Schaeffer's "Behind the Headlines" Highlights the Following Stocks: Barnes & Noble, Merck, and Yahoo!

CINCINNATI -- Today's "Behind the Headlines" from Schaeffer's Investment Research focuses on Barnes & Noble (NYSE:BKS), Merck (NYSE:MRK), and Yahoo! (NASDAQ:YHOO). "Behind the Headlines" is a report that analyzes newsworthy stocks that are generating a lot of attention on Wall Street. "Behind the Headlines" is published on www.SchaeffersResearch.com - the home of Bernie Schaeffer and Schaeffer's Investment Research.

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Behind the Headlines: Shakeup At Yahoo!

Barnes & Noble: Specialty retailer Barnes & Noble (NYSE:BKS) gained nearly five percent today thanks to an upgrade from Credit Suisse. Citing that the bookseller could be a takeover target, the brokerage lifted its rating to "outperform" from "underperform." The stock subsequently gapped higher on heavy volume, overtaking its 20-day moving average and short-term resistance at the 40.50 level.

From a longer-term technical perspective, BKS is trying to shake off a recent bearish cross of its 20-month and 10-month moving averages. A continued show of strength in the shares could reverse this technical phenomenon. Another impending technical challenge for the stock is the 43 level, above which BKS has not managed to trade since early May.

Click the following link to see a Daily chart of BKS since April 2006 with 20-Day Moving Average: http://www.schaeffersresearch.com/wire?ID=17832 .

Merck: Ahead of the opening bell, pharmaceutical heavyweight Merck (NYSE:MRK) issued a new annual earnings guidance, saying it will likely bank per-share results of between $2.48 and $2.52 per share, excluding restructuring charges. Including items, the company will earn between $2.18 and $2.25 per share. Analysts are currently targeting per-share results of $2.51 for the full year. Looking forward to 2007, MRK officials targeted earnings for that year of $2.51 to $2.59 per share, surrounding Wall Street's consensus forecast of $2.56 per share.

While the stock ended today's session slightly lower, it has traveled along an upward trajectory for the past 14 months. Since late June, the shares have gained momentum along their 10-week moving average and have currently consolidated into this trendline.

Click the following link to see a Weekly chart of MRK since June 2006: http://www.schaeffersresearch.com/wire?ID=17832 .

Despite this rally, options players are still huddled in the bearish camp. Schaeffer's put/call open interest ratio (SOIR) for MRK weighs in at 1.85, meaning that in the December and January series combined, there are 185 open put positions for every 100 open calls. This reading ranks higher than all of the past year's data, suggesting that bearishness among the speculative crowd is running at an extreme. Should this skepticism begin to unwind, MRK could benefit from increased buying power. Additionally, with low expectations in place such as this, the stock is able to be resilient amid mixed news such as today's earnings outlook.

There is room for improvement up and down Wall Street as well. According to the latest Zacks (www.Zacks.com) information, just six of the 16 brokerage firms that follow MRK have awarded a "buy" rating. Any upgrades could draw positive attention to the shares.

Yahoo!: A management shake-up claimed two percent of Yahoo!'s (NASDAQ:YHOO) value today, as investors were apparently left with an unsettled feeling. Overnight, the web giant said it would be reorganizing its executive line, placing current Chief Financial Officer in charge of revenue-generating activities. The firm's Chief Operating Officer and Media Group head are both leaving the company.

During the short term, YHOO is stifled between two levels. On the down side is the 26.50 region, which has contained very recent pullbacks in the stock. But challenging YHOO overhead is the 27.50 strike, which is home to peak call open interest in the December series. More than 90,000 contracts call the 27.50 strike their home, providing the foundation for some robust options-related resistance.

Click the following link to see a Daily chart of YHOO since September 2006 and December open-interest configuration for YHOO: http://www.schaeffersresearch.com/wire?ID=17832 .

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About Schaeffer's Investment Research (www.SchaeffersResearch.com)

Schaeffer's Investment Research, founded by Bernie Schaeffer in 1981, is a financial information and trading resources company. It publishes Bernie Schaeffer's Option Advisor, the nation's leading options subscription newsletter. The firm's contrarian approach focuses on stocks with technical and fundamental trends that run counter to investor expectations. The firm's website, http://www.SchaeffersResearch.com , is recognized as one of the leading information sources for stock and options traders and was cited as the top options website by both Forbes and Barron's. Click here for more details about Schaeffer's trading methodology: http://www.SchaeffersResearch.com/method .