Schaeffer's Midday Options Update Features 3M Company, Black & Decker, Mattel, First City Bank, Maxtor.

CINCINNATI -- Today's Schaeffer's Midday Options Update Features 3M Company (NYSE:MMM), Black & Decker (NYSE:BDK), Mattel (NYSE:MAT), First City Bank (NYSE:FBK), Maxtor (NYSE:MXO). The Midday Options Update contains a brief commentary on the day's most notable activity and a table listing the most active calls and puts for the day. The Midday Options Update is published every day at www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research. 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=PROB1M&PAGE=1

Schaeffer's Midday Options Update: Looking for a Bottom on Maxtor

Another attack on Iraqi crude pipelines has oil concerns weighing heavily on traders minds again today. The mixed market reaction in early trading quickly gave way to selling, as investors weighed the coming increase in production from OPEC against the difficulties of Iraqi adding to the much needed supply of crude oil. Crude for August delivery closed above $41 on Friday, and this weekend's turmoil in the Middle East has not allowed the contract to slip beneath this key level in today's session.

A weakened third-quarter forecast marred an otherwise solid earnings report from 3M Company (NYSE:MMM) this morning, giving investors yet another feather to add to their worry cap. MMM reported that income reached $773 million, or 97 cents per share, for the second quarter, rising over last year's $619 million, or 78 cents per share, and besting the Street's view by a penny. The firm now projects 2004 earnings in a range of $3.72 to $3.75 per share, up from a previous forecast of $3.60 to $3.70. However, it was the third-quarter guidance and lighter-than-expected second-quarter sales figures that had MMM trading down more than five percent by midday. For the current period, the company expects profits to fall flat with the second quarter at 97 cents per share, slightly below analyst forecasts.

Continuing our jaunt through the plethora of today's earnings announcements, Black & Decker (NYSE:BDK) reported a second-quarter profit of $121.8 million, or $1.50 per share compared with $75.7 million, or 98 cents per share last year. The firm slammed the consensus estimate for earnings of $1.26 per share. Looking ahead, BDK guided third-quarter earnings to $1.25-$1.30 per share, with the Street anticipating earnings of $1.28 per share.

Purveyor of playtime plastic perfection, Mattel (NYSE:MAT) reported second-quarter net income of $23.5 million, or six cents per share, easing past both the prior year's number and the Street's forecast by a penny. Sales rose five percent to $804 million over the prior year, as a 37-percent growth in Hot Wheels sales and a 12-percent increases in both Fisher Price and American Girl products offset a 13-percent drop in Barbie sales.

Breaking from the mania of earnings season, First City Bank (NYSE:FBK) rose more than 19 percent after agreeing to be acquired by Webster Financial for $33 million, or $27 per share. The deal values shares of FBK at a 22-percent premium over Friday's closing price.

At 2:09 p.m. eastern time, the Dow Jones Industrial Average (DJIA - 10102.3) is down 0.35 percent and the S&P 500 Index (SPX - 1100.85) is lower by 0.05 percent. The Nasdaq Composite (COMP - 1880.2) is down 0.15 percent. At 2:10 p.m. in the options pits, 2,082,467 calls and 1,412,094 puts traded for a composite put/call ratio across all five exchanges of 0.67. The CBOE put/call ratio for equity options weighed in at 0.60.

According to Yahoo!Finance, Maxtor (NYSE:MXO) designs, develops, and manufactures a line of hard disk drives for desktop computers, storage systems, and Intel-based servers. The company joined the growing list of tech earnings warnings on July 2, when it lowered it second-quarter earnings forecast to well below the current Street expectation. The firm also announced that it plans to cut 400-500 jobs in order to trim costs. After the announcement, Wall Street adjusted its earnings expectations on the firm to a loss of 18 cents per share, nearly a three-percent decline from the same quarter last year. Looking at MXO's history in the earnings confessional we find that the company has held up rather well, besting the consensus by an average of 18.56 percent over the past five periods. The company has its chance to tell its side of the earnings story on July 21, according to Zacks.

With the looming earnings report, the stock's technical picture is in dire need of some good news. MXO continues to underperform the broader market, as its relative-strength measure versus the SPX has declined since October 2003. In fact, the shares have shed more than 63 percent over this time frame, falling under consistence resistance at their 10-day and 20-day moving averages. The security has now broken back below long-term resistance at the six level and is searching for support in the 5-5.50 range to staunch the selling pressure.

Naturally, the sentiment picture on this underperformer is an extremely bearish one. Options speculators continue to hammer the shares, as their Schaeffer's put/call open interest ratio of 0.49 is higher than 72 percent of all those taken in the past year. Furthermore, skeptical investors have sent 5,040 puts across the tape at the stock's August 5 strike. With open interest at this strike amounting to only 25 contracts before today, most of the activity should translate into new positions. Short sellers are also bearishly oriented toward MXO, increasing their positions by 13 percent over the past month. The more than 14.1 million shares sold short would take a hefty 6.46 days to cover. However, given the equity's underperformance, short sellers would have little need to cover their positions, thus lessening the chances of a short-covering rally.

Finally, Wall Street continues to bail on the security. On the news that MXO had lowered its second-quarter forecast, a major brokerage downgraded the shares to "neutral" from "outperform." According to Zacks, this downgrade is indicative of the overall sentiment on the Street. Currently, there are 10 "holds" and four "sells" held by the analyst community toward MXO. With expectations already lowered, and a failing fundamental and technical outlook for the stock, MXO may still have some room to drift before its ultimate bottom is reached.

Click the following link to see the Daily Chart of MXO since January 2004 with 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=10621 .

The best way to take advantage of the timely Schaeffer commentaries is to sign up to receive their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB1M&PAGE=1

About Schaeffer's Investment Research (www.SchaeffersResearch.com)

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 .