WaveStrength RADAR for December 7, 2006

Market Trends

More good news for my WaveStrength Hot Sheet readers…

Research firm Oppenheimer just upgraded video game maker Activision inc. (ATVI:NASDAQ) to “buy.” This comes only a few weeks after Banc of America Securities rated it a buy as well.

Currently, ATVI is the best performing stock on our Hot Sheet open portfolio, showing gains of 22% going into the holiday season.

As I’ve been stating time and time again, ATVI is the true winner of this year’s video game consoles.

Material Profits

Gold slipped this morning, as oil prices opened slightly lower.

This offers investors a good opportunity to take advantage of my Gold to Oil ratio I’ve been telling you about. In Market Report, I’ll tell you why this strategy is so important for today’s investors.

Stay tuned…

Trading Tactics

We received an interesting question from R.R. today concerning the calls options we’re holding on the Telecom HOLDRs (TTH). He writes, “As you know, TTWBF stopped out this morning. It opened at 1.85, well below your stop price of 2.20. It soon climbed back up – too late. This keeps on happening. What's going on?”

From the looks of things, this was an erroneous price tick. For example, my real time options screen does not show the price tick at the stop-out level that R.R. is referring to. In fact, this particular option is currently trading between $3.80 and $4.80 with the last trade at $4.60.

As a result, it’s clear that there is NO WAY that the entire basket of telecom stocks could have dropped down to warrant a $1.85 price tick. The proper recourse would be to contact the exchange and have them correct the erroneous price tick my re-assigning you the TTH call contracts. This is unfortunate, but it does happen occasionally – and the exchange will do whatever they can to correct the issue. If something like this has ever happened to you, definitely contract the exchange and call for a “make good” on your contracts.

As it stands, WS Traders are still holding their TTH call positions, and we're looking to take profits if these contracts trade at $5.00.

Please note that all quoted currencies are in United States dollars, unless specifically stated otherwise.

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