Doctor Jack's Stock Medicine

[Rob]

Ebay Ebay Ebay

Never ever try to penny pinch options. Let the 1.30/contract decay and hedge your shares. If you bought at 27.41, your shares are hedged all the way down to 26.10

I appreciate the insight, Jack. Actually my buy price was 27.48; New-born got it slightly off. So I'm hedged to 26.18 the way I understand it.

Also, just to clarify, in no way should my comments earlier be taken such that I am "blowing off" technical analysis. They can be quite handy in fact. I'm just of the opinion that in the final analysis, technicals follow fundamentals.

And Lyehopper, you do have a point about PARL being cut off at the knees despite its impressive growth. But eBay's market cap is about 240x that of Parlux, making it, I believe, far less susceptible to the manipulators.

Obviously EBAY's chart alone gives no reason to buy it, but I firmly believe a modest understanding of the company, its business model, and market psychology among other things, reveals a picture far different than what the chart is showing. I may be proven wrong, and I may have to bail and lick my wounds. That's life. As stated earlier, it's just my best educated guess that eBay is near a bottom. Also, I thought this might be a good learning opportunity for hedging with covered calls, as it's something I've never tried my hand at.

[New-born baby]

Rob

Rob,
As always, the best to you on your trades. I am glad you are giving the options plays a try. I think you will profit by it.

We shall see how EBAY plays out. If EBAY is above $27.50 on July 21, I'd be surprised. The chart ljust looks too bearish to me.

[Rob]

If EBAY is above $27.50 on July 21, I'd be surprised.

That will largely depend on the Q2 earnings report due out on Wednesday, the 19th!

[Jack Haddad]

Orcl

Bought 5 blocks at 14.62, and wrote the 500 July 15 calls for .20/contract.

Outstanding fourth quarter results provided Oracle with some justification for the flurry of acquisitions completed over the past 18 months. Revenue increased 25%, including a 32% rise in the new software license category. Much of the 83% increase in application license revenue was due to the Siebel acquisition, but organic growth of 56% was impressive also. Oracle generated $4.2 billion of free cash flow in fiscal 2006, nearly a 30% increase versus last year. Similar to last year, Oracle spent significant working capital in the fourth quarter. Yet because working capital was a generator of cash in the first nine months of the year, working capital usage for the full year was negligible. Since Oracle does not pay a dividend and capital expenditures are modest ($241 million), virtually all of cash from operations becomes free cash flow. Share repurchases totaled $2.1 billion in fiscal 2006. This was a substantial increase compared to the $1.3 billion in fiscal 2005. Moreover, the company intends to buy back $1 billion of stock in each quarter for fiscal 2007. While $4 billion in annual share repurchases is substantial, our concerns are mitigated by our estimate for free cash flow of nearly $5.6 billion.


Oracle is also stealing market share from SAP in applications, IBM in database, and BEA in middleware. Theyre doing that by emphasizing technological advantages.

Sold 5 blocks at 14.91, and bought back 500 calls at .25/contract.

[Jack Haddad]

Intc

Yesterday's warning issued by AMD is evidence of INTC's price war!
In the June quarter, checks point to factual data that Intel has been gaining in the desktop and notebook segments, owed to aggressive pricing incentives. As a result, analysts from Bank of America and UBS speculate that revenue, which in April Intel forecast would be from $8 billion to $8.6 billion, has been steadied by sales to APPL-- which recently began using Intel processors in many of the machines it sells.

Chip buyers, knowing that lower-priced wares will soon be available, are logically refraining from buying AMD chips now, in anticipation of going on a low-priced buying spree in a few weeks.

AS this price war intensifies, I believe Intel has the advantage over AMD. Clearly, INTC is standing on the taller pile of cash, and holds the commanding heights in profitability. Therefore, it can cut steeper in prices should it needs to. AS this battle prolongs, AMD's cash will dwindle.

[Jack Haddad]

INTC versus AMD

Joe Osha, a colleague from Merrill Lynch, said the following in a letter to clients, "we expect Intel to begin taking share in desktop while defending its dominant position in mobile. The next big competitive inflection point for AMD is mid-2007, when AMD launches its first real mobile processor architecture. Until then, it looks like quite a fight between the two processor companies., with rapidly expanding manufacturing capacity at AMD to boot.” Osha kept his rating at “neutral.”

Bank of America’s Sumit Dhanda: “Various factors lead us to believe that the [worst] may not yet be behind for AMD. Specifically, we believe that 1) a continued deterioraton in AMD channel inventory, 2) difficult comps heading into Q3, which will revert back to a normal 13-week quarter, 3) margin impact from late quarter price cuts, which will be felt almost entirely in Q3, 4)strong likelihood of share loss to Intel in [the second hald], and 5)an elevated cost structure heading into ‘07, will result in further downward adjustments to AMD’s consensus forecast.” Dhanda cut his price target on the stock to $20, from $34, maintained a neutral rating and asserted that the valuation is “unattractive.”

[DSteckler]

5)an elevated cost structure heading into ‘07, will result in further downward adjustments to AMD’s consensus forecast.” Dhanda cut his price target on the stock to $20, from $34, maintained a neutral rating and asserted that the valuation is “unattractive.”

Oh, please. Nothing like being a day late and a few dollars short. Why wasn't he cutting the target when AMD was $33?

[Jack Haddad]

AMD's denial of Woodcrest energy-efficiency.

AMD has been disputing evidence that Intel’s new chip (Woodcrest, Xeon 5100) is more energy-efficient, using a measurement called “Thermal Design Power." However, this claim has been received skeptically by some analysts, such as Thomas Weisel Partners. Weisel’s analysts concluded in a June 21 report: “We ran benchmarks on servers that indicated that Woodcrest’s power consumption is lower than similarly configured Opteron systems, and Woodcrest has superior performance to Opteron systems.”


Other analysts have also been issuing positive investor guidance on Intel. For example, Gus Richard, managing director of First Capital Albany in San Francisco, recently issued a “buy” recommendation for Intel, writing, “The reason for our upgrade is that we believe the company's new desktop (Conroe) and server (Woodcrest) will allow the company to regain the performance lead in these markets. We expect the company to regain lost market share starting in the second half of 2006.”

Meanwhile, Intel plans to aggressively increase the power and energy efficiency of its chips, and plans to release its own quad-core processor before AMD. DEG Vice President Pat Gelsinger told Information Week at the Woodcrest launch event in New York that INTC is going to be delivering quad-core before AMD even has a chance to respond to Woodcrest.

[Jack Haddad]

Oh, please. Nothing like being a day late and a few dollars short. Why wasn't he cutting the target when AMD was $33?

When AMD was at 33, Woodcrest was still in the brewing. At that time, no benchmark or industry analyst reviews were available for evaluations/testing.

[Jack Haddad]

Oh, please. Nothing like being a day late and a few dollars short. Why wasn't he cutting the target when AMD was $33?

When AMD was at 33, Woodcrest was still in the brewing. At that time, no benchmark or industry analyst reviews were available for evaluations/testing.

[Jack Haddad]

INTC's new chip set to be launched.

Intel is launching Montecito on July 18. The Montecito processor features twice the performance, almost triple the amount of L3 cache (24 megabytes), and 20 percent lower power consumption compared to its predecessor. It also boasts Intel® Virtualization Technology and Hyper-Threading Technology. The die contains 1.7 billion transistors, more than any other microprocessor in the world.

About 90,000 Itanium-based systems have been deployed around the world since 2002, and Montecito is expected to accelerate that momentum. More than 75 percent of the world's largest companies deploy Itanium-based systems. Businesses are moving away from proprietary systems and enjoying freedom of choice with the 8,000 software applications available for Itanium-based systems.

[New-born baby]

INTL's formation

Jack
INTL's ten yr chart shows a huge, six yr symmetrical triangle formation (or a three yr formation in red).
It will soon bust it, up or down. The implications will be huge for the
stock price.

In your judgment, what price target are you expecting for INTL?
And what time to achieve the target? Because the chart expects an $18 move off of the three yr. formation, and a whopping $38 move off of the ten yr. formation. Note that this chart is huge, so we are looking for a big move over perhaps a year plus.

At the present time, the daily is one very ugly chart (second chart).


One yr. Daily chart: note the gaps

[spikefader]

EBAY bias is short and it whispers immediate lower to me. I'm seeing 23.50 as the support to cover shorts to wait the reaction to that area.


INTC on the other hand has done some much needed work at the area of significance I mentioned as far as weekly close and burnt toast. And in contrast, AMD has weakened technical relative to bands and directly relative to INTC. Remember that AMD:INTC chart I posted that was so bullish, well it actually gapped down through the support and has made a large island cluster and the pattern favors INTC now. In fact, looking at the inverse, the INTC:AMD chart the action has been impulsive bullish and is in a fuzzy 5th up, and the abc corrective will probably highlight the best point to go long INTC. 18.30 area is channel long territory for INTC and that would be a great area for pure FAers to look a confirming intraday pattern to buy into, despite the poor money flow that steers me clear of it. I think the patterns as they are show support for Jack's bullish FA.

Best to all.

[DSteckler]

When AMD was at 33, Woodcrest was still in the brewing. At that time, no benchmark or industry analyst reviews were available for evaluations/testing.

Jack, when AMD was 33 in early May and failed on its attempt to get back above the 50DMA, the chart was screaming sell.

When AMD gapped open higher on 5/19 with a negative Volume Flow and made a bearish divergence with the stochastic, it was screaming sell.

When over the following two days the action closed the gap, it was screaming sell.

Whether Woodcrest was in the brewing or not was irrelevant.

[spikefader]

Jack, when AMD was 33 in early May and failed on its attempt to get back above the 50DMA, the chart was screaming sell.

When AMD gapped open higher on 5/19 with a negative Volume Flow and made a bearish divergence with the stochastic, it was screaming sell.

When over the following two days the action closed the gap, it was screaming sell.

Whether Woodcrest was in the brewing or not was irrelevant.

On reflection, I have to pretty much now agree with that. It ain't actin' right!
And AMD directely relative to INTC as an issue was a screaming sell when the island was put in.

earlier AMD:INTC chart here