Schaeffer's Street Chatter Highlights the Following Stocks: Alcoa, Amazon.com, and J.P. Morgan Chase.

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Alcoa (NYSE:AA), Amazon.com (NASDAQ:AMZN), and J.P. Morgan Chase (NYSE:JPM). "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:

Alcoa

Aluminum production giant Alcoa (NYSE:AA) is receiving a considerable degree of attention on the Street today, as the company's earnings report is scheduled for release after the close tonight. Currently, the consensus on the Street is expecting a profit of 38 cents per share from AA. However, the company's performance in the earnings confessional has been somewhat shaky during the past year. During the prior four reporting periods, AA has bested these estimates twice, and missed twice.

Checking in on sentiment heading into tonight's earnings report, Whispernumber.com indicates that investor targets are set a hair lower than the Street, with AA's whisper number arriving at 37 cents per share. This whisper number is derived from an average of individual investors' expectations regarding AA's earnings for the most recent quarter.

After throwing all these earnings figures around, I thought a look at AA's technical performance might be prudent. The shares have performed admirably since mid-October, rallying along the support of their 10-day and 20-day moving averages. And speaking of earnings reports, following AA's consensus-beating release last quarter, the equity proceeded to jump more than 17 percent during the ensuing 30-day period.

Pulling back a bit further, I see that AA has bested intermediate-term resistance in the 30 area, bolstered by the support of its 10-week and 20-week trendlines. What's more, the security is poised to log its first monthly close above its 10-month and 20-month moving averages since November 2004.

Checking in on the rest of our sentiment indicators, option activity remains rather flat on AA, as its Schaeffer's put/call open interest ratio (SOIR) of 0.52 rests near the mid-point of its annual range. Sliding over to today's option activity, I see that AA's January 2006 32.50 call is seeing the lion's share of today's contracts, with more than 3,800 of these bullishly oriented contracts crossing the tape.

Short interest is also rather negligible, as it would take a mere 2.4 days to cover the 12.8 million AA shares sold short. This pittance of pessimistic positions stands to offer very little in the way of options-related support.

Wall Street offers up a bit more hope for the security. According to Zacks, five of the 10 covering analysts rate the shares a "hold" or worse. Should tonight's earnings report impress the brokerage bunch, we could see some rather beneficial upgrades tomorrow.

All in all, AA has had some rather impressive technical success lately, making a bearish play ahead of tonight's earnings report a rather difficult decision to make. However, the lack of a heavily pessimistic sentiment backdrop makes the flip side of the coin just as risky. I would tend to lean toward the bullish end of the spectrum, given the lowered whisper number, but I still feel that AA has its work cut out for it later tonight.

Click the following link to see a Daily Chart of AA Since October 2005 With 10-Day and 20-Day Moving Averages and a Weekly Chart of AA Since April 2005 With 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=14953 .

Amazon.com

Amazon.com (NASDAQ:AMZN) is taking it on the chin a bit in today's trading session. The reason for the shares' more than two-percent drop is an early morning downgrade from J.P. Morgan. The brokerage firm lowered AMZN to "underweight" from "neutral," citing concerns over U.S. growth. Analyst coverage on the shares was already near a bearish extreme prior to this morning's downgrade, as Zacks reported that 12 of the 14 covering analysts already rated AMZN a "hold" or worse. While today's broker call is a bit worrisome for the stock today, going forward, AMZN has much more room for potential upgrades, and thus more sideline money waiting to jump into the shares.

However, despite this wealth of pessimism from the brokerage bunch, AMZN has managed to continue its trek higher. In fact, the stock has enjoyed the intermittent support of its 10-week and 20-week moving averages since April, gaining more than 53 percent along these intermediate-term trendlines in the process.

Despite this uptrend in the shares, many investors are siding with the bearish majority on Wall Street. AMZN's SOIR of 1.49, for instance, ranks above 87 percent of all those taken during the past year, indicating a pessimistic extreme from the group.

Elsewhere, short sellers increased their positions by 28 percent during December, as pessimism continues to rise from this bearishly inclined group of investors. As a result, the 37.9 million shorted shares now account for more than 12 percent of the stock's total float, lending strength to a potential short-covering rally in the equity.

The combination of this wealth of pessimism and technical prowess has earned AMZN a Schaeffer's Equity Scorecard rating of 8.0 out of 10, indicating that the path of least resistance for the shares remains to the upside.

Click the following link to see a Weekly Chart of AMZN Since July 2005 With 10-Week and 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=14953 .

J.P. Morgan Chase

J.P. Morgan Chase (NYSE:JPM) was the target of a little broker-on-broker activity this morning, as Prudential upgraded the shares to "neutral weight" from "underweight." According to Prudential, JPM's outlook remains good in areas remotely related to the higher stock market, such as mergers, asset management and private equity.

Checking in with Zacks, I see that there is ample room for further improvements from JPM's brokerage firm brethren, as 10 of the 17 covering analysts still rate the shares a "hold" or worse.

Elsewhere in the land of sentiment, options players are heavily bearish on JPM, as the stock's SOIR of 1.02 ranks above 89 percent of all those taken during the past year. This is a drastic change from this ratio's December 20 reading of 0.72 in the 19th percentile.

In the short-selling arena, despite an eight-percent decline in JPM short interest, it would still take more than four days to cover the 43 million shorted shares. While this is not a huge figure, it still indicates that JPM could see a bit of a short-covering rally on any further good news.

Technically speaking, JPM has been on a tear since mid-October, advancing more than 23 percent along the support of its 10-day and 20-day moving averages. Furthermore, the stock has breached the round-number 40 level (a region of formerly heavy resistance), and continues to advance along its 10-week trendline. With performance like this, it could be a matter of time before these pessimistic investors are forced out of their positions, thus creating more buying pressure on JPM. As proof of this, our Schaeffer's Equity Scorecard rating for the stock arrives at 8.0 out of 10.

Click the following link to see a daily chart of JPM since October 2005 with 10-day and 20-day moving averages: http://www.schaeffersresearch.com/wire?ID=14953 .

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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 .