Schaeffer's Daily Market Blog Features Citigroup, Merck, Microsoft, Sprint Nextel, and Yahoo!

CINCINNATI -- Among the stocks featured in the April 4th edition of Schaeffer's Market Blog are Citigroup (NYSE:C), Merck (NYSE:MRK), Microsoft (NASDAQ:MSFT), Sprint Nextel (NYSE:S), and Yahoo! (NASDAQ:YHOO). 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 Tuesday, April 4, 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 .

10:20 AM Citigroup Cleared for Acquisitions

Yesterday, Citigroup (NYSE:C) Chief Executive Chuck Prince received a letter from William Rutledge of the New York Federal Reserve Bank concerning the one-year ban on mergers for C. Reportedly, the letter stated that the understanding that C "will refrain from significant expansion is no longer in operation." According to the letter, regulators "will carefully review any expansion proposal undertaken by Citigroup in accordance with all applicable statutory requirements and cannot, at this time, express any view on whether these requirements would be met regarding any specific proposal." An internal memo from Prince revealed that he is happy with the decision. Last March, the New York Fed imposed the ban as C was acquiring First American Bank. With the limits now lifted, watch C to start looking for acquisitions, which could encourage mergers in the banking sector.

Yesterday, the shares rebounded off their 20-day moving average and have their sights set squarely on the 48 level. The problem is that this level rejected the shares last week. In fact, this level has stifled the security for the most part since April 2004. The stock has added more than 0.50 percent, but is continuing to battle the 48 level.

11:56 AM Merck Adjusts Earnings Expectations

Merck (NYSE:MRK) announced before this open this morning that it expects first-quarter earnings of 71 to 75 cents per share, excluding restructuring charges. These expenses also came in lower than expected. Including charges, the company forecast earnings of 61 to 67 cents per share for the first quarter. Analysts currently expect earnings of 64 cents per share for the quarter on sales of $5.35 billion.

The drug maker also reaffirmed its outlook for earnings before items of $2.28 to $2.36 per share for the full year. Including restructuring charges, the company still sees earnings of $1.98 to $2.12 per share for 2006. The consensus Street estimate currently stands at $2.33 per share for the year. The firm noted that its outlook doesn't reflect the establishment of any reserves for any potential liability related to the ongoing Vioxx litigation.

At last check, the equity was up 0.65 percent at $35.64. Since the beginning of November, the security has rallied along the support of its rising 10-week moving average and is now battling resistance at the 36 level.

12:18 PM Microsoft to Announce Mobile-Phone Software Deal

A report came across MarketWatch this morning that Microsoft (NASDAQ:MSFT) is set to announce its largest ever mobile-phone software deal, an order for 500,000 Windows Mobile 5.0-based handsets. According to the report, Randy Siegel, the company's enterprise mobility strategist-U.S. government, stated that MSFT is due to unveil the pact with partners of the U.S. Census Bureau on Tuesday. The handsets are expected to be used by door-to-door census takers as part of the effort behind the 2010 U.S. Census. Siegel also stated that he's doing robust business with the U.S. government, with plans for contracts with agencies outside the Census office in the works.

The positive news has helped to lift the shares roughly 0.62 percent higher to $27.73. However, the equity is still facing some staunch resistance at the 28.20 level. This region halted the stock's rally attempts in November, January, and March. In fact, since December 2002, MSFT has logged only three monthly closes above the 28 level.

12:27 PM Options Traders Dial Up Sprint Nextel Calls

Sprint Nextel (NYSE:S) has earned a space on the most-active call options list today. Less than three hours of trading have passed, and nearly 5,600 contracts have swapped hands on the August 22.50 call (S HX). This in-the-money position was already home to more than 20,000 contracts, making it tough to determine whether today's action consists of liquidations, additions, or a combination of both. Two block trades of nearly 2,800 contracts were traded as spreads just before 10:30 a.m. One traded at the bid price of 4.20 per contract; one went off at the ask price of 4.30.

The only news on the telecom giant today was the announcement that Sprint will offer mobile ticketing capability to the monorail service in Las Vegas. The stock has rallied 1.5 percent, reaching its highest point since late November. The next technical challenge for S is the 27 region, which defined the stock's multi-year high last August.

1:37 PM Yahoo! Looks Shaky

Optimism on Yahoo! (NASDAQ:YHOO) is running as high as ever despite the stock's languishing price. During the past two days, call option volume has outpaced put volume by a ratio of about five-to-one. There are more than twice as many calls outstanding as puts, and the current put/call open interest ratio of 0.49 is lower than 98 percent of readings taken during the past year. I wouldn't be surprised to see the shares continue to struggle during the near term.

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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 .