'Witchy' Morning Mood Keeping Trading in Check - TheStreet

'Witchy' Morning Mood Keeping Trading in Check

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"Must be the season of the witch!" The triple witch that is.

Triple-witching, the quarterly expiration of stock options, index options and index futures, was expected to keep trading interesting this morning, though without providing much direction. And that's not much different than the way things have been for most of the week. The technology sector has continued to trade in a range, pushing on the upper end of the range, but unable to break out despite some friendly economic data.

In early trading, the

Nasdaq

was down 18.58, or 0.5%, at 3827.16. Yet another earnings

warning, this one coming from

Xerox

(XRX) - Get Report

, was creating some concern in the technology sector, though nothing overly significant. Xerox was down 4 1/2, or 18%, at 20 13/16 on the news.

Among other stocks in the news,

Covad Communications

(COVD)

was down 6 3/8, or 25%, at 18 7/8. Covad, which provides high-speed digital communications over phone lines, said it would buy privately-held

BlueStar Communications

in a deal valued at $202 million. Covad said the acquisition will enhance expansion into small cities and rural areas.

Charles Schwab

(SCH)

was down 1/2, or 1.5%, at 32 7/16. The brokerage firm said it would team with Swedish telecom firm

Ericsson

(ERICY)

to develop wireless investing services. The services will be based on the "Wireless Application Protocol", which allows users to surf the Net using a mobile phone. Ericsson was down 1/8, or 0.6%, at 21 1/2.

Jumping the gun just a bit,

Merrill Lynch's

Henry Blodget, put out a pre-earnings report for

eBay

(EBAY) - Get Report

, though the online auctioneer does not report its fiscal second-quarter earnings until July 25. Blodget wrote that he expected another "solid quarter," but he was not looking for much upside on either the top or bottom line, which he claimed "may come as a surprise to some investors, as eBay has often beaten expectations easily."

Blodget wrote that he expected online revenue to be $84.5 million, which was only a 9% increase sequentially, with potential upside to $88 million.

"The reasons we do not expect as much upside to this number as in past quarters are: 1) a sequential decrease in the number of new registered users added in the quarter (last quarter, the company added 2.6 million, this quarter, we are looking for just over 2 million), and 2) Billpoint, the company's person-to-person payment service is still not generating material revenue, as the company has had to keep it free to match the competition." He wrote that eBay expects to be able to start charging for Billpoint by the fourth quarter.

Blodget concluded that he did not expect to "significantly raise" revenue or earnings estimates for the year, noting the summer is a "seasonally weak time for eBay, and we still don't see any strong catalysts until the end of the year." eBay was down 3 5/16, or 5.2%, at 60 3/4.

Finally,

ABN Amro

put out a note on market volume for the first part of June, noting that

Knight/Trimark's

(NITE)

Over the Counter market share increasing by 104 basis points to 13.88% from May. Analysts wrote that they continued to believe that Merrill Lynch's purchase of market maker

Herzog Heine Geduld

"is not a material negative event for our outlook" for Knight/Trimark. Knight was down 1/4, or 0.8%, at 30 5/8.