Friday Nov 10, 2006

WaveStrength Radar for November 10, 2006

Providing Enough Oomph

Market Trends:
The Russell-2000 small-cap index (RUT) is taking a breather today, after attempting to beat a high posted in late October.

I have full confidence that investors are eyeing up small-cap stocks again until the next fourth-quarter earnings season.

The Nasdaq is doing exceptionally well setting a new high yesterday of 2,401.33. Of course that pop was aided by Cisco Systems Inc.’s (CSCO:NASDAQ) net income increase of 27.5%. The company also expressed guidance that CSCO would hit its 10-15% sales growth by the end of this fiscal year in July 2007.

Meanwhile, the Dow Jones Industrial Average is holding steady at the 10-day Moving Average.

I anticipate today’s market is going to be a bit of a bore. But serious trading should pick up again on Monday morning.

Trading Tactics:
As we open up the trading week on the first Friday after the mid-term elections, we’re getting nice upside moves from three Blue Chip components.

First is The Walt Disney Company (DIS:NYSE) which is up over 1.5% after its fourth-quarter net income more than doubled. Disney may be a good longer-dated call play going into next Spring. March calls, perhaps?

Not to be outdone, the upside play Adam and I issued in WaveStrength Options Weekly is on the move today, as American International Group Inc. (AIG:NYSE) reported a surge in third-quarter net income after the company “avoided” any big hurricane losses. This was exactly why we issued longer-dated calls on AIG, as WOW charts pointed to a further upside move.

And finally, Boeing Company (BA:NYSE) is up around $2.00 today on the news that it were selected by the U.S. Air Force to provide the military's next generation of combat search and rescue helicopters, a whopping $10 billion order.

All three of these upside moves should provide enough “oomph” to keep the Dow in positive territory for most of the day.