1:55 pm ET: The major averages are rangebound as traders are biding their time awaiting the release of the Fed meeting notes due out in a few minutes (2pm ET). What will happen after the release is up in the air but if there's no hint of further easing, expect the "risk-on" trade to take a hit. What that means is that stocks and commodities could swing to the downside. It should be noted that the S&P 500 (SPX) is sitting on 1340 support and a break through that could mean a run to the next support level at 1310. The outcome will become apparent in a few minutes.
Stock of the Day: Obagi Medical (NASDAQ:OMPI) makes high-end skin-care products that are sold via distributors outside of the US and within physician networks in this country. The company board has removed a poisin-pill takeover clause clearing the way for potential acquisition, while Avon (NYSE:AVP) has taken out a line of credit suggesting that it's ready to make such an acquisition. Putting two and two together, Wall Street is expecting Obagi to be Avon's takeover target. The stock has already risen 30% in the past 6 weeks on increasingly heavy volume moving the share price from $13 to $17. Should the company actually be in Avon's cross-hairs, analysts are projecting takeover bids in the $19 - $23 range which is 12% - 35% over the current price. Note that this is all still conjecture and as such, please treat this as a moderately speculative trade. The company will be reporting earnings sometime in the beginning of August which would be a good time to announce the take-over, but as with anything having to do with M&A, it could happen sooner. If you want to be on the safe side, a put option would buy some cheap insurance (Aug 12.5 put @ $0.60; Oct 12. put @ $1.20). Risk Level: Moderate (using puts as insurance) to Moderately Speculative