Schaeffer's Street Chatter Highlights the Following Stocks: Oracle, Research in Motion Limited, and Restoration Hardware

Business Wire, Nov 23, 2005

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Oracle (NASDAQ:ORCL), Research in Motion Limited (NASDAQ:RIMM), and Restoration Hardware (NASDAQ:RSTO). "Street Chatter" is a report that analyzes three newsworthy stocks that are generating a lot of attention on Internet message boards. "Street Chatter" is published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

For additional information about this report or to have it delivered to you free via email every day click on the following link: www.schaeffersresearch.com/redirect.aspx?CODE=PRSC11M&PAGE=1 .

Street Chatter:

Oracle

The Dow Jones Newswires reports that a judge in California has approved an unusual legal settlement yesterday. Larry Ellison, the larger-than-life founder and CEO of Oracle (NASDAQ:ORCL) will donate $100 million to charity and pay another $22 million to the attorneys who sued him for alleged stock-trading funnies. "The civil complaint revolves around a $900 million gain that Ellison generated by selling some of his Oracle stock shortly before the company's shares plummeted in 2001," according to the Dow Jones Newswires.

The stock has settled onto its powerful 80-week and 160-week moving averages for support this week. In a fair world, that support should hold. If it doesn't, we're getting a clear signal of short-term weakness.

We track a large number of sentiment indicators, but we frequently focus on three key areas:

-- Analyst ratings, to gauge Street sentiment

-- Equities sentiment, in the form of short selling

-- Options sentiment, in the form of put/call ratios and trends, and peak open interest

From Zacks I see that analysts award:

-- 14 "strong buys"

-- 4 "buys"

-- 7 "holds"

-- 0 "sells"

-- 1 "strong sell"

Eighteen out of 26 ratings are "buy" or better, and 14 of those are the supposedly rare "strong buy" flavor. With brokerages recommending ORCL this strongly to their clients, you can be sure that investors have already piled great wads of their cash into the stock. If there is little or no money left on the sidelines, where is further investment going to come from?

In the options pits, sentiment seems to be appropriately pessimistic toward ORCL. The stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.72 in the 81st percentile. In other words, this reading, which is higher than 81 percent of all those taken during the past year, is not all that far from a pessimistic extreme.

Short interest on ORCL amounts to just 0.92 percent of the stock's float, and all the shorted shares would take just 0.68 days to buy back, so the chances we'll see any short-covering support are minimal. Interestingly, short interest fell 16.3 percent last month, a sign perhaps that some short sellers are moving on to look for better opportunities in the belief that support for ORCL will hold.

Our Schaeffer's Equity Scorecard rating of 3.0 out of a possible 10 for ORCL suggests that the path of least resistance for this stock is to the downside.

Click the following link to see a Weekly Chart of ORCL Since June 2002: http://www.schaeffersresearch.com/wire?ID=14665 .

Research in Motion Limited

Research in Motion Limited (NASDAQ:RIMM) said it expects third-quarter subscriber numbers to come in eight percent lower than it previously announced, to a range of 625,000 to 653,000. Fourth-quarter subscriber additions are estimated to be three percent lower than the earlier forecast.

The stock peaked in December 2004, but failed to hold on to the 100 level. The 10-month and 20-month moving averages are now coming to a bearish cross. These long-term trendlines are hard to argue with, and they certainly warn of further declines. Yet, the chart technician's curse is that the strongest trendlines are also the ones that lag most - some of the data in that 20-month trendline is 20 months old.

Zooming in, we find that the stock has shown signs of nerves on excursions above the round-number 80 level this year, and the 70 level, which formerly acted as support is turning resistive. On Monday, we saw RIMM go as far as 69.45 before it turned and fled. Watch for more rebounds as confirmation that 70 is as good as it gets. The stock is currently squidged between its 10-day and 20-day moving averages, and the former looks to be the more powerful.

Turning to the main sentiment indicators, from Zacks I see that analysts award:

-- 9 "strong buys"

-- 1 "buy"

-- 8 "holds"

-- 0 "sells"

-- 4 "strong sells"

With 12 out of 22 ratings at a cautious "hold" or worse, perhaps there is room for upgrades to give the stock a boost. But we can spin this story either way, and I'm more concerned about those nine "strong buy" ratings. I'm supposed to call them "rare," but I just can't bring myself to do it. Any downgrades could easily pull money out of the stock, and it doesn't take NASA to work out the consequences.

In the options pits, sentiment is more optimistic than I'd like. The stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 0.86, indicating that calls outnumber puts by a small margin. This reading is lower than 76 percent of all those taken during the past year. RIMM needs to do a lot better if it wants to support this level of optimism.