines in 2006.

Short sellers could be adding some lift to the shares have they rush to stem their losses by buying back their bearish bets. In June, the number of MWY shares sold short increased by 27 percent to an eight-month high of 2.4 million. This accumulation of bearish bets accounts for roughly 22 percent of the security's float and is nearly nine times the stock's average daily trading volume.

For more information on these stocks or any stock in your portfolio, feel free to visit our Schaeffer's Equity Scorecard feature. Click here to read all of today's Market Blog: http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1C&PAGE=1

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Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com, is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method.