Stocks are indicated modestly lower following two days of gains and a mixed round of earnings news Wednesday. Thirty minutes before the opening bell on Wall Street, stock index futures hint at a possible 20 point early loss for the Dow Jones Industrial Average. The industrial average has gained 230 points so far this week.

However, Dow component Pfizer (PFE) is down 2.5 percent after the pharmaceutical giant reported quarterly profits of 49 cents per share, which was a penny shy of analyst estimates. Time Warner (TWX), MetLife (MET), and Wal-Green’s (WAG) are also lower on earnings. News Corp. (NWSA), owner of the Wall Street Journal, jumped 5 percent after reporting a 25-cent per share profit, which beat Street estimate by a nickel.

In economic news, ADP reports that 22,000 private sector jobs were lost in January, which was better than the 30,000 loss economists had predicted. The report comes two days ahead of key jobs data. Economists expect Friday’s report to show the economy adding 13,000 jobs in the first month of 2010.

The ISM Services Index is due out 10:00 a.m. eastern time. Economists expect the gauge of economic activity outside of manufacturing to improve to 51 for January, up from 49.8 the month before.

Bonds are lower on the better-than-expected jobs numbers. The benchmark ten-year Treasury is down a few ticks and now yields 3.67 percent

The dollar added .44 to 90.80 against the yen. The euro edged down .0019 to 1.3942 against the buck.

After gaining almost $5 over the past two days, crude oil is off 33 cents to $76.90 a barrel ahead of weekly inventory data at 10:30 eastern time. Gold lost $4.8 to $1113.20 an ounce.

Patriot Coal (PCX) is up $1.65 to $16.35, a new 52-week high, and options action is heating up as well. 9,450 calls and 2,040 puts traded. Most of the action is in the Jan 2010s (14s, 15s, and 16s). No news on the stock, but there must be some reason for the relative strength in the shares. The Market Vector Coal Fund (KOL) is up 64 cents to $36.18.

Massey Energy (MEE) is up 5.2 percent to $37.89 and hit a new 52-week high on a good day for the coal names (ACI, BTU, CNX, PCX, ANR). The Market Vectors Coal Fund (KOL) is up 4.5 percent. In the options, MEE volume is running 2X the average daily, with 12K calls and 2500 puts traded so far. The top trade of the day is a block of 5000 April 45 calls bought at $2.75 each, and tied to shares at $37.50 (on 35 delta). 7800 now traded. Looks like buyers of Nov 27, Jan10 45, and April 45 calls as well.

Stocks bounced around in morning trading, but the Dow Jones Industrial Average has battled back and is holding modest gains midday.

Stock index futures rallied before the stock exchanges opened after the Labor Department reported that the US economy lost 345,000 jobs in May. The number was significantly better than the 520,000 loss economists had expected.

However, investors sold into the early strength, as the news sparked a sharp rise in bond yields and a rally the dollar, which also sent crude oil and gold prices sharply lower. After hitting a high of $70 in early trading, crude fell into the red shortly after the payroll data.

Another reversal in mid-morning trading helped lift the equity market and the situation had stabilized by midday. Crude is back to unchanged at $68.80. Gold is still reeling, down $21.40 to $96.90 on dollar strength.

The buck is still holding higher ground, as higher bond yields attracts flow to the buck. The dollar is up 1.45 to 98.07 on the yen. The euro is taking a hit and dipped back below 1.40 against the greenback.

Meanwhile, the benchmark ten-year Treasury is down 23/32nd, but well off session lows. The yield on the ten-year is at 3.83 percent, up from 3.76 percent pre-payrolls, but down from six-month highs above 3.9 percent.

The CBOE Volatility Index (.VIX) is down .96 to 29.22 as stocks recover and event risk has passed. The Dow is up 40 points. Approximately 2.9 million puts and 3.9 million calls traded by Noon eastern time, a ratio of .75.

Puts are active in Genco Shipping (GNK) as the dry bulk shippers (DRYS, DSX, EGLE, EXM) show relative weakness. Shares are down .81 to $24.36 and 10,000 Oct 15 puts traded, including a purchase of 9,600 for $1.30.

Bearish trading is also being seen in PharMerica (PMC), the Currency Euro Trust (FXE) and the Market Vectors Coal Fund (KOL). Bullish trading picked up in a number of the metals companies, including Alcoa (AA), AK Steel (AKS), and Cliffs (CLF).

Coal stocks are hot after Alpha Natural Resources (ANR) reported strong earnngs. The Market Vectors Coal Fund (KOL) is up $1.24 to $22.33 and up 36.9 percent from a week ago. ANR is up $5 to $30.32 and 31K calls traded, compared to 5,800 puts. Players are also looking for additional upside in Massey (MEE) calls (11,000 traded, compared to 4000 puts), Arch Coal (ACI) calls (23K traded, compared to 5,340 puts), and Foundation Coal (FCL) calls (with 4,180 traded, compared to 570 puts.)

Coal stocks continue to run higher Monday afternoon. The Market Vectors Coal Fund (KOL) is up $2.24 to $21.25 and recently moved to session highs of $21.40 per share–its best levels since mid-October. The race higher comes after Goldman Sachs upgraded the coal group to attractive. In addition to KOL, a number of individual names are seeing increasing options activity. Foundation Coal (FCL) was mentioned this morning. Massey (MEE), Peabody (BTU), and Arch Coal (ACI) are also seeing bullish order flow late Monday.

The Market Vectors Coal Fund (KOL) is smokin after Goldman Sachs upgraded the group from Neutral to Attractive–Reuters. After rallying 7.3 percent Friday, KOL is up another $1.40 to $20.41 and up for a fourth day. Foundation Coal (FCL) is helping. FCL is up $2.35 to $20.32 and May 22.5 calls are being bought early. Bullish trading in FCL comes ahead of earnings tomorrow before the bell.

November 20 calls on the Market Vectors Coal Fund (KOL) are being bought, even as these contracts move deep out of the money two weeks prior to options expiration. The group is under pressure today after steel companies announced production cuts of up to 20 percent, which is likely to reduce demand for coal. KOL, which is an exchange-traded fund holding 41 companies from the industry, is down $2.17 to $15.23 and not far from session lows (15.16). The fund is down 21.4 percent from its Tuesday close of $19.38 per share. Some players seem to be looking for a cheap way to play a rebound, however. 1,400 KOL November 20 calls have traded, with 92 percent of the day’s volume trading offerside. Open interest is 989 and therefore the action looks opening.

Alpha Natural Resources (ANR, news, chart, volatility) saw bullish trading amid a recovery in the coal stocks Tuesday. The Market Vectors Coal Fund (KOL), which was down 40 percent month-to-date prior to today, gained $2.25 to $29.44. ANR was one of the stars of the show, rallying $8.02, or 18.5 percent, to $51.43. In the options market,13,000 ANR calls and only 634 puts traded on the day. The volume included a block of 5,000 January 65 calls traded offerside for $5.50 and 5,000 of the January 85 calls traded bidside for $1.10. With open interest of 273 in the 65s and 781 in the 85s, the volume appears to be the opening of a substantial bull call spread. If so, the strategist bought the 65s, sold the 85s, and paid a net debit of $4.40 per spread. The potential payoff is $15.60 if ANR rallies above $85.00, or 64.6 percent, by January options expiration (108 days).