CBOE Volatility Index S&P 500 Options-VIX closed at 21.71; 10-day moving average is 24.37.

Biogen Idec (NASDAQ: BIIB) closed at $49.79. BIIB is expected to report Q3 EPS on October 20 and give avonex outlook. BIIB November and January option implied volatility of 36 is near its 26-week average of 39 according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com.

Elan Corp (NYSE: ELN - option chain) stock is falling today after Biogen (NASDAQ: BIIB) reported another serious brain infection in a patient being treated with Tysabri. Tysabri is a MS drug whose revenues are shared by BIIB and ELN. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on ELN.

This morning, ELN opened at $7.37. So far today the stock has hit a low of $6.87 and a high of $7.49. As of 11:15, ELN is trading at $6.88, down 48 cents (-6.5%). The chart for ELN looks neutral and S&P gives ELN a neutral 3 STARS (out of 5) hold ranking.

"Midyear is as good a time as any to pause and reflect," says Richard Moroney in Dow Theory Forecasts -- a newsletter with the distinction of having been published for more than 50 years.

Here, he reviews the state of the market and offers a look at trio of favorite stocks which he considers "fundamentally superior" companies: Biogen Idec (NASDAQ: BIIB), Comcast (NASDAQ: CMCSA), and Oceaneering International (NYSE: OII).

Alcoa Inc. (NYSE: AA) started off the new earnings season with disappointing results that helped to stifle the recent rally. Was that enough of a sign of what's to come? No, probably not. But the earnings reports start to fly in earnest this week, which should provide a more detailed picture of the state of things.

Analysts surveyed by Thomson Reuters anticipate that some of the biggest names will prove to be holding their own. Google Inc. (NASDAQ: GOOG) is expected to post a profit of $4.91 per share, marginally higher than a year ago, and Johnson & Johnson's (NYSE: JNJ) expected $1.22 per share profit is slightly lower year over year. Even Mattel Inc.'s (NYSE: MAT) estimated loss of $0.13 per share is the same as in the year-ago period.

Elan (NYSE: ELN) said it is initiating a strategic review which could result in a minority investment, a strategic alliance, a merger, or a sale. ELN closed at $8.03 Monday. ELN February call option implied volatility is at 103, puts are at 112, above its 26-week average of 100 according to Track Data, suggesting larger price movement..

Biogen Idec (NASDAQ: BIIB) closed at $48.45 Monday. BIIB and ELN have a 50-50 stake in the multiple sclerosis drug Tysabri. ELN said it is initiating a strategic review which could result in a minority investment, a strategic alliance, a merger or a sale. BIIB February option implied volatility of 56 is near its 26-week average according to Track Data, suggesting non-directional price movement.

Crucell NV (NASDAQ: CRXL), a biopharmaceutical company, and Wyeth (NYSE: WYE) confirmed on January 7 the two firms are in discussion to combine. CRXL closed at $22.63 Monday. CRXL February option implied volatility of 58 is near its 26-week average of 61, according to Track Data, suggesting non-directional price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Health care has long been considered a recession-resistant business. Given the current economic challenges, it's little surprise that in our survey of favorite stocks for the coming year, a number of leading advisors turned to this classic defensive sector.

In this year's Top Stock Picks from 75 advisors report, we found an intriguing group of medical-related stocks, from speculation in emerging biotech to well-established pharmaceutical firms, and from medical products makers to medical services firms focused on increasing health care efficiency and early disease detection.

Mike Cintolo, editor of The Cabot Market Letter, thinks Myriad Genetics (NASDAQ: MYGN) could be a "big winner in 2009," The company is a lead in the new field of cancer predisposition testing. For Mike's full report, read Top Stock Picks '09: Myriad Genetics.

Chuck Carlson, editor of The DRIP Investor, sees both quality and potential in Bristol-Myers Squibb (NYSE: BMY). For Chuck's full report, read Top Stock Picks '09: Bristol-Myers Squibb.

It's been a tough year for many industries -- there's no denying it. Retailers of all stripes, oil companies, construction firms, financials, basic materials companies -- you name it, it's down.

So, are there any safe havens?

Historically, in times of economic uncertainty the pharmaceutical industry, along with consumer staples, is often the "go to" place where, at a minimum, you can count on a nice dividend yield to shield your portfolio from gigantic losses. Not anymore.

In this downturn even stalwarts such as Merck (NYSE: MRK) and Pfizer (NYSE: PFE) trade near their multi-year lows, despite offering generous yields.

What about biotechs? That sector has performed much better.

However, one of my favorite biotech names, Elan (NYSE: ELN), is struggling.

At the start of the year, ELN was looking strong. Its stock was up by 50% by mid-summer. Since then shares have collapsed and now trade in the mid-single digits.

I profiled the company on July 2, with one caveat: If late-stage testing of a new Alzheimer's drug called bapineuzumab doesn't go as planned, then ELN will trade lower.

About a month later, the company announced that the results of a Phase II clinical study showed the drug does safely treat the symptoms of Alzheimer's disease, but the results were not statistically significant, and the 234-person Phase II study would have to be broadened to a much larger Phase III study to be considered for FDA approval.

The shares fell 17% on the announcement, but that was just the start. As is often the case, when it rains, it pours.

"Investors should keep a defensive posture," says Richard Moroney. However, the editor of the blue chip advisory service, Dow Theory Forecasts, see opportunity in two drug stocks that he has just added to his buy list.

"In general, we prefer to let the market's action signal that the point of maximum pessimism has passed before deploying our cash reserves. But we intend to remain engaged, looking for stocks capable of bucking the bearish trend.

"Biogen Idec (NASDAQ: BIIB) produces biotechnology drugs that treat non-Hodgkin's lymphoma and multiple sclerosis. Per-share profits jumped 69% and operating cash flow surged 71% in the September quarter.

"Wall Street expects per-share-profit growth of 9% in 2009 and 7% in 2010, but good news on Biogen's most-promising drug could render those targets conservative.

"At 12 times estimated 2009 earnings, Biogen shares are the cheapest of the six largest U.S. biotech stocks. Biogen is being initiated as a Focus List Buy and a Long-Term Buy.

"AstraZeneca (NYSE: AZN) is being added to the Buy List. The British drugmaker offers an intriguing blend of value and growth potential. A study released this month showed that the company's cholesterol drug Crestor reduced the risk of various heart problems by 44%.

"The study could potentially expand Crestor's addressable market to include millions of new patients, though AstraZeneca is soft-pedaling the potential benefits. AstraZeneca, which earns a Quadrix Overall score of 94 and yields 4.5%, is being added to the Buy List."

Steven Halpern's TheStockAdvisors.com offers a daily look at the latest market commentary and favorite stock picks and investment ideas from the nation's leading financial newsletter advisors.

Cisco (NASDAQ: CSCO) is recently up 28c to $18.15 in pre-open trading. CSCO is expected to report Q1 EPS on November 5. Morgan Stanley lowered its price target to $24 from $29. CSCO November option implied volatility of 74 is above its 26-week average of 38 according to Track Data, suggesting larger price movement.

Biogen Idec (NASDAQ: BIIB) is recently trading down $3.69 to $38.25 in pre-open trading. BIIB & ELN disclosed another confirmed a case of PML in MS patient treated with Tysabri in the U.S.; two others were disclosed on July 31 in Europe. Cowen says: "We believe BIIB shares 25% undervalued relative to the market assuming no contribution from Tysabri." BIIB November option implied volatility of 74 is above its 26-week average of 47 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

Analyst upgrades:

• Calyon upgraded major network carriers based on falling oil prices and capacity cuts. The analyst is positive over the next 12 months but cautious short-term given the uncertain economy, and volatile markets and oil prices. AMR Corp (NYSE: AMR) and Delta Air (NYSE: DAL) were upgraded to Add from Neutral and UAL Corp (NASDAQ: UAUA) was raised to Neutral from Reduce.
• Ryanair (NASDAQ: RYAAY) was upgraded at Citigroup to Buy from Hold.
• Boardwalk Pipeline (NYSE: BWP) was raised to Buy from Hold at Deutsche Bank.
• Cowen lifted Biogen Idec (NASDAQ: BIIB) to Outperform from Neutral.
• JP Morgan upgraded Choice Hotels (NYSE: CHH) to Neutral from Underweight following the better-than-expected Q3 report.
• Oppenheimer upgraded shares of Integra LifeSciences (NASDAQ: IART) to Outperform from Perform on valuation, the company's minimal exposure to economic conditions, and expectations for margin improvement and a rebound in organic growth.

Analyst downgrades:

• Sherwin-Williams (NYSE: SHW) and AerCap Holdings (NYSE: AER) were downgraded to Neutral from Overweight at JP Morgan.
• UBS downgraded Embarq (NYSE: EQ) to Neutral from Buy following the CenturyTel (NYSE: CTL) merger announcement.

Shares of drugmaker Biogen Idec Inc. (NASDAQ: BIIB) are higher this morning after the company posted an 84% surge in its fourth-quarter profit, driven by strong sales of its multiple sclerosis drugs Avonex and Tysabri.

The company said its profit increased during the fourth quarter to $201.2 million, or 67 cents per share. This is a significant jump from the same period of last year when the company reported a profit of $108.6 million, or 32 cents per share. Included in Biogen's earnings figures were costs related to merger, and expenses related to the company's stock option.

Excluding that, the drugmaker's quarterly profit gained 45% and its earnings per share came in at 89 cents. Analysts were expecting the company show earnings of only 80 cents per share.

MAJOR PAPERS:

• The Wall Street Journal reported that IAC/InterActiveCorp's (NASDAQ: IACI) CEO Barry Diller is in talks with outside investors or possible buyers for all four companies that he plans to spin off, according to a person familiar with the situation.

OTHER PAPERS:

• Biogen Idec Corporation (NASDAQ: BIIB) may be considering an offer for Genmab (OTC: GNMSF), according to the UK Times; GlaxoSmithKline Plc (NYSE: GSK), which has a license for Genmab's HuMax, may have to counterbid in order to protect its position.
• The Economic Times reported that Sears Holdings Corporation (NASDAQ: SHLD) may be interested in launching operations in India.

WEB SITES:

• According to a source close to Yahoo! Inc (NASDAQ: YHOO), CEO Jerry Yang has decided to go forward with layoffs at the company. The source said that the layoffs will come in the 1,500-2,000 range instead of the "hundreds" reported elsewhere, the Silicon Alley Insider reported.

MAJOR PAPERS:

• Australian resources firm BHP Billiton Limited (NYSE: BHP) is unlikely to up its $99.22B bid to acquire mining company Rio Tinto PLC (NYSE: RTP), according to the Wall Street Journal.
• Ten years after taking the reins at eBay Inc (NASDAQ: EBAY), CEO Meg Whitman is making plans to retire, reported the Wall Street Journal. Company president John Donahoe is the leading candidate to replace her.
• According to the Financial Times, Biogen Idec Incorporated (NASDAQ: BIIB) CEO Jim Mullen said the company could make a "large-scale acquisition" this year after it failed to sell itself.

WEB SITES:

• Finance companies including Citigroup Incorporated (NYSE: C) could sell proprietary investments in India as they struggle to shore up their capital after suffering losses in the subprime sector in the U.S., LiveMint.com reported.

Biotechnology firms are judged on the basis of how successful they are at shepherding drug candidates through the clinical trial/regulatory approval process. With several approved formulations and more than twenty products currently in clinical development, there is a Cambridge, Massachusetts outfit that ranks with the best.

Biogen Idec (NASDAQ: BIIB) specializes in drugs for neurological disorders, autoimmune disorders and cancer. Products include multiple sclerosis treatments Avonex and Tysabri; psoriasis drug Fumaderm; cancer radioimmunotherapy Zevalin; and Rituxan, a cancer formulation developed with Genentech (NYSE: DNA). The company was formed in 2003, by the merger of Biogen and Idec Pharmaceuticals.

The firm pleased investors last week, when it affirmed expectations for full year EPS of $2.60-$2.70 and revenues of $3.12-$3.16 billion. Analysts had been looking for $2.68 and $3.13 billion. Management also said it expects to grow revenue by 15% each year from 2007 to 2010 and will increase earnings per share, before charges and expenses, by 20% annually for those years. The news kept BIIB shares cycling through a positive seven-week trading channel. The price is currently at the base of that channel, where oversold Stochastic and MACD technical parameters suggest the potential for a rise back toward the top.

"The long-term outlook for biotech is excellent and many of today's undervalued companies will ended up looking like screaming bargains at today's prices," notes biotech expert John McCamant.

In his Medical Technology Stock Letter, the advisor has long been a fan of Biogen Idec (NASDAQ: BIIB). Now, he is joined by Carl Ichan, who has purchased shares in the biotech firm.

Says McCamant, "There may be no such thing as a pure safe haven within the equity markets. However, we believe the market for new drugs will continue to grow rapidly even if we enter into a difficult period for the economy."

He argues, "Quite simply, if an individual has to decide whether to buy a new TV or a new cancer drug, it is a safe assumption that they will chose the best drug possible. Additionally, with the continued aging of America, the demand for healthcare is poised for unprecedented growth."

As to Biogen, he explains, "We have long recommended the stock primarily for the significant growth opportunity Rituxan brings to the plate in treating autoimmune disease, most importantly rheumatoid arthritis (RA)."