Schaeffer's Street Chatter Highlights the Following Stocks: Amazon.com, Google, and Rambus.

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Amazon.com (NASDAQ:AMZN), Google (NASDAQ:GOOG), and Rambus (NASDAQ:RMBS). "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.

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Street Chatter:

Amazon.com

I don't think I've heard many complaints about Amazon.com's (NASDAQ:AMZN) service. I placed an order a couple of weeks ago, and the package arrived on my doorstep before the date on which AMZN told me it would leave their warehouse. And because the company elects to spend its advertising budget to subsidize a free shipping policy, shopping online at AMZN is very easy to do.

I keep a look out for Fibonnaci retracement levels, simply because the folks on Wall Street keep an eye on them, too. Based on the highest monthly close (85.06) and the September 2001 lowest close (5.97), the 50-percent retracement level is 45.52, and I notice that the stock was trading at 48.08 at last check. In other words, it made it past this potential resistance level.

The 10-unit and 20-unit moving averages on the daily, weekly, and monthly charts are all looking supportive. The powerful 160-day and 160-week moving averages are also lending help. On October 28, the stock dipped to support at these trendlines, and I see very solid support at the 40. This is a full eight points below the stock's current price, so it is too low to help options players much, but it certainly helps to reassure equity investors that the downside is limited, and the limit, defined by those trendlines, is rising every day.

From Zacks I see that analysts award:

--3 "strong buys"

--0 "buys"

--9 "holds"

--2 "sells"

--1 "strong sell"

With 12 out of 15 ratings at a cautious "hold" or worse, we find a degree of pessimism for AMZN that allows plenty of room for upgrades. Brokerages are not recommending AMZN strongly to their clients, so you can be sure that investors have sideline money left.

The stock's Schaeffer's put/call open interest ratio (SOIR) checks in at 1.00, telling us that puts and calls are perfectly balanced in the December and January series. (There are no February options for AMZN yet.) Furthermore, this SOIR figure lies in the 49th percentile, almost exactly in the middle of the range of readings taken during the past year. Remember that January is a LEAPS month, so it pays to see what the SOIR would be if we excluded January options. It turns out that the front-month put/call open interest ratio is very close to 1.00, too, confirming our analysis.

Short interest on AMZN amounts to 9.6 percent of the stock's float, and all those shorted shares would take 6.0 days to buy back, so there is a chance we'll see short-covering support if a trigger came along.

Click the following link to see a Weekly Chart of AMZN Since June 2002: http://www.schaeffersresearch.com/wire?ID=14671 .

Google

Google (NASDAQ:GOOG) moved more than three dollars higher in today's shortened session. This move has come on no discernable news, but it has spurred the shares on to yet another all-time high.

GOOG's 10-day moving average has been a solid support level since the shares' initial public offering, and it appears ready to help them move higher still. The trek higher will not be an easy one; there is heavy call open interest at the 430 strike in the front three months, but this has done little to quell the equity's run. Should the shares fall, there is some call open interest at the 420 level, but the next significant accumulation of calls is at the 400 strike. If the support of GOOG's 10-day trendline gives way, this should be the next layer of support.

Joining the 10-day trendline in the support of the shares is GOOG's 10-week and 20-week moving averages. Aside from a handful of weeks (five to be exact) in early 2005, the shares have consistently closed above the support of these trendlines throughout their lifespan.

One would think that the options pits teem with optimism toward the sultan of searches. . . one would be wrong. In fact, pessimism was running high before last Friday's options expiration, when GOOG's SOIR checked in at 1.05, in the 98th percentile. On Wednesday, GOOG's SOIR stood at 0.83, in the 57th percentile. Finally, today's SOIR for GOOG is 0.74, in the 32nd percentile. While today's reading is a tad more optimistic, GOOG has historically received a great deal of pessimism, and history often repeats itself.

While skepticism toward a strong performer is a bullish contrarian indicator, I find myself a little concerned about GOOG's short interest backdrop. Short sellers decreased their pessimistic positions by more than 11 percent during the past month. This drop leaves less than one day to cover the shorted search engine shares, which would provide little in the way of a short-covering rally on any good news.

Zacks shows 17 of 23 covering analysts rate GOOG a "buy" or better. If this group changes its mind, the shares could get their first taste of downside pressure.

GOOG receives a 6.0 out of a possible 10 on our Schaeffer's Equity Scorecard, but more pessimism from options players could serve to push this indicator higher.

Click the following link to see a Daily Chart of GOOG Since April 2005 : http://www.schaeffersresearch.com/wire?ID=14671 .

Rambus

Since October 18, when Rambus's (NASDAQ:RMBS) released a rather impressive quarterly earnings report, the stock has advanced more than 43 percent along its 10-day and 20-day moving averages. On Wednesday, the shares took out resistance at the 15 level on heavy volume. This could be a good sign for RMBS going forward, especially given the strength in the semiconductor sector as whole.

Despite the ever-present threat of negative news on the legal front, the stock is set to challenge long-term resistance at the 16 level and its descending 20-month moving average. RMBS has not bested the 16 level since February, while its 20-month trendline has forced the shares lower since December 2004.

The stock's Schaeffer's put/call open interest ratio (SOIR) of 0.29 ranks below 93 percent of all those taken during the past year. There are two points of encouragement for the equity on this front, however, as this ratio has risen from an annual low of 0.26 set on November 14. The second point is that RMBS is now trading above peak call open interest for the December series, located at the 15 strike.

After rising for much of the past four years, short interest is finally starting to decline. Despite two straight months of decline, the 10.9 million RMBS shares sold short still account for 12 percent of the stock's total float and would take 6.6 days to cover. Should this trend continue, RMBS could see additional upside potential due to the added buying pressure.

Zacks reports that only two analysts have even dared to offer up ratings on the firm, both with "holds." Any additional coverage or upgrades from the two brokerage firms bold enough to offer up "holds" (again not the sarcasm) could provide further lift for RMBS.

I find it hard to recommend this equity as a buy. Compounding this legal backdrop is a lack of "extreme" pessimism from the investing community. Furthermore, RMBS still has a couple major technical hurdles to overcome before making any meaningful advances. As a result, our Schaeffer's Equity Scorecard rating for RMBS falls at a meager 4.5 out of 10.

Click the following link to see a Daily Chart of RMBS Since October 2005 : http://www.schaeffersresearch.com/wire?ID=14671 .

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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 .