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Schaeffer's Daily Market Blog Features: Dell, Wal-Mart Stores, General Electric, Home Depot, and Deere & Co.

Posted on: Tuesday, 15 August 2006, 18:00 CDT

Among the stocks featured in the August 15 edition of Schaeffer's Market Blog are Dell (NASDAQ:DELL), Wal-Mart Stores (NYSE:WMT), General Electric (NYSE:GE), Home Depot (NYSE:HD), and Deere & Co. (NYSE:DE). 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=PROB13M&PAGE=1 .

Schaeffer's Market Blog for Tuesday, August 15, 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=PROB13C&PAGE=1 .

Posted 1:19 PM General Electric is Going Nowhere Fast

After going through a proprietary screen combining technical price performance and sentiment I came up with what seems to be a prime bearish stock play. General Electric (NYSE:GE) has been a lackluster stock for the past couple of years, and yet sentiment toward the old blue chip is as optimistic as ever. Option activity on the shares has been decidedly bullish as the stock's current Schaeffer put/call open interest ratio of 0.66 is below 81 percent of readings taken during the past year. Short interest on GE fell 12 percent during the past month, and only represents about one-third of one percent of the stock's float. Analysts love the shares as well, given their 13 "buy" ratings, one "hold" rating, and zero "sell" ratings. If you're looking for a stock that will rally, and you think that GE might be a good value, then think again.

Posted 12:29 PM Dell on Fire Following Battery Recall

I'm not quite sure I understand the reasoning for a stock rallying amid a recall. However, this is the situation for technology-bellwether Dell (NASDAQ:DELL) today, as the stock has jumped nearly four percent after the firm recalled more than four million notebook computer batteries last night. While I'm one of the lucky few that happens to own an Inspiron 700M that is not affected, if you happen to own a DELL laptop, you may want to head on over to DELL's website to get checked out. No need for overheating batteries that may pose a fire hazard. I mean, DELL laptops are hot, but this is pushing the envelope a bit.

Turning back to the matter at hand, investors are probably reacting to the company's statement that the recall would have no "material adverse effect" on its results of operations, financial position, or cash flows. If you are a regular reader of SchaeffersResearch.com, you may have noticed my "free premium" article on DELL yesterday, which focuses on the company's upcoming earnings report. In my opinion, today's run higher in the shares could be setting the stock up for a bigger fall, should DELL disappoint with this report. For a more in-depth look at the shares, check out my article on DELL ahead of earnings. Sure, it's a "free premium" article, but all you have to do is sign up with your email address. No money, no credit information, just an email address, and the benefits of the "premium" articles can be right there at your fingertips.

Posted 11:54 AM Home Depot Tops the Dow

Home Depot (NYSE:HD) shares have rallied three-and-a-half percent today and have added the most index points to the Dow Industrials. The home-improvement retailer noted this morning that its second-quarter profit rose more than five percent to 90 cents per share. Excluding items, HD would have banked 93 cents per share, a penny more than analysts were expecting. Sales rose 16.7 percent to $26 billion, while retail sales grew by 5.1 percent.

Looking ahead to the full year, HD expects 2006 sales growth of between 14 and 17 percent, along with earnings-per-share growth between 10 and 14 percent. These figures are toward the lower end of previous outlooks. An analyst with Merrill Lynch noted that this news was "modestly disappointing ... but within expectations."

Despite this lackluster outlook, the stock is surging along with the broader market and using its second-quarter positive earnings surprise as a jumping-off point. Today's rally has eased the stock over its 20-day moving average, but HD continues to waffle beneath its 10-week and 20-week moving averages. In fact, these intermediate-term trendlines have served as solid resistance since early April. This resistance still seems fairly robust, and the stock's Schaeffer's Equity Scorecard rating of 3.0 portends further downside. The stock's major competitor, Lowe's (LOW), is modestly higher today but has also been struggling with resistance at its 10-week and 20-week trendlines. LOW shares have been pointed lower since early March and show no signs of recover at the current juncture.

Posted 10:51 AM Deere Tops Expectations

Sticking with the blog's early theme of earnings, Deere & Co. (NYSE:DE) announced that its third-quarter income increased 13 percent to $1.85 per share. DE's earnings rose thanks to higher prices for its agricultural equipment and better sales of its landscaping, construction and forestry machines. Revenue for the third quarter came in at $6.27 billion. The Street expected DE to post earnings of $1.81 per share on revenue of $5.77 billion. Not all the news was good, as DE hinted that poor growing weather could lead to lower farm-equipment sales in the quarter. While the stock is up nearly one percent on the day, the company should be concerned about overhead resistance from its 10-day, 10-week, and 20-month moving averages.

Posted 10:03 AM Wal-Mart Drops

This morning, Wal-Mart Stores (NYSE:WMT) announced that its second-quarter profit dropped 26 percent, the retailing giant's first profit decline in a decade. The company announced that the sale of its retail business in Germany offset back-to-school spending. WMT backed its full-year forecast, but did note that the second half of 2006 year could be "challenging." For the quarter, WMT earned 50 cents per share, including a charge of $863 million related to the sale of its German business. Excluding this charge and charges related to operations in South Korea, WMT earned 72 cents per share, matching the consensus estimate. Total sales for the quarter totaled $85.43 billion. While the results are 11 percent higher than last year, it fell short of the consensus estimate. WMT announced that it expects earnings from continuing operations between 59 and 63 cents per share for the third quarter, and full-year earnings between $2.88 and $2.95 per share. The Street expects full-year earnings of $2.92 per share.

In pre-market trading, WMT was down roughly one percent. The opening bell did little to help the retailing behemoth, as it has currently lost more than two percent. The shares continue to retreat from their 10-month and 20-month moving averages. Twice since April 2004 has the equity finished above these trendlines (this past May and June), and the trendlines have resumed their role as resistance. What's more, WMT's 10-week moving average has capped the shares.

For more information on these stocks or any stock in your portfolio, feel free to visit our Schaeffer's Equity Scorecard feature. Click here to read all of today's Market Blog: http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB13C&PAGE=1.

Take advantage of the timely Schaeffer commentaries by signing up for their free e-newsletters -- Opening View, Market Recap and Monday Morning Outlook. Click here to have the Schaeffer's commentaries delivered to you free via email every day. http://www.schaeffersresearch.com/redirect.aspx?CODE=PROB13M&PAGE=1.

About Schaeffer's Investment Research (www.SchaeffersResearch.com)

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 .

Source: Business Wire

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