Schaeffer's Daily Market Blog Features Omnivision Technologies, Adobe Systems, Oracle, Winnebago Industries, and KB Home

Business Wire, June 16, 2006

CINCINNATI -- Among the stocks featured in the June 16 edition of Schaeffer's Market Blog are Omnivision Technologies (NASDAQ:OVTI), Adobe Systems (NASDAQ:ADBE), Oracle (NASDAQ:ORCL), Winnebago Industries (NYSE:WGO), and KB Home (NYSE:KBH). 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=PROB12M&PAGE=1 .

Schaeffer's Market Blog for Friday, June 16, 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=PROB1C&PAGE=1 .

2:40 PM Short Sighted on Omnivision Technologies

Last night, Omnivision Technologies (NASDAQ:OVTI) reported fourth-quarter earnings that bested the Street's view by a penny per share. However, the shares are down nearly 12 percent, as traders have apparently chosen to focus on the company's eroding gross margins for its image sensor products. Furthermore, both Piper Jaffray and Needham raised issues concerning the quality of OVTI's quarterly earnings and outlook, though neither firm lowered its rating on the equity.

It wouldn't have come as much of a surprise to contrarians if either brokerage firm had downgraded the shares, as OVTI is in the process of rolling over from an all-time high, breaking several key support levels in the process. Today, however, the stock broke below the 24 level, which has historically been a major sticking point for OVTI. Sentiment is rather mixed on the stock, as four of the 10 covering analysts rate the shares a "buy." And to prove that short sellers are not always off the mark, more than 18 percent of OVTI's float is sold short. While it seems unlikely at this point, watch out for a bounce in the shares, as a sustained rebound could prompt some of those short sellers to take some profits off the table, thus adding buying pressure to the shares.

1:03 PM Adobe Could Continue to Fall

I'd be wary of Adobe Systems (NASDAQ:ADBE) given all the optimism toward the stock. The past two days has seen call option activity in excess of four times that of respective put option activity. The shares were upgraded today and are only up about one percent. The recent price action of the stock is terrible, and I think that the shares still have plenty of room to fall.

12:19 PM Is that a Winnebago with Wings?

Short sellers could be feeling the heat today, as shares of Winnebago Industries (NYSE:WGO) have rallied more than eight percent following the company's third-quarter earnings report. For the quarter, WGO logged a profit of $13.2 million, or 40 cents per share, compared to analyst expectations for 38 cents per share. Currently, the 8.3 million WGO shares sold short would take more than 17 days to cover and represent nearly 26 percent of the company's total float. While technical resistance at the 31 level seems to be holding WGO in check for now, a breach of this region could send even more short sellers scrambling for the exits.

10:38 AM Fortune Telling for Oracle Following Earnings Lift

Following news that it lifted its fourth-quarter revenue and earnings forecast, shares of Oracle (NASDAQ:ORCL) rocketed out of the gate to initially trade nearly nine percent higher in the first five minutes of the session. However, the stock lacked staying power, and has quickly pulled back to potential support in the 14 area. For a reason behind the hasty retreat, look no further than the technical and sentiment backdrop for ORCL. Not only did the 15 level cap the security in late April and early May 2006, but this strike is home to peak call open interest in the June, September, and December series of options.

The stock's sentiment indicators also hint that buying power on the equity may be at minimal levels. Zacks reports that 15 of the 23 analysts covering the shares rate them a "buy" or better, while short interest is practically nonexistent. However, all is not lost for ORCL. The shares have taken out heavy call open interest at the 14 level, and this strike is also home to peak put open interest in the June, September, and December series. ORCL should find some options-related and technical support near this level during the intermediate term.

10:04 AM Building a Bearish Case for KB Home

KB Home (NYSE:KBH) is continuing yesterday's rebound after reporting second-quarter earnings that bested the Street's estimate. Investors seem to have the resilience to shrug off yesterday's downgrade of the stock and the homebuilding sector. KBH is even up despite the company guiding lower for fiscal 2006. However, while the shares have advanced approximately two percent and recaptured their descending 10-day moving average, short-term resistance in the 46 region seems to have put a halt to the equity's rally. Since June 6, the 46 level has held KBH in check. Furthermore, with a Schaeffer's Equity Scorecard rating of 1.0 out of 10, I would guess that there is very little sideline money to help push the shares above this level any time soon.