Schaeffer's Midday Options Update Features Brightpoint, Dollar General, Dollar Tree Stores, ImClone Systems, and Elan.

CINCINNATI -- Today's Schaeffer's Midday Options Update features Brightpoint (NASDAQ:CELL), Dollar General (NYSE:DG), Dollar Tree Stores (NASDAQ:DLTR), ImClone Systems (NASDAQ:IMCL), and Elan (NYSE:ELN). 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=PRMOU12M&PAGE=1

Options Update: Checking Back in on Elan (ELN)

U.S. stocks are in retreat this afternoon following Fed Chair Ben Bernanke's comments on inflation Monday afternoon. Investors believe that Bernanke's remarks raise the likelihood of further interest-rate increases, while his remarks that economic growth is slowing raised concern about corporate profits. Bernanke told an international banking forum yesterday that recent core inflation readings "have been higher in recent months" and have "reached a level that, if sustained, would be at or above the upper end of the range that many economists, including myself, would consider consistent with price stability and the promotion of maximum long-run growth." Bernanke also stated that the U.S. economy was experiencing a "real slowdown," kicking off the aforementioned concerns over corporate profits.

Crude futures are also in a retreat formation, as investors and traders wait for Iran's response to the package of incentives that western governments have offered hoping to persuade the country to stop nuclear research. Earlier today, European Union (EU) foreign policy chief, Javier Solana, presented the proposed incentives to Iran, noting that the West hopes "to start a new relationship on the basis of mutual respect and trust." Initially, Iran's chief nuclear negotiator Ali Larijani told the BBC that the package contains "positive steps" as well as "ambiguities." The negotiator stated that the Iranian government would respond as soon as it studied the offer. Currently, a barrel of oil will cost you $71.70 per barrel, 90 cents less than when the market opened.

One CELL of a Drop

A downgrade to "hold" from "buy" has Brightpoint (NASDAQ:CELL) more than 14 percent lower today. Deutsche Bank blamed the downgrade on a shift in carrier competition, which has favored accounts where CELL is less well represented. The broker added that normal seasonality is returning and offering only "modest" growth for the current quarter.

Dollars Down

Dollar General (NYSE:DG) and Dollar Tree Stores (NASDAQ:DLTR) have both dropped after being downgraded to "sell" from "hold" at Deutsche Bank. The brokerage noted that the second-half recovery assumed in consensus estimates may not come to fruition. Deutsche Bank stated that the "pressures facing lower-income customers have been well documented, but we believe further weakening in the consumer environment will lead to even more top-line weakness.

Attack on the Clone

ImClone Systems (NASDAQ:IMCL) is sliding lower today following its report of data from five clinical trials looking at Erbitux. The company studied the effect of Erbitux in combination with chemotherapy had on metastatic colorectal cancer. In one study, the primary endpoint was survival and secondary endpoints were response rate, progression-free survival and toxicity. IMCL announced that the response rate among patients treated with the combination of Erbitux and chemotherapy was 52 percent, while the response rate for patients treated with just chemotherapy was 38 percent. IMCL is more than five percent lower heading into the midday hour. This data was presented at the American Society of Clinical Oncology's 42nd Annual Meeting in Atlanta.

Most-Active Options Update

At 1:40 p.m. Eastern Time, the Dow Jones Industrial Average (DJIA - 10,961.2) is flirting with a triple-digit fall yet again, losing 0.79 percent. The S&P 500 Index (SPX - 1,260.74) has dropped 0.36 percent, and the Nasdaq Composite (COMP - 2,156.4) is down by 0.61 percent. At 1:42 p.m. Eastern Time, 2,808,312 calls have changed hands compared to 3,003,211, equaling a single-day put/call volume ratio of 1.06. The CBOE's equity put/call volume ratio was slanted toward the put side, weighing in at 0.94.

Elan

Yesterday, the Food and Drug Administration (FDA) informed Elan (NYSE:ELN) that its multiple sclerosis (MS) treatment, Tysabri, could be returned to the U.S. market as a monotherapy. The FDA told ELN that Tysabri could be used only in MS patients who've failed other therapies and would be available at specially authorized infusion centers and pharmacies. Yesterday's news was not what investors and analysts had hoped for, and it propelled ELN to a drop of nearly 13 percent. Today, the pharmaceutical firm continues to drop, shedding more than three percent. However, heavy activity on ELN's June 15 call (ELNFC) and July 15 call (ELNGC) indicates that the options players are a bit optimistic.

Back in May, my colleague Ed Stenson covered ELN. Ed noted, "On our Schaeffer's Equity Scorecard, the stock earns 7.5 out of 10, suggesting that the path of least resistance lies to the upside. ELN fell dramatically last year, but that should not cloud your judgment. This could be a stock to watch and learn about." After Ed's observation, ELN continued to move higher, but has slipped after yesterday's news. Admittedly, a drop of 13 percent is never good, but look at the daily chart below. Has ELN slipped below the 15 level yet? Your answer should be "no," (at least at the time I wrote this observation) and you should also notice that the 15 level acted as resistance in the past. This is a good sign, as prior resistance will often switch roles and serve as support when given the chance.

Most of you know that ELN basically walked off a cliff thanks to concerns over the safety of Tysabri. You can see that on the monthly chart below, but there is another reason that I spanned back to January 2003. In November 2003, ELN saw a bullish cross of its 10-month and 20-month moving averages; the stock then immediately rode the support of its 10-month higher. In fact, the only thing that stopped the company's ascent was the news concerning Tysabri. Now, look at this month and notice that ELN's 10-month moving average has again completed a bullish cross of its 20-month counterpart. This formation is often a signal of a continued run higher, which came to fruition in the past. Will this happen again? I can't tell you that, but history does often repeat itself.

Don't forget, the 15 level also appears ready, willing, and able to stand as support for the stock.

Technically, I find ample reasons to be enthusiastic about ELN going forward. Let's take a look at how the firm's sentiment stacks up:

--Percent of analysts tracked by Zacks who rate the stock with a "hold" or worse: 100%

--Number of analysts tracked by Zacks: six

--Short-interest ratio: 8.91

--Schaeffer's put/call open interest ratio (SOIR): 0.55

--SOIR percent rank: 11%

--Overall Schaeffer's Equity Scorecard rating: 8.0

When Ed looked at ELN's sentiment backdrop, it earned a Schaeffer's Equity Scorecard rating of 7.5 out of a possible 10. Since Ed looked at ELN's sentiment, the firm's short-interest ratio has increased to nearly nine days to cover the shorted shares (from 5.43). As a result, the company's Schaeffer's Equity Scorecard rating has increased to 8.0. This high rating indicates that ELN has more room to increase and warrants a serious look.

Click here to see a Daily Chart of ELN Since September 2005 and a Monthly Chart of ELN since January 2003 With 10-Month and 20-month Moving Averages: http://www.schaeffersresearch.com/wire?ID=16165

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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.