Schaeffer's Street Chatter Highlights the Following Stocks: Apple Computer, Hilton Hotels, and Best Buy.

CINCINNATI -- Today's "Street Chatter" from Schaeffer's Investment Research focuses on: Apple Computer (NASDAQ:AAPL), Hilton Hotels (NYSE:HLT), and Best Buy (NYSE:BBY). "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:

Apple Computer

There is little news to be found on Apple Computer (NASDAQ:AAPL) today, but that hasn't stopped the message board faithful from creating a buzz surrounding this guru of digital music and trendy computing hardware. From my perspective, the most interesting development for AAPL during the past several weeks is the equity's stall near the 75 level.

A look at a daily chart spells out this weakness rather plainly. AAPL tested overhead resistance in the 75 area in mid-December only to be soundly rejected. The shares then pulled back to their 20-day trendline in the 70 area (which happens to be hoe to a considerable degree of put activity in the January series). However, AAPL has since been rebuffed in the 75 region once again and has broken through short-term support at its 10-day and 20-day moving averages.

Click the following link to see a Daily Chart for AAPL since October 2005 With 10-Day and 20-Day Moving Averages: http://www.schaeffersresearch.com/wire?ID=14893 .

However, AAPL is far from rolling over completely, as it still maintains the stalwart support of its 10-week moving average. The shares have not closed a week below this intermediate-term trendline since early July. What's more, this moving average is quickly ascending into the 70 area and could provide some additional support for the shares. With resistance at the 75 level and support at the 70 region, AAPL looks to be set for a bit of sideways movement during the short term.

The security's sentiment backdrop could also use some improvement before we see a real breakout to the upside. Options players are among the bearish contingent, as AAPL's Schaeffer's put/call open interest ratio (SOIR) of 1.01 ranks above 93 percent of all those taken during the past year. This ratio is also on the rise, advancing from December 23's reading of 0.99 in the 86th percentile.

Short sellers, meanwhile, remain one of AAPL's weak spots from a contrarian point of view. In fact, the number of AAPL shares sold short declined by 15 percent during December, leaving less than one day to cover the 24.8 million shorted shares. This pittance of pessimistic positions has AAPL sorely lacking in the short-covering support department.

Wall Street is a bit of a conundrum. Zacks reports that 11 of the 19 covering analysts rate the shares a "hold." Normally this would be a good signal for AAPL, but with the shares experiencing a bit of a slide lately, and the much anticipated "Santa Claus" rally taking a vacation this year, it could take more than just a few sparkling sales moments to prompt any upgrades from this group.

However, don't write AAPL off just yet. The shares still remain in a strong uptrend, and there is ample bearish sentiment to provide sideline money to boost the shares out of their funk. As a result, AAPL receives a Schaeffer's Equity Scorecard rating of 8.0 out of 10. Think of this as a longer-term play, and look for the stock to trend sideways for the time being.

Hilton Hotels

Before the market open this morning, a spokesman for Britain's Hilton Group announced that a deal with Hilton Hotels (NYSE:HLT) may be announced late on Thursday. "It's getting pretty close, we hope we may have an announcement," he said. The news of the reunion of these two Hilton companies after their 40-year hiatus has sent HLT skipping more than three percent higher so far today.

Technically speaking, HLT has had its struggles, but remains in a rather impressive long-term uptrend. Since March 2003, the stock has rallied higher along the steadfast support of its 10-month and 20-month moving averages, having closed only one month below this duo during this time frame.

Click the following link to see a Monthly Chart of HLT since March 2003 With 10-Month and 20-Month Moving Averages: http://www.schaeffersresearch.com/wire?ID=14893 .

Sentiment is a mixed back for HLT. Options players have the bearish pulse of the stock, pushing its SOIR to 1.06 in the 98th percentile. Meanwhile, investor stock trading strategies have also shifted toward the pessimistic end of the spectrum. But while short interest for HLT jumped 27 percent during December, it would still take less than two days to cover the 6.7 million HLT shares sold short. At this rate, the security stands to garner very little in the way of covering support from the group.

Finally, Wall Street remains the biggest concern for a bullish play on HLT. According to Zacks, 17 of the 21 covering analysts rate the shares a "buy" or better. Even if this impending reunion deal impresses the Street, there is very little room for upgrades. However, if things fall through, or the terms of the deal are disappointing to analysts, there is plenty of room for downgrades.

Best Buy

Electronics retailing guru Best Buy (NYSE:BBY) is getting a fair amount of attention on the Street today, after retailers are citing a strong holiday season for flat-panel televisions and MP3 players. BBY is the biggest retailer in that category by sales. The shares have responded lightly, and were last seen up nearly one percent on the day.

Pulling back for a broader technical view, BBY has struggled a bit lately. The shares appear to have set a double-top formation in the 50-51 area. Furthermore, the equity is now trading below resistance at its 10-week and 20-week moving averages. Support at the 44 level seems to be buoying the shares, but should this level give way, the last bastion of support for BBY is its 10-month trendline in the 42 area.

Click the following link to see a Weekly Chart of BBY since May 2005 with 10-Week And 20-Week Moving Averages: http://www.schaeffersresearch.com/wire?ID=14893 .

Readings are pretty weak on the sentiment side of the coin for BBY as well. The stock's SOIR of 0.91 ranks below 71 percent of all those taken during the past year, indicating a considerable degree of optimism from the options crowd. Meanwhile, short interest declined by more than five percent during December. It would now take less than three days to cover the 15 million BBY shares sold short.

On Wall Street, analysts are firmly entrenched in the bullish camp. Zacks reports that 13 of the 22 covering analysts rate the shares a "buy" or better. While BBY has a bit of a long-term uptrend still working in its favor, I think that a bit of disappointment over holiday sales and rising heating costs could put a damper on any returns for the shares going forward. Look out for downgrades from this loving analyst bunch, as it could be the harbinger of a longer downturn in the shares.

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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 .